Property Investment

[Salmank]

Hi,

I saved up R750 000 and thinking of buying a property to let out, for investment.

1) Whats a reasonable period for ROI on property? Most Apartments have levies, so you only get your around 9% nett per annum.

2) Whats the best way to buy a property with paying minimal taxes? In a PTY? Or a trust? I already own one property, so want to save myself from too many taxes, and also capital gains.

3) Whats the best way to get bargain deals on properties?

4) The last question which supposed to be first: Is it even worth it to buy more property in SA, or should I invest that money with Woolworths (JSE) and put some in a retirement fund and R33 000 in a Tax free account?

Thanks in advance.

Regards,

Salman

 

[The_MAC]

I have not heard good experiences on property investments in the sub R1 Mil category, for the following reasons:

- Small flats attract dodgy credit-strained tenants, which can mean either not getting your rent or damage
to your property.
- Small flats are not only prone to neighbourhood deterioration but also complex deterioration (You could
end up with a really badly run complex) - dropping the value of your property.
- Levies can be high, and they increase annually, not to mention special levies.

But since you buying cash, maybe the risk is worth it.

 

[Salmank]

Eish, thats true.

I was also considering putting the full R750 000 as a deposit and taking finance to pay a R2.5 milliom property.

But who will pay R27 000 rental, when they can rather pay their own bond!

I

 

[The_MAC]

Eish, thats true.

I was also considering putting the full R750 000 as a deposit and taking finance to pay a R2.5 milliom property.

But who will pay R27 000 rental, when they can rather pay their own bond!

I

There are apparently many rich people who do not want to be tied down to a property and by default to a country i.e. RSA

I have heard that big estates like Fourways Gardens are full of "foreign" execs renting big mansions.

Do some thorough homework on this.

Edit: I do however have 2 family members who are renting flats in the low R1 Mil range, but they bought in very good areas and in good complexes, so it is possible, but risky.

 

[f2wohf]

Eish, thats true.

I was also considering putting the full R750 000 as a deposit and taking finance to pay a R2.5 milliom property.

But who will pay R27 000 rental, when they can rather pay their own bond!

I

Foreigners who can't buy like me because financing is hardcore when you're not South Africa.

But then, in the areas where you have a market for foreigners, you don't get that return, on my recent rentals it was more the following:

- R5.5 million: 37000 rental
- R2 million: 13500 rental.

 

[saturnz]

4) The last question which supposed to be first: Is it even worth it to buy more property in SA, or should I invest that money with Woolworths (JSE) and put some in a retirement fund and R33 000 in a Tax free account?

if you already have (investment) property then it makes very little sense to continue down that line,

I've started dabbling in other projects but I will have to wait to see how they work out, but I wouldn't use financial assets as vehicles for my savings- its just way too rigged

 

[Splinter]

if you already have (investment) property then it makes very little sense to continue down that line,

Someone call an ambulance, I must have had a stroke - I'm hallucinating that saturnZ is not recommending additional investment in property!

 

[Eti1]

Someone call an ambulance, I must have had a stroke - I'm hallucinating that saturnZ is not recommending additional investment in property!

No, no. Read what he said again.

Edit: actually, now I am not sure what he meant. Maybe he will explain? Would love to hear about his new projects.

 

[saturnz]

No, no. Read what he said again.

Edit: actually, now I am not sure what he meant. Maybe he will explain? Would love to hear about his new projects.

property is low risk with reasonable gain for people with very little to no financial background

however if you already have a property which I'm guessing is unbonded and you have an additional 750k in cash, then it suggests you are open to more risk and other opportunities

in saying that if you find a property bargain then sure take advantage otherwise explore other interests you may have

that's sort of my experience, a guy I do business with told me of a property towards the end of last year that he may be able to get for a good price, so now I'm in the process of selling two of my properties to purchase that one- which I will probably also flip and then venture out elsewhere- depending on which projects I deem need the injection more.

time will tell, but its more fun than simply repeating a generic formula

 

[saturnz]

Someone call an ambulance, I must have had a stroke - I'm hallucinating that saturnZ is not recommending additional investment in property!

you first learn the rules, then you learn when to break the rules

 

[Splinter]

you first learn the rules, then you learn when to break the rules

Sure...

 

[FatBoySlim]

It's a pleasure.

 

[Other Pineapple Smurf]

Eish, thats true.

I was also considering putting the full R750 000 as a deposit and taking finance to pay a R2.5 milliom property.

But who will pay R27 000 rental, when they can rather pay their own bond!

I

In my town they do.

The majority of people I know would rather rent than buy. Why buy a place you can afford when you can a rent a house you really canno't afford.

Even my financial adviser rents as posting their overseas monthly holidays on Facebook is more important.

 

[jman]

Anyone seen this calculator? Very interesting stuff

http://www.rollingalpha.com/2016/09/27/rent-or-buy-the-calculator/

 

[Tman*]

Eish, thats true.


But who will pay R27 000 rental, when they can rather pay their own bond!

I

Part of my business is facilitating lease agreements for rental properties for foreigners. Typical monthly price is R40 000 to R50 000pm. goes upwards to R80 000 to R100 000pm

R27 000 is really not substantial.

 

[Basil959]

I would buy 4 or if possible 5 flats with the R750k deposit and bond the rest, off set the interest and levies for tax.

I have found there is a much bigger market for middle class than there is for "high end", and by spreading the capital you are less likely to have the property sitting empty having to chip a large amount in on the bond and levies. If you can't find a tenant or if the tenant doesn't pay, and this happens..!

I don't believe a high value property attracts a better class of tenant, I've had more drama with my R2.5m investment than with my R600k investments.
In my experience people who pay more expect more..!

That said I have a very simple philosophy with flats.. buy in the right area, investigate neighboring properties.. ideally you want a good body corporate, good security, near transport, near school..etc
Then I make sure my unit is in pristine condition and I ask the going, my tenants basically can't get a better deal..

But I'm no mogul, that's just my 2 cents...