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Question of the Day: What's the most interesting small town you've visited in South Africa?
Purchasing property
- Thread starter DrewChan
- Start date
Good luck cape Town prices are crazy almost double that of KZN ( area dependent but comparing like for like )
3 bed 2 bath flat in dbn: 120sqm - Purchased for 970,000 in 2007
3 bed 2 bath flat in CPT 102sqm - Purchased this month for 1.7mil
Scary
3 bed 2 bath flat in dbn: 120sqm - Purchased for 970,000 in 2007
3 bed 2 bath flat in CPT 102sqm - Purchased this month for 1.7mil
Scary
Archer
Honorary Master
Haha, had the same realisation a week or so ago. My entire family (and the SO's family) live in Durbanville, so we we're like cool, before we have kids we'll move there so that its all nice and close. Then we looked at house prices and decided we wont be having kids for a few more years
SauRoNZA
Honorary Master
Is it just me or has property skyrocketed over the last year or so?
I cannot find a house in a semi decent area for under 1 million. [Cape Town]
Are you trying to buy in the CBD?
Northern Suburbs there is plenty in the <R800 000 range but it all depends on your expectations.
You aren't getting 3 bedrooms and a double garage that's for sure, either or maybe.
MrR
Expert Member
Prices in Northern Suburbs have inclined over the past 36 months or so.
Bought my first property 2 years ago and the sell value has already increased by 25% (actual sales on neighboring units).
If I had the money, I'd be buying up all the property I could get my hands on.
Any specific area you looking at?
Bought my first property 2 years ago and the sell value has already increased by 25% (actual sales on neighboring units).
If I had the money, I'd be buying up all the property I could get my hands on.
Any specific area you looking at?
At that price, you prbably won't get much in a decent area. You would get a lot in a crappy area.
Ecco
Honorary Master
- Joined
- Jun 4, 2007
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Is it just me or has property skyrocketed over the last year or so?
I cannot find a house in a semi decent area for under 1 million. [Cape Town]
I dont think you can buy a new decent townhouse complex for under a million these days. Never mind a house.
SauRoNZA
Honorary Master
Well it all boils down to a matter of expectation and perception and snobbery at the end of the day I guess.
Townhouse complex by design is going to be more expensive...so no you won't be getting anything for under a million there and you'll be shafted for levies while you are at it.
You can buy freestanding for R800k but again if you are expecting 6 bedrooms, 3 bathrooms and double garage in Welgemoed for that kind of money you are smoking something.
You can buy for R800k on the outskirts of Durbanville like Sonstraal Hoogte or Uitzicht for that kind of cash or the newer areas of Brackenfell like Protea Heights as well.
And if you want security complex living you can look at Buh Rein or Burgundy but then you are more than likely looking at a flat not a house.
The same options always apply...
Fancy area, low price, less space.
Less fancy area, low price, more space.
Fancy area, high price, more space.
You really can't have it all and you need to decide the compromise you are willing to take to make it happen.
Personally I like striking balance between all three in a decent enough not too pretentious area, more space free standing houses at a decent enough price.
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The biggest challenge is that a R1mil bond will be 9,000 after tax or so ( I have not calculated it just estimated ). Now you apply the rules that the bank have and soon you need to be earning a fair amount to even get that.
Then you look higher and my Flat, purchased above, cost just under R100,000 in fees before we even started.
Then you look higher and my Flat, purchased above, cost just under R100,000 in fees before we even started.
ToxicBunny
Oi! Leave me out of this...
Your estimation is a bit wrong... It's about 8000 for a mil at prime.
But yes in general house prices have started to climb again... I've already seen houses in my area in Durban going for 1.1m when they were going for 900k 3 years ago.
But yes in general house prices have started to climb again... I've already seen houses in my area in Durban going for 1.1m when they were going for 900k 3 years ago.
Stefanmuller
Expert Member
Durbanville is crazy. We live in a 3 bed 2 bath duplex in a complex in Sonstraal Heights. Rent has gone up to R7 800 this month for 2014. I have seen units advertised for sale for R1.35m. That means at least R12.5k including rates, levies and water if we want to own. And its not even a house!
Been looking to buy investment property rather. There are new developments going for R460 000 in new part of Parklands for example with rent going at R4500 with water meter and prepaid electricity. The idea is to own and use agents to guarentee rent and have the place pay itself. In 3 to 5 years refinance and buy another unit. The idea is to eventually have 5 and qualify for sec13sex tax deduction. Or just use the one or two units as saving for our baby's education. The problem is how is Parklands these days? I heard it is a bit dodge, like a small "Nigeria"? There are developments in other areas like Paarl for the same range.
Problem is we cant afford the types of properties we want to live in in the area we want to live in so instead of waiting for better days these investment properties is a way to get into the market. Check out www.igrow.co.za in Durbanville.
Been looking to buy investment property rather. There are new developments going for R460 000 in new part of Parklands for example with rent going at R4500 with water meter and prepaid electricity. The idea is to own and use agents to guarentee rent and have the place pay itself. In 3 to 5 years refinance and buy another unit. The idea is to eventually have 5 and qualify for sec13sex tax deduction. Or just use the one or two units as saving for our baby's education. The problem is how is Parklands these days? I heard it is a bit dodge, like a small "Nigeria"? There are developments in other areas like Paarl for the same range.
Problem is we cant afford the types of properties we want to live in in the area we want to live in so instead of waiting for better days these investment properties is a way to get into the market. Check out www.igrow.co.za in Durbanville.
Some links please [freestanding]
Please explain what this tax deduction entails. I'm always looking for ways to decrease tax payments.
EMAM
Honorary Master
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Been looking to buy investment property rather. There are new developments going for R460 000 in new part of Parklands for example with rent going at R4500 with water meter and prepaid electricity. The idea is to own and use agents to guarentee rent and have the place pay itself. In 3 to 5 years refinance and buy another unit. The idea is to eventually have 5 and qualify for sec13sex tax deduction. Or just use the one or two units as saving for our baby's education. The problem is how is Parklands these days? I heard it is a bit dodge, like a small "Nigeria"? There are developments in other areas like Paarl for the same range.
I would say parklands is a bit dodgy. Have you seen the new flats they have built? Was just saying to my SO the other day, when we drove past, that it looks like the cape flats - that's what the buildings look like - so now you know why they are so cheap in comparison to other areas. Not sure when last you drove through the area but think long and hard before investing in a flat there - maybe a house will be ok but they are alot more expensive.
I would say parklands is a bit dodgy. Have you seen the new flats they have built? Was just saying to my SO the other day, when we drove past, that it looks like the cape flats - that's what the buildings look like - so now you know why they are so cheap in comparison to other areas. Not sure when last you drove through the area but think long and hard before investing in a flat there - maybe a house will be ok but they are alot more expensive.
I.am.Sam
Honorary Master
so hecate dumped her BF and drew is buying a house
and there is houses in bothasig and northern suburbs for 1mil and below
and there is houses in bothasig and northern suburbs for 1mil and below
Stefanmuller
Expert Member
Basically, if you own 5 residential units that are new (bought new as first owner or from developer or erected) and you use them all for trade (renting out), you can deduct 5% of the cost each year for single title and 2,75% (cost x 55% x 5%) on sectional title. This is on top of the normal rental profit/loss and normal deductions such as interest, maintenance etc.
For the scheme to work and get the most tax benefit, you need to be in the top tax bracket, and you will need to earn at least R70 000 per month (just in order to get the bond approvals). If you want to start off with one and acquire more as you become financially able to, as soon as you have 5 units you will qualify, and deductions will be allowed for the first time in the year you have five units (deduction allowed in full, not proportionally for part of a year).
For the first 5 years or so you will have a big tax loss that you will be able to set off against your other income. From a cash flow perspective, you will break even at around year four, and from there on in, you will be making significant money, increasing every year. We have many clients who already fall in the category of R70K plus a month, who then go and buy 5 units at once, because then you can immediately get the deduction immediately. You can then use the projection to calculate your taxable income from all sources taking the sec13sex into account, and ask for a tax directive from SARS. The result is instead of paying tax @ 40% on your salary, you can now ask to be taxed monthly at 20% or whatever may be the case.
I can send you cash flow and tax saving projections examples if you like.
Stefanmuller
Expert Member
The cash flow is calculated by taking the rental income, less the expenses, less the bond installments, PLUS the tax saving. This is why the deduction is most advantageous if you are in the top tax bracket because the tax saving cash flow is @ 40%. I highly doubt that anyone under the 40% tax bracket will be able to afford 5 properties anyway, so the two go hand in hand.
I have been looking in areas like Paarl and Brackenfell and these houses are ridiculously overpriced. It doesn't even look like much. There is a house in Northern Paarl that looks very normal to me...very. It costs 1.8 mill. So yeah...I guess I'll have to continue paying off someone elses bond.
BTW, houses in Kuilsrivier seem to be cheaper.
BTW, houses in Kuilsrivier seem to be cheaper.
Stefanmuller
Expert Member
Yep, my wife is saying the same. Not keen that I am even entertaining the idea of Parklands. She told me there are lots of Nigerians there, and if you drive through the main road where most of the Flats are, they are all lying around there. It seems like the dodge areas are located around the main road and around the hign density flats. There are still other parts of Parklands that are OK. With the new Sandown road that goes past, it might boom a bit and become more popular, purely because of the impact the new improved access will be. The other thing, if you are buying to rent out, then I don't care that much because I am not going to live in it. All I want is people to rent from me. As long as there is demand for rent in the area, and you can use agents that will guarentee your rent, it might still be a good idea. Granted, the place might become more and more dodge, which might drop the prices of the property. On the other hand, if it still remains popular even though it is among Nigerians, rent is rent. It might still be popular among investors.
About 8 years ago there was also a trend of investors buying property in areas like Salt River, Mitchells Plain etc. Purely because houses there are cheap, you get three bed places for the price of a flat in other areas. But rent is fairly high, because the more affluent people in those areas have a rent mentality, rather than a buy to own mentality. So your shortfall between rent and bond payment is negligible or even more. You do have the risk of tenants defaulting, but there is also options of using estate agents and partly guarenteeing your rent for a fee of 4% or so. Capital appreciation might be a bit lower, but that is not really the point of buying, rather the point was owning property that costs you nothing. Any capital appreciation, which there will be, is on top of that.