Renting vs Buying ; House vs Complex

[dyllindd]

Hi Everyone,

I am currently considering purchasing my first property. Have been renting for close to 3 years.

I currently rent a 2 bedroom in Morningside. My brother (student) stays with me and my mother had to move in with us in July last year due to a Covid related retrenchment. She has started working again from this month.

Would you consider a first purchase in a complex or buying a similar priced house. Around the area, a 3-bedroom townhouse would sell for about R1.7m. Looking at Blairgowrie (where I grew up) I could buy an older 3-bedroom house for that price.

Things to consider:

• I work for a bank so I could get a preferential rate on the bond.
• Current rental is R8500pm (includes electricity).
• Current levies R2500 (includes water and building insurance).
• Current complex only has one garage. Most complexes in the area only have shade netting. This would also increase my monthly car insurance premium.
• Currently 3 adults sharing a 2 bedroom townhouse. (A bit cramped).
• DIY is not a problem for me so would be able to fix the smaller issues on an older house.
• Already have all the gardening and outdoor equipment to maintain a yard - currently in a storage unit due to lack of space for it in our current complex, however levies do include the lawn being mowed on a weekly basis.
• I would need to pay electricity, water, building insurance and property tax in addition to the bond amount.

Any advice would be appreciated (especially on things I haven't considered).

Thank you in advance!

 

[Scooby_Doo]

If you had to rent a similar property to the one that you are looking at. How much would you be paying?

Also, do the math on the bond at 9% prime and not the current low, its going to go up at some point.

 

[Nerfherder]

Its a good time to get a bond because the rates are so low and there are loads of houses on the market.

Make sure its the right house for you though.

 

[Nerfherder]

If you had to rent a similar property to the one that you are looking at. How much would you be paying?

Also, do the math on the bond at 9% prime and not the current low, its going to go up at some point.

Not for a while and if it starts going up you can ask to fix it.
It will be a good couple of years at this rate and lower.

 

[Scooby_Doo]

You do not know that.

The exercise is to determine what your finances will look like in the event of a rise. If you max out your affordability now and leave no head room, you are asking for unnecessary stress.

Not for a while and if it starts going up you can ask to fix it.
It will be a good couple of years at this rate and lower.

 

[Nerfherder]

You do not know that.

The exercise is to determine what your finances will look like in the event of a rise. If you max out your affordability now and leave no head room, you are asking for unnecessary stress.

Yes, that does go without saying - with a low interest rate you should allow for some breathing space.

What I meant to say is that in addition to the rates being low the banks are offering good rates as well. ie relative to prime lending. So its still a really good time to invest.

 

[Speedster]

Hi Everyone,

I am currently considering purchasing my first property. Have been renting for close to 3 years.

I currently rent a 2 bedroom in Morningside. My brother (student) stays with me and my mother had to move in with us in July last year due to a Covid related retrenchment. She has started working again from this month.

Would you consider a first purchase in a complex or buying a similar priced house. Around the area, a 3-bedroom townhouse would sell for about R1.7m. Looking at Blairgowrie (where I grew up) I could buy an older 3-bedroom house for that price.

Things to consider:

• I work for a bank so I could get a preferential rate on the bond.
• Current rental is R8500pm (includes electricity).
• Current levies R2500 (includes water and building insurance).
• Current complex only has one garage. Most complexes in the area only have shade netting. This would also increase my monthly car insurance premium.
• Currently 3 adults sharing a 2 bedroom townhouse. (A bit cramped).
• DIY is not a problem for me so would be able to fix the smaller issues on an older house.
• Already have all the gardening and outdoor equipment to maintain a yard - currently in a storage unit due to lack of space for it in our current complex, however levies do include the lawn being mowed on a weekly basis.
• I would need to pay electricity, water, building insurance and property tax in addition to the bond amount.

Any advice would be appreciated (especially on things I haven't considered).

Thank you in advance!

If it was me I'd look at buying the house, bit that is my personal preference.

Do remember that while rental costs increase annually, if you buy your bond repayment is basically fixed for the next 2 decades. Yes, interest rates change a bit and obviously the running costs increase but the bulk is pretty much stationary for the duration of the loan.

 

[Scooby_Doo]

Yes, that does go without saying - with a low interest rate you should allow for some breathing space.

What I meant to say is that in addition to the rates being low the banks are offering good rates as well. ie relative to prime lending. So its still a really good time to invest.

Fair,

But i doubt most people buying in now are thinking about anything but the low rates. Hence why I suggested to plan for what the average rate is likely to be over 20 years.

Anyway I am more interested to know what you can rent the same place for, I guess is that you can still rent for cheaper than owning the same property including all taxes and levies.

 

[Speedster]

Fair,

But i doubt most people buying in now are thinking about anything but the low rates. Hence why I suggested to plan for what the average rate is likely to be over 20 years.

Anyway I am more interested to know what you can rent the same place for, I guess is that you can still rent for cheaper than owning the same property including all taxes and levies.

See my post above about renting vs buying.

 

[Scooby_Doo]

See my post above about renting vs buying.

Yup,

FYI, my rent has not increased in 3 years.

 

[Toxxyc]

Buy a house. Get out from under a bodycorp. That's my opinion and I'm REALLY glad I didn't end up buying a place where I don't even have a say about the colour of my roof tiles.

 

[Nerfherder]

Fair,

But i doubt most people buying in now are thinking about anything but the low rates. Hence why I suggested to plan for what the average rate is likely to be over 20 years.

Anyway I am more interested to know what you can rent the same place for, I guess is that you can still rent for cheaper than owning the same property including all taxes and levies.

So I actually am... I'm trying to move to a bigger house and with the current interest rate I'm paying I'll actually save money getting a new bond.

That said... the big factor here is covid deaths, emigration and unemployment. So there are plenty of houses coming on the market and for some reason less rentals.
From what I can see people are dumping their rental properties because of the last year.

There is a weird knock on thing that because so many houses are on the market there are less rentals and then because there are fewer places to rent and cheaper houses people are buying... so less demand for rentals.

I have been in the market for a new house for 2 years and I have seen a swing in the reason for selling from emigration to now death or no tennant.

Interesting times.

 

[dyllindd]

If you had to rent a similar property to the one that you are looking at. How much would you be paying?

Also, do the math on the bond at 9% prime and not the current low, its going to go up at some point.

Avg rent in the area is about R9500 and most complexes does not include water or electricity in the price. (Based on other properties I've looked at renting in the past).

 

[dyllindd]

Its a good time to get a bond because the rates are so low and there are loads of houses on the market.

Make sure its the right house for you though.

Agree on the low rates but also not planning on it staying low forever. As bank staff I can get a bond currently at approx 5.0%. To build in some wiggle room I would see what I can afford comfortably on 7% over 20 years.

 

[L-Dog]

Do the math if the property you want to buy has buy has a similar monthly installment as your rent buy although also consider rates & taxes, levies, electricity etc. Have a few mates working for a bank so you should probably get prime -2 so buying is definitely the best option in my opinion unless you plan on leaving the country soon.

 

[Scooby_Doo]

Avg rent in the area is about R9500 and most complexes does not include water or electricity in the price. (Based on other properties I've looked at renting in the past).

I understand the average rent, but what I am asking is for a specific home, what is the rent for that. In essence I am trying to understand what it would cost to rent home that is the same as the one you want to purchase.

There is no use in saying the average rent for the area is x if it include all manner of different types of property.

But if we use the R9500 as rent, then you will be paying R13 567 for a bond on R1.75 million.

Edit,

Also you would be in for a transfer fee of R100k.

 

[dyllindd]

Buy a house. Get out from under a bodycorp. That's my opinion and I'm REALLY glad I didn't end up buying a place where I don't even have a say about the colour of my roof tiles.

I agree. I like to make changes on a property to make it a home for myself. Additionally, parking is always a nightmare in complexes. We have 1 garage and 3 cars. (3 employed adults).

Body corporate head is at our door frequently complaining about the parking situation. He moaned about my mom's car and brother's car both being under the residents carport parking. We moved my brother's car to the total back-end of the complex's visitors parking. Got crapped on for that as well even though that parking is never full.

I wanted to put up a small Karcher PVC shed in my backyard for my gardening tool. Got declined by the Body Corporate noting it as an unsightly fixture.

I am in all honesty fed up with Body Corporates.

 

[dyllindd]

Do the math if the property you want to buy has buy has a similar monthly installment as your rent buy although also consider rates & taxes, levies, electricity etc. Have a few mates working for a bank so you should probably get prime -2 so buying is definitely the best option in my opinion unless you plan on leaving the country soon.

Not planning on leaving the country soon .
TBH regardless of buying or renting a 3 bedroom, it will be more expensive.At this point in time it is kind of picking my own poison in terms of needing to pay all utilities and maintenance myself in return for not being ruled by a body corporate.

 

[dyllindd]

So I actually am... I'm trying to move to a bigger house and with the current interest rate I'm paying I'll actually save money getting a new bond.

That said... the big factor here is covid deaths, emigration and unemployment. So there are plenty of houses coming on the market and for some reason less rentals.
From what I can see people are dumping their rental properties because of the last year.

There is a weird knock on thing that because so many houses are on the market there are less rentals and then because there are fewer places to rent and cheaper houses people are buying... so less demand for rentals.

I have been in the market for a new house for 2 years and I have seen a swing in the reason for selling from emigration to now death or no tennant.

Interesting times.

I have noticed similar trends. However some areas' property values never seem to decline. Also want to buy something that I'd be happy in for at least the next 10 years. Have enough saved to pay the bond registration, transfer and attorney fees in cash.

 

[cguy]

Should you end up renting out the property while moving on: Not sure about SA, but where I live, property managers charge around 50% more to manage something in a complex. The reasons being that they need to work through the rules and such for everything from move-ins/outs to pet rules, and also deal with complaints via the body corporate, etc.

Still in complexes the the advantage is that the owner only has to deal with unit interior and has very low maintenance involvement externally. I have found this to suit me well when I’ve moved (I just leave and rent out, without dealing with selling, or external maintenance).