Should I keep my property or sell it

F

Frisket77

New Member
Joined
May 28, 2015
Messages
3
Reaction score
0
Hi all.

I need your opinions/advice.
So as the title describes, I bought my first and only property (flat in a complex) almost exactly 3 years ago in jhb, I've had a tenant paying the bond the entire time. She's informed me that she won't be renewing her lease when it expires in a few months.
I bought the property for R720k and at the moment have an outstanding amount of R635k on my bond.
I spoke to some agents recently and they told me I could comfortably sell the property for R950k, Which would leave me with a nice chunk of cash.

if I sold it I'd reinvest in more property but I can't decide if I should hold onto it or not.
What should my next move be?


Any feedback would be appreciated.

Thanks in advance.

FYI: Im currently renting in Cape Town.
 
Well you're currently renting, so personally I would sell and buy myself a place in CT
 
Sell that one and put a deposit on two new one's, one for you and the other you rent out.
 
Two points:

  • You will rarely obtain the price that the agents quote; and
  • Did the estate agents quote R950K before or after their commission was deducted ?
 
I would say hold it. The tenant seems to be paying the entire bond which is unusual. Bear in mind that you'll attract a bunch of expenses and fees if you sell it (capital gains because it isn't your primary residence, for example). If you buy another place after selling it you'll no doubt encounter even more fees (transfer duty, legal/conveyancing fees, bank costs, utility fees, etc.)

Will you really be able to get a better return after all those expenses than if you were to just hold onto it and diversity your investments into other asset classes, like shares?
 
A less desirable unit in the same complex sold for 900k recently and they are pretty sought after. It was a 1st floor unit and needed some attention. Mine is ground floor and has a garden.

I know I'll take a knock with all the fees. But I see that as an unavoidable expense.

I'd like to live in a property that I own but don't want to make a bad call by selling this unit considering its current status.
 
So as the title describes, I bought my first and only property ...
Click to expand...

i like do go after the maths - just hope it shows something

Costs(all are very rough estimates)
Transf fee's 35k
levies 800* 36 = 28.8k
selling now you will pay some more fee's - maybe 15k
agents comission( lets say 4%/38k)
cape town rent 266k
jhb bond 266k
total 648.8

income
266k on rent
and difference between current bond and sell after fee's : 912k minus 635k = 277k
total 543

******current loss: -105k****



5 years forward(house value 1.5m at current growth)
Costs(all are very rough estimates)
Transf fee's 35k
levies 77k
selling you will pay some more fee's - maybe 15k
agents comission( lets say 4%/60k)
cape town rent 710k
jhb bond 710k

total 1607k


income
about 710k on rent
and difference between current bond and sell after fee's : 1.4bar minus 295k = 1140k
total 1850k


****8 years profit 243k*****




Looks like it will work -as long as the CPT and JHB rent increases are kept the same. Levies/taxes is another bugger.
Property value has to keep going up at +-10%, which i'm not sure is realistic.
 
Historic costs are have little relevance to your decision other than possibly being indicators of future expectations.

Your decision should be based on your expectations of capital growth of the property in question as well as potential net rental income going forward if you do not sell. Against that you need to consider how you would apply the funds released by selling and what impact on your future costs should you decide to buy a property for own use or alternatively what expected growth and income on an alternative investment property. By quantifying these options you should be able to decide on the best option.
 
Not sure about growth rate.. It's flattening slowly hence sellers trying to cash in
 
Never sell a property unless you have to or it's costing you money. Are there high maintenance costs projected in the near future ie painting carpets fittings etc.
 
Never sell property that pays itself off. In 17 years property will be paid-off and you would get R7000 in today's money.

Property is long term investment and 3 years are not long term.

Many people go and buy property that think is investment when in fact it cost them money. Your property does not cost you money and you will start to generate income soon. Longer you keep property bigger monthly income you will generate.

When it comes to property, at least for me, all boils down to income. Find property that pays all cost and put few rand in your pocket. Buy as many of those as you can.
Retire.

Hope this helps
 
I would not sell... You are in the property game with your first rental. There are good examples thus far in the thread that clearly illustrate that moving in and out of the market over short periods helps the government with taxes and the realities with commissions.... You lose unfortunately.

You should find a reasonable property management outlet that can match / find another renter. When you have built enough Equity in the property use it to reinvest into another rental.
 
You must log in or register to reply here.
Back
Top
Sign up to the MyBroadband newsletter
X