What should I consider when purchasing a property to let?

N

NimblrFuture

Member
Joined
Jan 24, 2021
Messages
23
Reaction score
3
Hi all

I am looking to buy an investment property to let in CT and I was wondering what are the different considerations for a prospective investor?
Besides rent yield and capital appreciation, what are the other important considerations?

Thank you in advance!
 
Residential or business property?

SA property capital growth has been basically flat for the past 10 years and will most likely be the same for the foreseeable future. Unless you buy property in a current run down area for next to nothing and said area is thereafter rejuvenated to become the next Sandton, don't count to much on capital appreciation.

Then rental returns in SA as percentage of cost of the property in SA is also less than 5%. That is before expenses such as municipal rates and taxes, maintenance etc.

Anyway, the articles below should give you all the answers you are looking for:

www.moneyweb.co.za

What is the real return of your investment property?

Do your research so you can make an informed decision.
www.moneyweb.co.za www.moneyweb.co.za

www.globalpropertyguide.com

Signs of improvement after 5 year depression

A look at real estate investment in South Africa from the perspective of property income, taxes and South African investment prospects
www.globalpropertyguide.com
 
Before I buy more property, I always ask myself this : If it stands empty for 12 to 24 months, can I still afford it :)

Residential is easier than commercial. Do things yourself, why pay someone for taking 10% who just calls you with issues. Alot of guys always see the bad (con's), but there are pro's too.

The biggest thing for alot of people : TIME. If you don't have time, don't do it.

Nothing just falls on your lap (be pro-active and make it your hobby)
 
Last edited:
I had a rental property for about 8 years in the Jhb area. Rough calcs put the growth of any funds I put into it at about 10% after I sold it.

Before doing your calcs, decide whether you want to use a rental agent, and find out what they charge. I ended up not using one, as the ones I tried were useless. My ad in Private Property did in 2 days what they couldn't do in 2 months.
 
saturnz said:
the financial advantages only works with a bond, so take one out and take as long as possible to pay it off
Click to expand...
What exactly are the financial advantages of a bond? I'm just aware of the leveraging benefit of a bond.
 
Affieplaas said:
Residential or business property?

SA property capital growth has been basically flat for the past 10 years and will most likely be the same for the foreseeable future. Unless you buy property in a current run down area for next to nothing and said area is thereafter rejuvenated to become the next Sandton, don't count to much on capital appreciation.

Then rental returns in SA as percentage of cost of the property in SA is also less than 5%. That is before expenses such as municipal rates and taxes, maintenance etc.

Anyway, the articles below should give you all the answers you are looking for:

www.moneyweb.co.za

What is the real return of your investment property?

Do your research so you can make an informed decision.
www.moneyweb.co.za www.moneyweb.co.za

www.globalpropertyguide.com

Signs of improvement after 5 year depression

A look at real estate investment in South Africa from the perspective of property income, taxes and South African investment prospects
www.globalpropertyguide.com
Click to expand...
I'm looking mainly for residential property, and would ideally like the property to pay itself off in the long run but not sure what indicators will indicate this for me
 
zerocool2009 said:
Before I buy more property, I always ask myself this : If it stands empty for 12 to 24 months, can I still afford it :)

Residential is easier than commercial. Do things yourself, why pay someone for taking 10% who just calls you with issues. Alot of guys always see the bad (con's), but there are pro's too.

The biggest thing for alot of people : TIME. If you don't have time, don't do it.

Nothing just falls on your lap (be pro-active and make it your hobby)
Click to expand...
I understand that rent void is a massive risk for real estate investors - is there a specific way that you estimate this probability for each property you're prospecting?

In terms on time required for investing, to what extent can one reduce this by hiring a property manager who handles all the issues related to the investment?
 
NimblrFuture said:
What exactly are the financial advantages of a bond? I'm just aware of the leveraging benefit of a bond.
Click to expand...

the leveraging aspect is the biggest, you are not going to make reasonable returns from a rental property any other way

but the other part to the equation is the tax advantages, many landlords ran (maybe still do) run tax losses, but SARS has squeezed the lemon here too
 
NimblrFuture said:
What exactly are the financial advantages of a bond? I'm just aware of the leveraging benefit of a bond.
Click to expand...

The only real advantage is the fact that you can deduct the interest paid on the bond from your rental income.

On the flip side, if you finance a R1m property over 20 years at 10% interest you will pay R1,316,000 in interest so the property would have cost you R2,316,000.
 
Affieplaas said:
The only real advantage is the fact that you can deduct the interest paid on the bond from your rental income.

On the flip side, if you finance a R1m property over 20 years at 10% interest you will pay R1,316,000 in interest so the property would have cost you R2,316,000.
Click to expand...

no the property would not cost R2.3m to the owner, you have to deduct the rental payments
 
NimblrFuture said:
Would a good screening process suffice to minimize some of the risks?
Click to expand...

you have rental insurance products which also protect your rental income

but yes good vetting will protect you to a large extent
 
Considering running a million miles away and don't come back!

Biggest nightmare of my life was renting our property. And I've had some pretty bad nightmares..
 
saturnz said:
no the property would not cost R2.3m to the owner, you have to deduct the rental payments
Click to expand...
Well that is what you would have paid to the bank.

You can calculate the actual cost of the property any way you like. Just remember that if you want to deduct the rental earnings, you must also add the rates and taxes, maintenance and other costs to get an accurate view. That is in addition to the bond registration cost, transfer duties and legal fees.
 
Read this thread. All of it. :

Your tenant / squatter nightmare stories ?

Just wondering what your nightmare stories are ? My girlfriend has rented out her place 01 January 2020 - 31 December 2020 and the tenant stopped paying rent in April due to Covid. But some of the nightmare points : - Employer confirms she had been receiving full rent until September - so was...
mybroadband.co.za mybroadband.co.za
 
Affieplaas said:
Well that is what you would have paid to the bank.

You can calculate the actual cost of the property any way you like. Just remember that if you want to deduct the rental earnings, you must also add the rates and taxes, maintenance and other costs to get an accurate view. That is in addition to the bond registration cost, transfer duties and legal fees.
Click to expand...

yes, sure, I did this calculation on a speadsheet a few years ago on this forum, return on actual investment (like your own money) came to 900% over 20 years
 
You must log in or register to reply here.
Back
Top
Sign up to the MyBroadband newsletter
X