First-Time Investors Guide 2020 2020 - Page 20

Step 2 : Affordability & Personal Finance


Protect the income that you have
of the things that the bank will ask for is information regarding the insurance that you currently have in place . As you are reliant on one income only , it is very important to get income protection insurance to ensure that should something happen , you can continue to service the loan .


Longevity is the key to success
far as lenders are concerned , the longer that you have been in your job , the better . If you have been in and out of jobs . Greeff says wait until you have locked down your dream job .
Purchasing property always comes with a few challenges that homeowners , whether single or married , that you will have to work around . However , owning your own home has countless , long-term benefits and that makes everything worth it .
Preparation is the key to success when buying a home on a single income . Work through the tips above , and you ’ ll put yourself in the best position possible to become a homeowner .
Sources Greeff Christie ’ s International Real Estate , BetterBond
Step 4: Acquiring your Property 4 Step 4: Acquiring your Property Offer to purchase (OTP) You’ve found the perfect property to invest in – congratulations! Now it’s time to put pen to paper and sign your OTP. An OTP is an agreement that covers the terms and conditions of the property transaction. Everything that is agreed upon between the buyer and the seller must be included in the offer. The Offer to Purchase will include but is not limited to: The purchase price that has been agreed upon Any conditions of sale The deposit payable (if there is one) Fixtures and fittings that are part of the sales agreement e.g. fireplace, air-conditioning units, satellite dish, carports etc. That the seller declares that to the best of his knowledge, the house is structurally sound and fit for occupation Approved house plans, if available If the building or property was recently built, a copy of the NHBRC certificate and an occupation certificate may need to be provided A copy of the electrical compliance certificate. Compliance in respect of electricity, gas and electric fencing must be adhered to. Any special conditions as agreed upon by seller & buyer. The occupation date of the property once registered or the proposed occupation date with an agreed upon occupational rental. The property market has stood the test of time and has survived Depressions and recessions. You can be sure that your property investment will yield great rewards and in the long run prove to be an excellent return on investment. The Art of Writing an OTP Offer to Purchase - Friend or Foe? Nobody should make expensive mistakes and nobody should end up paying for a house that they never end up buying. Seems fair right? But you would be surprised by how many horror stories I have come across in my life as a property coach. From people that ended up having to pay expensive agents commissions on deals that never materialized. How is this possible? Reality is that, like it or not, a signed Offer to Purchase (OTP) means serious business and one should never present an OTP without the understanding that an OTP is a legally binding document that gives the purchaser very specific rights and obligations. These obligations can include paying agents commissions irrespective of the sale ending up being registered or not in the Deeds Office, in specific but not infrequent circumstances. So as a First Time Buyer, I have some simple but powerful hacks so that you can avoid expensive mistakes: Invest in a professional inspection Voetstoots is out, professional inspection is in. Unexpected repairs, latent defects, structural issues, shoddy electrical installations, leaking plumbing are the sorts of realities you are likely to encounter with many properties. Don’t rely on agents and sellers’ promises or even written declarations. This not a time and a place for “DIY”. Engage the services of a professional property inspector. This is guaranteed to be your best investment in avoiding expensive surprises. South Africa has a highly competitive banking and lending industry. Why not making the most of it? When you apply directly to your bank simply as a matter of convenience, or because your bank or private banker told you that you are already pre-approved by them, can quite possibly cost you a ton of money. Why? Simply because you have not created competition between banks for your business. The more competition, the lower your interest rate. They need you as much as you need them. Appoint your own bond broker A bond broker that is appointed by you works for you and for your benefit. A bond broker that is appointed by the same agent that works for the seller and gets paid by the seller for a lucrative commission, well…you tell me who they are more focused to help. Sometimes a bond broker needs that little extra time to get you the best deal. Don’t give up control of this process. Don’t renovate until date of transfer When you have bought a property and you want to do some upgrades, the temptation can creep in to take shortcuts and start some of the work as soon as your bond has been approved. After all nothing can go wrong from here, right? Think again. Keep a copy of the signed OTP - just in case At no point in time, not even for a second, should you be without a copy of the Offer to Purchase that you have signed with you. Either in a safe electronic or physical format. There are many reasons why a deal can collapse even after you have done everything you were supposed to do. In this case you are very likely to lose all the money you spent on renovations and upgrades. Patience is a virtue. You have waited long for the house of your dreams, don’t turn it into a nightmare Do not sign and trust anybody to tell you that they will scan it for you. You have just signed a legally binding document and you have the right to have a copy for you and the duty to ask for it to avoid nasty surprises Property remains the most proven way to build wealth and cash flow for you, your family and generations to come. But only when done right. “If you think education is expensive, try ignorance” – Derek Bok. Give a clear & short deadline to your offer All offers should clearly state the date and time by which such offer simply lapses, i.e. is no longer of any legal validity. Savvy property investors rarely afford more than 24 hours for the validity of their offers and you should consider using the same principle and time-frame as a first-time buyer. 20 FIRST-TIME INVESTOR Never apply for a bond directly with your bank Carlo Mariani Carlo Mariani, founder of ThePropertyCoach is an experienced property investor, entrepreneur and educator with a track record of more than 17 years in South Africa and overseas. His passion for making people succeed in their property journey inspires everything he does. FIRST-TIME INVESTOR 21