Step 2 : Affordability & Personal Finance
5
One
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 .
6
As
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
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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