qualify for , get an expert to get your preapproval started and once you have that , you can start the hunt for your perfect investment property with ease .
When looking for a property , consider the type of property you would like to invest in . Do the necessary research to determine the rental demand as well as the areas where you could potentially invest in .
Step 2 : Finding the Perfect Investment Property
Location is key when buying an investment property . Do some research on the areas you are considering and determine whether the area adds value to your property .
Consider the Following :
• Market value of the entire area
• How much buying / selling activity there is in the area
• How long properties are listed for before they are bought / sold
• Proximity to schools , CBD , shopping |
centres , and |
all |
other |
necessary |
amenities |
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• The demographic as well as the income bracket that is dominant in the area ( this is an important factor as it will determine the type of tenant you will attract e . g . young professionals , small families , students etc ).
• Rental demand in the area , once you have decided on the area where you will be buying , you will need to compare the prices of different properties to establish the best fit for you .
Step 3 : Consider all the Cost Buying a property as an investment or as a residence costs a substantial amount of money . Yes , it ’ s an asset that will yield long-term returns , but the initial costs can be overwhelming . It ’ s imperative that you are aware of these costs throughout the buying process .
Once off Costs :
• Deposit ( will not always be necessary )
• Bond costs , transfer costs , initiation costs , possible levy deposit if you purchase a sectional title unit
• Capital Gains Tax *
• Municipal rates
* Capital Gains Tax ( CGT ) is a tax levied on profit from the sale of property . This means that when you sell your investment property , the government will tax you on the profit you have made on that sale .
Regular Monthly Costs :
• Repayment of home loan
• Insurance on the property
• Life insurance to cover the bond
• Monthly levies if it ' s a sectional title property
• Rates and taxes
• Electricity and water ( usually charged to the tenant but if the property is vacant , you will have to foot the bill ).
• Maintaining the residence
• Repairing damages to the property
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 .
SOURCES Betterbond , GreefProperties SA Real Estate Investor Magazine APRIL 2021 23