Real Estate Investor August 2022 | Page 86

PROPERTY INTELLIGENCE
At this level , you should try to put down a deposit of R500 000 and gear the balance by way of a rental of at least R6 000 per month . If your rent just covers your costs - or is slightly lower than your costs - then you will enjoy the tax benefit . Essentially , you now own an asset valued at R1 million , but you have only had to pay R500 000 for it . Remember however , that you need to be able to cover mortgage repayments , building insurance premiums , and any necessary maintenance and if relevant , a letting agent ’ s fees .
In time , your rent will escalate and if you are able to pay in an extra amount of say R1 000 to R2 000 per month on your bond , you will very quickly reach a position that will enable you to leverage this asset and use this access facility to enable you to acquire your second sectional title unit . If you have been ‘ overpaying ’ on your bond each month , you will then be able to utilise this access facility to put down a deposit on your next apartment and then secure a tenant to pay your bond instalment on your second property .
By applying this strategy , after an initial investment of R500 000 you may be able to acquire two or three units each valued at R1 million – R2 million over a few years and suddenly you own an asset base of several million rand . As a small investor this is the best way to get started as your risk is minimal , your borrowing
86 AUGUST 2022 SA Real Estate Investor Magazine