Real Estate Investor Magazine South Africa May 2013 | Page 8

INBOX Interest Rates Dr Andrew Golding Pam Golding Properties www.pamgolding.co.za Q Jeanne van Jaarsveldt Asks: Holiday Property Investing In Property Neale Petersen South African Real Estate Investor Mag www.reimag.co.za Q Caj van Zyl Asks: JP Farinha Property 24 www.property24.co.za Q Conti Maletsiri Asks: How long can we expect rates to remain unchanged, as we are seeing good recovery, 5% year-on-year growth for 2012? Are stable rates vital for sustainable recovery? Is it better to buy or rent holiday property for accommodation which will only be used for only a few times in the year? Do they make good investment sense? I would like to start investing in property but I am not sure where I should start. What are the first steps I should take to become a serious property investor? A A A Dr Andrew Golding Replies: Neale Petersen Replies: With interest rates at historic lows, the fact is that consumers remain beset by rising energy, fuel, food and other costs as well as increased municipal tariffs - all of which contribute to inflationary pressures and are of concern to the general economic outlook. There are different reasons for investing in a second property. Is it for an investment option or just lifestyle? Is it solely for your use or should you rent it out for a few months? These are the logical questions but here are some of the things you should consider. This is seen against the backdrop of a somewhat volatile global economy. Although South Africa’s economy remains resilient, it is naturally subject to international impacts, whether positive or negative. Most people believe in investing in a holiday property will one day be their retirement nest egg. Others believe that the property will bring good returns. If you end up renting it out in the off season or when you are not there, you will certainly struggle to find tenants and there is also the cost of wear and tear to furniture. Rental incomes during peak times can generate short-term high returns but you will have to evaluate if it can generate enough to cover for the year. While market commentators appear to be indicating that a rise in the interest rate may be anticipated in 2013, the Monetary Policy Committee is held every two months in order to take cognisance of changing economic factors and conditions which ultimately result in the final decision regarding the repo rate. Having said that, the general consensus seems to be that the interest rate will inevitably resume an upward trend - making sound investment in solid bricks and mortar, ie property, all the more compelling. It is a known fact that all the major cities yield higher investment returns than holiday destinations. However there are certain towns that achieve high capital growth, notably towns with high tourist appeal. The best value for money available at present in holiday properties is in bank-assisted sales. JP Farinha Replies: There are many ideas and expert tips on making a sound property investment. And while these may all be correct, what lies at the heart of them all is knowledge and research. Making a good investment and being able to discern a good opportunity from a bad one, is only possible if all the relevant details are known and understood. With this in mind, the best advice is to research. Ask for advice from an experienced estate agent, and take advantage of the wealth of information made available through technology. Research cities and suburbs online. For an investment property, ask yourself questions when investigating. Can it offer [?B?H?X?\??\?H?]\??[??[?[?Y??[??][??\?H?YYY ?[H[??\?Y[?[[X][H?B???]X?K[??X\?[??H??\?x?&\??[YK??\?\?HH?\????\??\][\?][??\?H\?XB?Z?[H?\?X?X]H[??[YH?]X[?H\?\?X?B?[Y[?]Y\?[????H??[Z]O[???]\??X\?[?Z[?]?^Z[????\?H\?H??]\?H[??\?Y[? [????][?????H\???[?]H?\]Z\?\?]Y[??K???XZ?HH[???[?\?[??\?Y[? ?[??[?\??Y]??????[?H]?HH??\?H]Y\?[?[?H??[Z?H[???\?Y?H?\?^\????Y?????]?T??HVT?????˜?Z[XY????H?[XZ[Y]?X[?Z[XY????B????X^H ? L??H?X[\?]H[??\??????˜?Z[XY????B??