Real Estate Investor Magazine South Africa November 2016 | Page 20

FINDING

Choosing the right

Investment Property

Ownership control and the bank’s opinion
BY GERT VAN STADEN

S

electing the right investment properties is
fundamental to the success of your property
investment success. If you choose the right
property, you can be almost assured that you will
enjoy good capital growth for many years, and that
the property will rarely - if ever - be vacant, which
will practically guarantee your property investment
success.
For this reason, our P3 Investment Group members
use the 10-point P3 Scorecard to evaluate each
potential investment property before making an
investment decision. Among these crucial factors
are ownership control and the bank’s opinion of the
investment.

them additional protection against a poor investment
decision that could place their entire property
investment business at risk. In complying with the
banks’ stringent criteria in terms of the valuation of
the property, its affordability and acceptable security,
P3 investors ensure that their cash flow can indeed
support the repayment of the loan and that the value
of the property – as the security for the loan – will in
fact cover the outstanding loan should they default or
sell.
Don’t miss the next article in which we will look
at the easiest way to ensure you select the right
investment property every time.

Ownership Control

While acquiring a full title investment property
provides the investor with full control of the property
to subdivide, extend, renovate and remodel to improve
its rental, there are several benefits to property
investors when purchasing a unit in a well-managed
sectional title development. For example, the cost of
maintenance of amenities and the common areas of
the development is shared by all the owners via a levy,
often making it more affordable than carrying the
full responsibility and costs of maintaining a full title
property. Furthermore, many tenants prefer the safety
of a sectional title complex, as well as the common
amenities, such as a swimming pool, which they can
enjoy but are not responsible for maintaining.

Bank valuation

Professional property investors appreciate the fact that
the banks’ strict valuation and lending criteria afford
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NOVEMBER 2016 SA Real Estate Investor

P3’S 10 SCORECARD VARIABLES
1 Price
2 Rental income
3 Break-even
4 Condition of the property
5 Vacancy
6 Area
7 Levies and taxes
8 Affordability
9 Control
10 Bank valuation

RESOURCES
P3 Investment Group
http://p3propertyinvestments.co.za
www.reimag.co.za