and investments . This provides you with a complete overview of your financial situation on a daily basis .
Mobile2Budget is another mobile application , available for download , that allows you to set up a predefined budget for capturing daily expenses . Like 22Seven , the app allows you to set budget categories and goals for monthly expenses . It then alerts you when you ’ ve overspent . This allows you to track your spending decisions so you know when to start pulling back and slowing down to stretch your budget to cover the month . In addition to the monthly email updates , a Mobile2Budget Personal Trainer is appointed to each user , to help them , amongst others , identify and address their most expensive debt , and plan together to reduce their overall debt and increase their affordability rating .
5Save for a deposit
Buyers and investors who can afford to put a deposit down on a property will have more negotiating power with lenders , as well as more access to financing options . An upfront deposit will guarantee you a better interest rate , which will save you considerable amounts over the term of your bond . If you apply for a 100 % bond , you will receive a higher ‒ risk adjusted rate . The bottom line is that banks consider applicants to be lower risk if they can demonstrate an ability to save .
An upfront deposit on a property also gives estate agents and sellers confidence in your ability to get a bond approved , as you won ’ t have to wait to raise an 100 % bond .
Prequalification with a bond originator will let you know what price property you can afford and how much of a deposit you will need for a property in your price range .
DOING THE MATH :
FLISP subsidy : R20 000.00 Bond : R500 000.00 Cost savings on bond repayments : +/ -R100 000.00 Time Savings : from 20 years in bond repayments down to almost 18 years
FLISP subsidy : 40 000.00 Bond : R400 000.00 Cost savings on bond repayments : +/ - R170 000.00 Time Savings : from 20 years in bond repayments down to almost 15 and a half years
FIRST TIME INVESTORS - THE DIFFERENCE
While the process for a first-time home buyer and first time investor follow similar paths , the difference comes in four main areas that drive the real estate investor :
• Ability to source the best property returns
• Ability to become the best buyer
• Ability to get the best finance
• Ability to manage the property efficiently
Achieving the best property returns – look at the numbers We advocate investors buying rental properties in markets that have attractive rent-to-value ratios , where the primary goal is positive cash flow and not capital gain , which is more speculative and risky . Investors invest for cash flow , equity , appreciation , adaptability of property or for tax benefits .
Becoming the best buyer – find properties with problems Become the best buyer by buying a problem that the current owners don ’ t want to fix . Your ability to buy a property like this , with cash , and the ability to finance a property quickly can set you apart from the pack . Make sure you have great credit and access to finance or an investor who can co-invest .
Get the best finance deal – get good partners Investors avoid unnecessary expenses by putting down the least deposit possible , with the best interest rates , and by using longterm financing with banks or lenders to maximize leverage of their purchasing power .
Another great way an investor can save is to avoid paying transfer duties from existing properties , which can eat into your budget . The transfer duty threshold in South Africa has just been adjusted from R750 000 to R900 000 , which is good news for first time buyers and investors wanting to get a foot onto the property ladder .
Manage the property effectively – maximizing the lease The fundamental difference between a first time homebuyer and an investor is that the investors buy to rent out the property while the homebuyer lives in the property . For the investor , this means having the ability to manage the property effectively and generating enough cash flow to cover all expenses . Here , the tenant essentially pays down the debt of the property not you and is detailed in the lease .
RESOURCES
Credit Bureau , My Bond Fitness , Finweek , Ooba , Absa Home Loans , FLISP . co . za ,
Consumer Housing Education , Debt Busters .
www . reimag . co . za MARCH 2017 SA Real Estate Investor 23