Step 4: Finding Your First Property
Looking for a property to live in and finding your first investment property doesn’ t involve the exact same process or mindset. A first-time homebuyer will have different property requirements to those of a first-time property investor. Buying a home is a lifestyle decision, very much based on you and your family’ s long-term needs. Unless you have a flatlet or room on the property you plan to rent out, a home purchase won’ t necessarily be an income generator either.
An investment purchase, however, is a calculated decision around generating passive income streams through various buy-to-let, multi-let, buy-to-flip or development strategies. The following symbols will be used throughout this article to indicate which piece of advice applies to your specific buyer’ s journey:
First-Time Home-Buyer First-Time Property Investor
CONSIDER THE COST IMPLICATIONS INVOLVED IN A PURCHASE
According to Standard Bank, there are certain costs associated with buying a home that you need to consider when to buy a property. You’ ll need to:
• Examine the transfer and legal costs involved;
• Consider municipal rates, taxes and sectional title levies in your‘ affordability’ calculations;
• Assess the cost of moving households;
• Consider the implications of making physical changes to a new home;
• Work in the cost for buying furniture and fittings for a new home;
• Compare the maintenance costs of established homes in the suburbs versus higher density townhouse complexes;
• Weigh the advantages of buying a newly built home or an old existing home.
At the end of the day, your budget will determine your bond size and the type, size, and location of the home you eventually purchase.
Do your homework on property values and crime rates You will also need to do some research on the area in which you want to buy. Determine which of the local amenities you need are in that area. This includes schools, healthcare facilities and retail outlets. Other considerations include proximity to main roads and freeways and other modes of transport, like train stations and bus stops, to know all your commuting options.
It is also a good idea to find out the average property values and crime rates for an area in which you are interested. You can source this information from an estate agent who knows the area well. They would have done a Comparative Market Study( CMC) on the neighbourhood, using tools offered by Lightstone and PropStats, and should have these statistics and facts ready for you. They will also have a better understanding of the current property market ‒ whether it’ s a buyer’ s or seller’ s market and what the supply and demand in the area might be.
Alternatively, pop into the local police station for crime stats, speak to residents in the area, chat with store owners and restaurant managers ‒ this information will provide you with a better idea of whether an area is a good one in which to buy.
Know what you want from your first home Be sure to have a clear idea of what you need from your first property purchase. Standard selection criteria include: number of bedrooms, bathrooms and off-street parking bays, erf size, and if the building is in a sectional title scheme or not( more about that below).
First-time home buyers should take a long view on their property purchase ‒ about five to 10 years ‒ to ascertain if the property will be able to cater to their changing needs over time. Are you requiring a house you can add additional rooms to accommodate a growing family? Is there space to add an extra bathroom? And, at the end of the day, will you be getting enough bang for your buck?
Additional homework will be to find out if there is anything that might prevent you from developing a property as you plan to. According to Raazik Nordien of UF Architects, this includes Title Deeds( for
www. reimag. co. za MAY 2017 SA Real Estate Investor 19