Real Estate Investor Magazine South Africa September 2014 | Page 25

RESIDENTIAL

5. Employment and business districts
Locations with growing employment opportunities
tend to attract more people - meaning more
tenants. To find out how a particular area rates, go
directly to the Statistics South Africa or the local
municipal offices. If you notice an announcement
for a new major company moving to the area, you
can rest assured that workers will flock to the area.
However, this may cause house prices to react
(either negatively or positively) depending on the
corporation moving in. The fall back point here is
that if you would like the new corporation in your
backyard, your renters probably will too.
6. Amenities
Check the potential neighbourhood for current or
projected parks, malls, gyms, movie theatres, and
all the other perks that attract renters. Cities, and
sometimes even particular areas of a city, have loads
of promotional literature that will give you an idea
of where the best blend of public amenities and
private property can be found.
7. Building permits and future development
The municipal planning department will have
information on all the new development that
is planned. If there are many apartment blocks,
business parks or malls going up in an area, it
is a sign that it’s a good growth area. However,
watch out for new developments that could
hurt the price of surrounding properties, for
example, developments which result in the loss
of an activity-friendly green space. The additional
apartments and/or new housing could also provide
competition for renters, so be aware.
8. Number of listings and vacancies
If there are an unusually high number of listings for
a particular neighbourhood, this can either signal a
seasonal cycle or a neighbourhood that has “gone
bad”. Make sure you figure out which before you
invest. You should also determine whether you are
financially sound during any seasonal fluctuations
in vacancies. Similar to listings, vacancy rates will
give you an indication of how successful you will
be at attracting tenants. High vacancy rates force
landlords to lower rents in order to snap up tenants
- low vacancy rates allow landlords to raise rental
rates.
www.reimag.co.za

9. Rents
Rent is the bread and butter for your rental property,
so you need to know what the average rent in the
area is. If charging the average rental price is not
going to cover your bond payment, taxes and other
expenses, then keep looking. Be sure to research
the area well enough to gauge where the area is
heading in the coming five years. If you can afford
the area now, but major improvements are in store
and taxes, rates and levies are expected to increase,
then what could be affordable now may mean
bankruptcy later.

10. Natural disasters
Insurance is another expense that you will have to
subtract from your returns, so it is good to know
just how much you will need to carry. If an area is
prone to flooding, the extra insurance can add up
and eat away at your income.

RESOURCES
Just Invest
September 2014 SA Real Estate Investor

25