Have you ever started feeling mildly panicky before even signing an offer to purchase for your dream investment property? Have you ever wondered if you paid too much? Or maybe you are simply scared you are about to make an expensive mistake? There’ s no doubt that buying an investment property in South Africa can be a daunting experience for the vast majority of people, especially when considering the amount of money involved and the potential risks attached to it.
So what can you do to avoid expensive mistakes and to tap into the endless power of property investments, without taking unnecessary risks?
Here are a few“ vaccines” to beat debilitating fear, avoid crippling procrastination and protect you from dangerous haste by becoming an expert at the art of Writing an Offer to Purchase( OTP):
1
Don’ t Take Risks that
You Don’ t Need to Take Unexpected repairs, latent defects, structural issues, shoddy electrical installations, leaking plumbing and approved building plans that differ from what you see with your eyes, are the sort of realities you are likely to encounter with many properties. Don’ t rely on agents and sellers’ verbal reassurances, non-binding promises or even written declarations. The truth is often sellers lie to agents and sellers are not genuinely aware of the serious problems their properties have.
Buying an investment property is not a time and a place for“ DIY”. You should always make your offer subject to a detailed inspection and engage the services of a Professional Property Inspector to do exactly that. This will ensure you avoid expensive surprises that can destroy your return on investment and turn property into a nightmare.
2
Keep a Copy
A signed OTP is the kind of document that you want to keep a copy of with you at all times. Never sign an OTP without making a copy immediately, even if you are told that you will get a copy in 1 hour“ as soon as I get to the office”.
3
Do Your Own“ Fact Finding”
Any claims by seller or agents that are not in writing are just that …” claims”. So, ensure that you have a good view of what the actual market value of the property is, that the property has been built in accordance with the approved building plans and that the financials of the Body Corporate( if you are purchasing a unit in a Sectional Title) are in good shape by obtaining a copy of the latest Audited Accounts. Seek a copy of the latest Management Accounts and Levy Age Analysis and do not skip the power of a telephonic interview with the Body Corporate Chairperson
4
The 3 Visit Rule
I recommend you visit the property and the complex / block and the surrounding area on 3 different days and time of the day. Make sure you visit on weekends, after sunset and at“ rush hour”. This is a powerful way to ensure that there are no safety and crime issues as well as unforeseen surprises.
SA Real Estate Investor Magazine MARCH 2021 27