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