PROPERTY INVESTING
Buying to let is the act of purchasing a property with the intention of leasing it to a tenant so that you can receive “ rental income ”, explains Chris Xotongo , sales property practitioner at Just Proper Port Elizabeth . The best approach , he says , is to research the property you are considering purchasing . Is it situated in a position that is and will continue to be attractive to tenants - and in time future buyers ? Is it well maintained ? Are like-minded people invested in the area or development ?
Then run rental income projections of how much you can rent / lease the property for . “ The accepted current standard is to charge between 0.7 % and 1.1 % of the property ’ s market-related sales value in relative terms ,” says Paul Stevens , CEO of Just Property . “ Compare this figure to average rentals in the area to get an idea of whether the property will be a good investment .”
“ Ideally , the rent should significantly contribute to your mortgage repayments and maintenance expenses , thus ensuring its capital growth . But you also don ’ t want to price yourself out of the market ,” says Xotongo .
“ This allows you to grow wealth through an asset while someone else contributes to your mortgage bond .”
Capital growth is the term used to describe the change in property value over time . “ If you bought a property for R900 000 in 2012 and sold it for R1 350 000 in 2021 , the capital growth would have been 50 %,” explains Stevens . “ Capital growth can be difficult to
60 OCT 2022 SA Real Estate Investor Magazine