INVESTOR INTELLIGENCE
NEW OR EXISTING PROPERTY
If you are buying a sectional title property , you cannot go wrong if you buy off-plan , as long as it is in a good position and with a reputable developer . There are some older blocks with larger units that are an attractive option and you will have access to historical sales statistics in the block , which will indicate the price growth of units in the complex . Often these older buildings go through a regeneration period and if you can get in at the start of this , there is money to be made .
HOW MANY UNITS ?
How many units you invest in depends on how highly geared your purchases are , namely the amount of the mortgage in relation to the value of the property . If you are highly geared , you need to have the ability to subsidise your purchase over and above the rental income you receive , and you are also susceptible to increased interest rates in the current cycle . Bear in mind that all the expenses incurred by your investment property can be deducted from the rental income before tax is calculated , such as for example repairs and maintenance , property management fees , insurance and municipal rates and agent ’ s commission . If you are a cash buyer and invest in the kind of units outlined above , and have a longer-term outlook , you will have a monthly return and undoubtedly a good capital return .
Naturally , you need to ensure you have high quality tenants . A good tenant is not only defined by the amount of rent paid – it is someone who has been properly checked on Tenant Profile Network ( TPN ), their income and expenditure has been scrutinised , and they are comfortable to pay a double deposit .
90 SEPTEMBER 2022 SA Real Estate Investor Magazine