THE ULTIMATE PROPERTY INVESTMENT
GUIDEBOOK
2013 EDITION 5
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CONTENTS FEATURES
6 Are You Ready To Buy?
22 Find Your Dream Property
28 Insurance
32 Save Money
40 Property Managers
56 Cleaning Crime & Grime
6 ARE YOU READY TO BUY Taking the first steps
10 GETTING YOUR BOND It’s all in the credit
28 INSURANCE
More than peace of mind
31 PURCHASING & THE TRANSFER What are the legal steps
12 BOND & TRANSFER COST’S
32 SAVE MONEY And the planet
18 BEFORE SAYING“YOU’RE HIRED”
34 ENFORCING THE FIC ACT
22 FIND YOUR DREAM PROPERTY
36 GETTING PERFECT TENANTS
Ensure your estate agent is the best
With a click of the mouse
And combatting crime
Is critical for success
24 GATED ESTATE
40 PROPERTY MANAGERS
Is community life for you
Should you delegate?
INTERACT WITH US find us on facebook
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Residential Handbook 2013
1
THE TEAM
44 BUYING A RENOVATOR’S DREAM Visualise the potential
46 RAISE THE VALUE OF YOUR PROPERTY With DIY
50 PICKING THE PERFECT COLOUR
Neale Peterson Publisher
Angelique Redmond Editor
Marisa George Financial Manager
Amy Little Designer
Juanita Heilbron Traffic
Russell Krynauw Sales Director
For your property
52 GIVE YOUR GARDEN TLC And improve your kerb appeal
53 TIME TO BUILD
The perfect home office
56 CLEANING CRIME & GRIME Urban renewal
58 CHANGING THE INNER CITY
Roy Lategan Team Leader
Advertising / 021 674 5026 Distribution / On The Dot Distribution For distribution inquiries contact Craig Hughes on 021 918 8659 / 073 395 2396 Printing / SED Printing Solutions
TUHF leads the way
60 THE FACADE OF THE FUTURE
Published by REALE MEDIA Neale Peterson (CEO) B. Taylor
What will our homes look like?
64 BE STREETS AHEAD Tips for success
Also Published by REALE MEDIA ©
Politics, Policy & Property BUYING PROPERTY?
Know the numbers
R43.86 Other Countries
www.reimag.co.za
Rent killing you! How to save
Autumn 2013
APRIL 2013
Distributed by
Overseas investing made simple
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Printed by
IRELAND & CANADA
LESSONS FROM A BILLIONAIRE INVESTOR Z
What to look out for How to find them
How will you be affected?
April 2013 R50.00 (Incl. VAT)
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PROPERTY Heavenly Tenants
THE 2013 BUDGET
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The road to a brighter future
RETIRE IN STYLE STANLIB Direct Property Investments manages the Liberty Property Portfolio which owns the Eastgate Shopping Centre and is the majority shareholder of Sandton City. We are in the process of registering and launching the STANLIB African Direct Property Fund which aims to invest in retail-led real estate developments with a focus on opportunities in Nigeria and Kenya.
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Where investment and excellence meet STANLIB Direct Property Investments
ISSUE
4
MASTER INVESTOR JANNIE MOUTON
All rights reserved. No portion of this publication may be reproduced or used in any form without prior written consent and permission from Real Estate Media. The publisher gives no written guarantees or assurances and makes no representation regarding any goods or services written or advertised within this edition. Prospective investors should always consult their attorneys, advisors or accountants. Copyright © Real Estate Media cc
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Residential Handbook 2013
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Residential Handbook 2013
3
Do you invest in
Property?
TUHF provides financial support to residential landlords who seek to acquire and refurbish dilapidated residential buildings in South African inner cities.
TUHF offers a single long-term (15 year) loan that covers both the acquisition and the refurbishment of a property.
Our products include:
• Mortgage Finance • Bridging Finance • Construction Finance • Equity Finance for Previously Disadvantaged Individuals
We are the leaders in inner city commercial property finance because only,
Is
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086 000 TUHF (8843) or Visit www.tuhf.co.za for your next inner city investment Contact us
Celebrating 10 years - Good Business, doing good
INVESTOR TALK
The Road To Financial Freedom
W
elcome to the fourth annual edition of our Residential Handbook. Whether you ow n one proper t y and a re considering another or are a first-time buyer, this guide will help you in your property investment journey. We aim to bring you the best information to make your foray into property investment easy and simple and most importantly a success. Investing in real estate is about arming yourself with the right knowledge to make the best choices; after all you wouldn’t pick a bank or a car without knowing all the facts first. As you start your journey, think of it as the road to success and f inancial freedom. This guide is your roadmap; it will show you the best possible route to arrive at your destination, owning your own home. There are very interesting things happening in the real estate market right now. The so called ‘gap’ market, a market who could previously not get mortgages as they earned too much for RDP housing but not enough to qualify for a bank mortgage has been given government assistance, and this is going to have a massive impact on the residential property
market. Providing loans for people who have been unable to access them in the past is an important step in allowing more South Africans to take their first step onto the property ladder. The bottom line with investing in property is that house prices are going to increase; current interest rates are low, so instead of paying off someone else’s bond, why not pay off your own? In the long run owning your own property is a great way to provide stability and build up equity, creating a solid financial plan for your future. Our mission is simple; we want to pass on the wealth of expertise from experienced individuals and investment groups, whose goal is to help you make wise property investments. So without further ado, lets get started on your journey to financial freedom and owning your own home.
Angelique Redmond EDITOR
“Obstacles are those frightful things you see when you take your eyes off your goal.”Henry Ford (1863-1947) www.reimag.co.za
Residential Handbook 2013
5
GETTING STARTED
Are You Ready To Buy?
Taking the first steps
L
et’s say one morning you wake up and rea l iz e t hat, yes, buying a home is the right thing to do for you. You’re tired of throwing away money on rent and f i g u r e t h a t it ’s time to get into a home of your own. But you have reservations. After all, if it’s your first time, you’ve got questions. You might be a l it t le ner vous t hat you’ l l mess up, and it’s normal to feel that way. You are probably spending hundreds of thousands of rands and mak ing the most important financial purchase of your life.
You will find that being an informed individual
about the home buying process is empowering for you. Lucky for you that you came to the right place. So why should you buy a home? Well not only does it make a great investment option but it is the start of your early retirement plan. Property is a great asset and will earn you money while you pay off a bond, and once you have paid off your bond, you can buy more property leveraging the one you already have. And before you know it, you have 5 or 10. What should you consider before you buy your first property? There are three things, firstly location, secondly price and lastly, the type of investment you have in mind with your property. 6
Residential Handbook 2013
So let’s get started buying your first home! Location, location, location If you’ve heard it a hundred times before, it is because it is an absolute fundamental principle of property investment. You may also have heard that it is better to buy the worst property in a good location, than the best property in a bad location. People have different needs and what is going to appeal to one, isn’t going to appeal to another. A single person, for example, may well look for an apartment that is close to all the action of city life. Those will small children are more likely to look at quieter neighbourhoods with little traffic, while older buyers may consider the proximity of shopping centres, hospitals and other factors before buying a home. The advent of Google Maps and the like have made the buying process easier for those looking to invest in www.reimag.co.za
an unknown area. Knowing where to start looking can save an enormous amount of time and energy. Once it
has been established which area the buyer intends to settle, finding the correctly priced property that is for sale in the area via the Internet can prove advantageous. The location of the property affects everything from the capital appreciation to the income possibilities and rentability or saleability of the property.
they have chosen and their objective in acquiring a particular property. Property investment strategies There are various property investment strategies that property investors can implement, each of which involves a different approach.
There are many factors that determine whether the location is right for a property investment, but accessibility and future potential must be two of the most important. Remember, too, that the surrounding areas and properties influence the value of a property, so be aware of the current neighbours and future developments.
Buy-to-let Buy-to-let property investments focus on generating an annuity income. The capital appreciation potential of the property is a secondary consideration to the rental income potential. In other words, when an investor is evaluating a potential buy-to-let property, their focus is on the current and long-term ability of the property to generate a monthly income, and the capital appreciation is a long-term bonus.
Price Buying a great investment at an inflated price is not a smart investment strategy. Buying at the height of a property boom reduces your ROI significantly, while selling when the market is depressed will lead to significant losses. Unfortunately, it is human
Buy-to-hold A buy-to-hold st rateg y wou ld ta ke capita l appreciation into consideration, but over a longer term. In other words, the short-term capital appreciation would be less important than the potential over the long term, say 10 or 20 years, to
nature to follow the herd, and statistics clearly show that when house price inflation is buoyant, people – including property investors – join the buying frenzy, and when property price inf lation drops, people panic and sell. Your ROI is determined by the price you buy at, not only the price you sell at. If you buy well, you can be assured of a good return. Even at the height of a property boom, investors can find properties at good prices, provided they do not become swept up in the excitement of the market. Look out for ‘motivated’ sellers who can be found in any market, and for whom the selling price is not the most important factor. And be sure to negotiate – always! Evaluating A Property Investment It really depends on what property investment strategy www.reimag.co.za
naturally appreciate in value, or perhaps as a result of developments in the area. Buying at a good price is always an important consideration, but in a buyto-hold strategy, it becomes even more important than usual, since the return on investment (ROI) is magnified if the purchase price is low. Speculation If a property investor is speculating with property, in other words, buying high to sell higher, the shortterm capital appreciation is critical. The objective here is to make short-term gains based on high property price inflation. This is a very risky strategy, since the capital appreciation may not be realised, or a buyer may not be found, and the investor could be stuck with a long-term commitment that he or she is unable to honour. In boom times, many investors made spectacular profits using this strategy. Residential Handbook 2013
7
GETTING STARTED Fix-and-flip A ‘fix-and-flip’ property investment strategy involves
purchasing a run-down property and making an additional investment to renovate the property, which can then be sold at a substantially higher price. In this case, the investor’s evaluation of the property will be focused on the potential of the property, and less on the income potential or capital gains. Hybrids However, property investments are rarely as black and white as the above categories imply. In many cases, the strategies employed are hybrids of the different approaches. For example, an investor may acquire a run-down property to renovate and then rent out. So now that you have a firm idea of where your ideal property is, how much it costs and what you want to do
8
Residential Handbook 2013
with it, there is nothing stopping you from taking that first leap and buying your house.
BEFORE YOU START: 1 2
Location, location, location!
3
Evaluating a property investment.
4
Property investment strategies.
5
Is buy-to-let best?
6
Buy-to-hold over long-term.
7 8
Speculation, buy high, sell high.
9
More than one category: hybrids.
What’s your price?
Should you fix-and-flip?
www.reimag.co.za
GETTING STARTED
Getting Your Bond It’s all in the credit
W
hen applying for a bond or home loan, it’s not just the buyer’s affordability that needs to be ascertained, it’s the buyer’s credit and payment profile that will be checked carefully and if there is the slightest chance that he has “black marks” against him the bond application will be rejected, says Avia Ebrahim, bond consultant for IHFS. “In the R450 000 to R750 000 price bracket, we find these households have very little, if any, savings. Usually my advice to these buyers is to try their best to save at least 10% deposit and maintain a good standing with their accounts. The properties will not sell out over the next six months to a year and rather have a decent deposit to put down than apply for a 100% bond (which is now difficult to obtain). The other thing that home loan applicants need to watch is the way they pay their accounts; payments must be made consistently and should always be the full amount on the due date. “It may seem ridiculous in some instances, but if you cannot pay a small payment on due date for a retail account, how can the banks trust you will be able to pay a big amount on time?” says Ebrahims.
“While most bonds offered from the banks are usually prime plus 2% and they often offer higher interest rates, the one thing that many do not realise is possible,” said Ebrahim, “is that the interest rate on a mortgage bond might be renegotiated after a few years of regular payments to the bank if the client asks for this. The credit scoring might be better and the bank might be willing to drop the interest rate on the balance owing.” 10
Residential Handbook 2013
The six steps to getting your bond 1. Check your credit rating The first thing that any bank will do when assessing your home loan application is check your credit rating. To avoid any nasty surprises or deal with any unresolved matters, you should check your rating www.reimag.co.za
before you get started. You are entitled to check your credit rating for free once a year. 2. Work out what you can afford Analyse your income and expenses very carefully to work out what you can afford. Bear in mind that homeownership comes with additional expenses and responsibilities beyond merely paying a bond. You will need to repair and furnish your new home, and additional expenses always crop up. 3. Consider the interest rate Interest rates look set to remain low for the time being, but it is always worth calculating what the difference in your bond repayments would be should the rate fluctuate. There should always be room in your budget for upward growth – especially if you buy when the interest rates are low. 4. Save up for a deposit Banks are far more likely to grant a home loan if you have a deposit saved up. It’s good to aim at saving between 10% and 20% of the purchase price, although obviously the more you can offer, the better your chances of approval of your home loan, and at a favourable rate.
5. Get your documents in order Making an offer on a home and applying for a bond involves paperwork. This can be daunting, but the consultant who handles your application will guide you through it. To start your home loan application process, you will need at least the following documents: – Your latest payslips and bank statements – An Income and Expenditure statement (your consultant can help you with this) – A Statement of Assets and Liabilities (and this) – If you are not a SA citizen, copy of residence and work permits, otherwise – Your SA identity document
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6. Shop around for the best deal on your bond When you are ready to make an offer on a property, it makes sense to apply for a bond from more than
one bank. This allows you to be sure that you have the best opportunity for an approval, and at a favourable interest rate. 7. Should you buy with a friend? While property pricing and market conditions currently favour buyers, many are still struggling to m e e t t h e l e n d i n g c r it e r i a of f i n a n c i a l institutions. In light of this, many buyers are choosing to pa r tner w ith a friend or fami ly member to purchase property together. In today’s property market, co-ownership has become an especially attractive option as the shared costs make it a much more affordable venture. Although some banks no longer offer joint cheque or savings accounts; Adrian Goslett of RE/MA X says that due to the vast number of buyers who are choosing to co-own w ith another part y, many lenders do offer joint home loan accounts or mortgage packages that cater specifically for this situation. “ There are def initely advantages of buy ing
proper t y w ith a par tner, such as the greater prospect of f inance being approved as well as the possibility of obtaining a bond for a higher amount. Additionally, there is the benef it of a reduced individual f inancial commitment as all costs during and after the purchase process are shared. Both parties can contribute to the deposit, transaction costs, bond repayments, as well as the maintenance and utilities bills,” says Goslett, “However, it is important that co-ownership is handled in the correct manner and that all aspects are discussed before any transaction has been concluded. It is advisable that there is an agreement in writing that is signed by both parties, should any dispute arise in the future.”
RESOURCES IHFS RE/MAX OOBA Residential Handbook 2013
11
TRANSFER COSTS
TRANSFER COSTS - BASED ON THE PURCHASE PRICE Purchase Price
Transfer Duty
BOND COSTS - BASED ON BOND AMOUNT
Conv Fee
Posts, Petties & Deed Search
Deeds Office
FICA
VAT
TOTAL
Conv Fee
300, 000
6 050
637
350
550
0.00
1 013
8 601
4 440
1 050
769
450
6 709
350, 000
6 490
637
450
550
0.00
1 074
9 202
4 920
1 050
835
450
7 255
400, 000
7 040
637
450
550
0.00
1 151
9 829
5 520
1 050
920
450
7 940
450, 000
7 590
637
450
550
0.00
1 228
10 456
6 000
1 050
987
450
8 487
500, 000
8 250
637
450
550
0.00
1 321
11 209
6 480
1 050
1 054
450
9 034
550, 000
9 350
637
450
550
0.00
1 475
12 463
7 440
1 050
1 189
450
10 129
600, 000
9 350
637
450
550
0.00
1 475
12 463
7 440
1 050
1 189
650
10 329
650, 000
10 450
637
650
550
1 500
1 629
15 417
8 400
1 050
1 323
650
11 423
700, 000
10 450
637
650
550
3 000
1 629
16 917
8 400
1 050
1 323
650
11 423
750, 000
11 550
637
650
550
4 500
1 783
19 671
9 360
1 050
1 457
650
12 517
800, 000
11 550
637
650
550
6 000
1 783
21 171
9 360
1 050
1 457
750
12 617
850, 000
12 650
637
750
550
7 500
1 937
24 025
10 320
1 050
1 592
750
13 712
900, 000
12 650
637
750
550
9 000
1 937
25 525
10 320
1 050
1 592
750
13 712
950, 000
13 750
637
750
550
10 500
2 091
28 279
11 280
1 050
1 726
750
14 806
1, 000, 000
13 750
637
750
550
12 000
2 091
29 779
11 280
1 050
1 726
850
14 906
1, 100, 000
14 300
637
850
550
17 000
2 168
35 506
11 808
1 050
1 800
850
15 508
1, 200, 000
14 850
637
850
550
22 000
2 245
41 133
12 336
1 050
1 874
850
16 110
1, 300, 000
15 400
637
850
550
27 000
2 322
46 760
12 864
1 050
1 948
850
16 712
1, 400, 000
15 950
637
850
550
32 000
2 399
52 387
13 392
1 050
2 022
850
17 314
1, 500, 000
16500
637
850
550
37 000
2 476
58 014
13 920
1 050
2 096
850
17 916
0861 111 731 www.ebonds.co.za
Posts. Petties & FICA
VAT
Deeds Office
TOTAL
TRANSFER COSTS - BASED ON THE PURCHASE PRICE Purchase Price
Conv Fee
Posts, Petties & Deed Search
Deeds Office
FICA
1, 600, 000
17 050
637
850
550
1, 700, 000
17 600
637
850
550
1, 800, 000
18 150
637
850
1, 900, 000
18 700
637
2, 000, 000
19 250
2, 500, 000
Transfer Duty
BOND COSTS - BASED ON BOND AMOUNT VAT
TOTAL
Conv Fee
45 000
2 553
66 641
14 448
1 050
2 170
850
18 518
53 000
2 630
75 268
14 976
1 050
2 244
850
19 120
550
61 000
2 707
83 895
15 504
1 050
2 318
850
19 722
850
550
69 000
2 784
92 522
16 032
1 050
2 391
850
20 323
637
850
550
77 000
2 861
101 149
16 560
1 050
2 465
950
21 025
22 000
637
950
550
117 000
3 246
144 384
19 200
1 050
2 835
950
24 035
3, 000, 000
24 750
637
950
550
157 000
3 631
187 519
21 840
1 050
3 205
950
27 045
3, 500, 000
27 500
637
950
550
197 000
4 016
230 654
24 480
1 050
3 574
950
30 054
4, 000, 000
30 250
637
950
550
237 000
4 401
273 789
27 120
1 050
3 944
1 100
33 214
4, 500, 000
33 000
637
1 100
550
277 000
4 786
317 074
29 760
1 050
4 313
1 100
36 223
5, 000, 000
35 750
637
1 100
550
317 000
5 171
360 209
32 400
1 050
4 683
1 100
39 233
5, 500, 000
37 125
637
1 100
550
357 000
5 363
401 776
33 720
1 050
4 868
1 100
40 738
6, 000, 000
38 500
637
1 100
550
397 000
5 556
443 344
35 040
1 050
5 053
1 500
42 643
6, 500, 000
39 875
637
1 500
550
437 000
5 748
485 311
36 360
1 050
5 237
1 500
44 147
7, 000, 000
41 250
637
1 500
550
477 000
5 941
526 879
37 680
1 050
5 422
1 500
45 652
7, 500, 000
42 625
637
1 500
550
517 000
6 133
568 446
39 000
1 050
5 607
1 500
47 157
8, 000, 000
44 000
637
1 500
550
557 000
6 326
610 014
40 320
1 050
5 792
1 500
48 662
8, 500, 000
45 375
637
1 500
550
597 000
6 518
651 581
41 640
1 050
5 977
1 500
50 167
9, 000, 000
46 750
637
1 500
550
637 000
6 711
693 149
42 960
1 050
6 161
1 500
51 671
10 Million
49 500
637
1 500
550
717 000
7096
776 284
45 600
1 050
6 531
2 000
55 181
0861 111 731 www.ebonds.co.za
Posts. Petties & FICA
VAT
Deeds Office
TOTAL
BOND INDEX LOAN AMOUNT
20 YEARS 8%
9%
25 YEARS 10%
8%
30 YEARS
9%
10%
8%
9%
10%
R 100,000
R 836
R 900
R 965
R 772
R 839
R 909
R 734
R 805
R 878
R 150,000
R 1,254
R 1,350
R 1,448
R 1,158
R 1,259
R 1,364
R 1,101
R 1,208
R 1,317
R 200,000
R 1,672
R 1,800
R 1,930
R 1,544
R 1,678
R 1,818
R 1,468
R 1,610
R 1,756
R 250,000
R 2,090
R 2,250
R 2,413
R 1,930
R 2,098
R 2,273
R 1,835
R 2,013
R 2,195
R 300,000
R 2,508
R 2,700
R 2,895
R 2,316
R 2,517
R 2,727
R 2,202
R 2,415
R 2,634
R 350,000
R 2,926
R 3,150
R 3,378
R 2,702
R 2,937
R 3,182
R 2,569
R 2,818
R 3,073
R 400,000
R 3,344
R 3,600
R 3,860
R 3,088
R 3,356
R 3,636
R 2,936
R 3,220
R 3,512
R 450,000
R 3,762
R 4,050
R 4,343
R 3,474
R 3,776
R 4,091
R 3,303
R 3,623
R 3,951
R 500,000
R 4,180
R 4,500
R 4,825
R 3,860
R 4,195
R 4,545
R 3,670
R 4,025
R 4,390
R 550,000
R 4,598
R 4,950
R 5,308
R 4,246
R 4,615
R 5,000
R 4,037
R 4,428
R 4,829
R 600,000
R 5,016
R 5,400
R 5,790
R 4,632
R 5,034
R 5,454
R 4,404
R 4,830
R 5,268
R 650,000
R 5,434
R 5,850
R 6,273
R 5,018
R 5,454
R 5,909
R 4,771
R 5,233
R 5,707
R 700,000
R 5,852
R 6,300
R 6,755
R 5,404
R 5,873
R 6,363
R 5,138
R 5,635
R 6,146
R 750,000
R 6,270
R 6,750
R 7,238
R 5,790
R 6,293
R 6,818
R 5,505
R 6,038
R 6,585
R 800,000
R 6,688
R 7,200
R 7,720
R 6,176
R 6,712
R 7,272
R 5,872
R 6,440
R 7,024
R 850,000
R 7,106
R 7,650
R 8,203
R 6,562
R 7,132
R 7,727
R 6,239
R 6,843
R 7,463
R 900,000
R 7,524
R 8,100
R 8,685
R 6,948
R 7,551
R 8,181
R 6,606
R 7,245
R 7,902
R 950,000
R 7,942
R 8,550
R 9,168
R 7,334
R 7,971
R 8,636
R 6,973
R 7,648
R 8,341
R 1,000,000
R 8,360
R 9,000
R 9,650
R 7,720
R 8,390
R 9,090
R 7,340
R 8,050
R 8,780
R 1,050,000
R 8,778
R 9,450
R 10,133
R 8,106
R 8,810
R 9,545
R 7,707
R 8,453
R 9,219
R 1,100,000
R 9,196
R 9,900
R 10,615
R 8,492
R 9,229
R 9,999
R 8,074
R 8,855
R 9,658
R 1,150,000
R 9,614
R 10,350
R 11,098
R 8,878
R 9,649
R 10,454
R 8,441
R 9,258
R 10,097
R 1,200,000
R 10,032
R 10,800
R 11,580
R 9,264
R 10,068
R 10,908
R 8,808
R 9,660
R 10,536
R 1,250,000
R 10,450
R 11,250
R 12,063
R 9,650
R 10,488
R 11,363
R 9,175
R 10,063
R 10,975
R 1,300,000
R 10,868
R 11,700
R 12,545
R 10,036
R 10,907
R 11,817
R 9,542
R 10,465
R 11,414
R 1,350,000
R 11,286
R 12,150
R 13,028
R 10,422
R 11,327
R 12,272
R 9,909
R 10,868
R 11,853
R 1,400,000
R 11,704
R 12,600
R 13,510
R 10,808
R 11,746
R 12,726
R 10,276
R 11,270
R 12,292
R 1,450,000
R 12,122
R 13,050
R 13,993
R 11,194
R 12,166
R 13,181
R 10,643
R 11,673
R 12,731
R 1,500,000
R 12,540
R 13,500
R 14,475
R 11,580
R 12,585
R 13,635
R 11,010
R 12,075
R 13,170
R 1,550,000
R 12,958
R 13,950
R 14,958
R 11,966
R 13,005
R 14,090
R 11,377
R 12,478
R 13,609
R 1,600,000
R 13,376
R 14,400
R 15,440
R 12,352
R 13,424
R 14,544
R 11,744
R 12,880
R 14,048
R 1,650,000
R 13,794
R 14,850
R 15,923
R 12,738
R 13,844
R 14,999
R 12,111
R 13,283
R 14,487
R 1,700,000
R 14,212
R 15,300
R 16,405
R 13,124
R 14,263
R 15,453
R 12,478
R 13,685
R 14,926
R 1,750,000
R 14,630
R 15,750
R 16,888
R 13,510
R 14,683
R 15,908
R 12,845
R 14,088
R 15,365
R 1,800,000
R 15,048
R 16,200
R 17,370
R 13,896
R 15,102
R 16,362
R 13,212
R 14,490
R 15,804
R 1,850,000
R 15,466
R 16,650
R 17,853
R 14,282
R 15,522
R 16,817
R 13,579
R 14,893
R 16,243
0861 111 731 www.ebonds.co.za
R 1,900,000
R 15,884
R 17,100
R 18,335
R 14,668
R 15,941
R 17,271
R 13,946
R 15,295
R 16,682
R 1,950,000
R 16,302
R 17,550
R 18,818
R 15,054
R 16,361
R 17,726
R 14,313
R 15,698
R 17,121
R 2,000,000
R 16,720
R 18,000
R 19,300
R 15,440
R 16,780
R 18,180
R 14,680
R 16,100
R 17,560
R 2,050,000
R 17,138
R 18,450
R 19,783
R 15,826
R 17,200
R 18,635
R 15,047
R 16,503
R 17,999
R 2,100,000
R 17,556
R 18,900
R 20,265
R 16,212
R 17,619
R 19,089
R 15,414
R 16,905
R 18,438
R 2,150,000
R 17,974
R 19,350
R 20,748
R 16,598
R 18,039
R 19,544
R 15,781
R 17,308
R 18,877
R 2,200,000
R 18,392
R 19,800
R 21,230
R 16,984
R 18,458
R 19,998
R 16,148
R 17,710
R 19,316
R 2,250,000
R 18,810
R 20,250
R 21,713
R 17,370
R 18,878
R 20,453
R 16,515
R 18,113
R 19,755
R 2,300,000
R 19,228
R 20,700
R 22,195
R 17,756
R 19,297
R 20,907
R 16,882
R 18,515
R 20,194
R 2,350,000
R 19,646
R 21,150
R 22,678
R 18,142
R 19,717
R 21,362
R 17,249
R 18,918
R 20,633
R 2,400,000
R 20,064
R 21,600
R 23,160
R 18,528
R 20,136
R 21,816
R 17,616
R 19,320
R 21,072
R 2,450,000
R 20,482
R 22,050
R 23,643
R 18,914
R 20,556
R 22,271
R 17,983
R 19,723
R 21,511
R 2,500,000
R 20,900
R 22,500
R 24,125
R 19,300
R 20,975
R 22,725
R 18,350
R 20,125
R 21,950
R 2,550,000
R 21,318
R 22,950
R 24,608
R 19,686
R 21,395
R 23,180
R 18,717
R 20,528
R 22,389
R 2,600,000
R 21,736
R 23,400
R 25,090
R 20,072
R 21,814
R 23,634
R 19,084
R 20,930
R 22,828
R 2,650,000
R 22,154
R 23,850
R 25,573
R 20,458
R 22,234
R 24,089
R 19,451
R 21,333
R 23,267
R 2,700,000
R 22,572
R 24,300
R 26,055
R 20,844
R 22,653
R 24,543
R 19,818
R 21,735
R 23,706
R 2,750,000
R 22,990
R 24,750
R 26,538
R 21,230
R 23,073
R 24,998
R 20,185
R 22,138
R 24,145
R 2,800,000
R 23,408
R 25,200
R 27,020
R 21,616
R 23,492
R 25,452
R 20,552
R 22,540
R 24,584
R 2,850,000
R 23,826
R 25,650
R 27,503
R 22,002
R 23,912
R 25,907
R 20,919
R 22,943
R 25,023
R 2,900,000
R 24,244
R 26,100
R 27,985
R 22,388
R 24,331
R 26,361
R 21,286
R 23,345
R 25,462
R 2,950,000
R 24,662
R 26,550
R 28,468
R 22,774
R 24,751
R 26,816
R 21,653
R 23,748
R 25,901
R 3,000,000
R 25,080
R 27,000
R 28,950
R 23,160
R 25,170
R 27,270
R 22,020
R 24,150
R 26,340
R 3,050,000
R 25,498
R 27,450
R 29,433
R 23,546
R 25,590
R 27,725
R 22,387
R 24,553
R 26,779
R 3,100,000
R 25,916
R 27,900
R 29,915
R 23,932
R 26,009
R 28,179
R 22,754
R 24,955
R 27,218
R 3,150,000
R 26,334
R 28,350
R 30,398
R 24,318
R 26,429
R 28,634
R 23,121
R 25,358
R 27,657
R 3,200,000
R 26,752
R 28,800
R 30,880
R 24,704
R 26,848
R 29,088
R 23,488
R 25,760
R 28,096
R 3,250,000
R 27,170
R 29,250
R 31,363
R 25,090
R 27,268
R 29,543
R 23,855
R 26,163
R 28,535
R 3,300,000
R 27,588
R 29,700
R 31,845
R 25,476
R 27,687
R 29,997
R 24,222
R 26,565
R 28,974
R 3,350,000
R 28,006
R 30,150
R 32,328
R 25,862
R 28,107
R 30,452
R 24,589
R 26,968
R 29,413
R 3,400,000
R 28,424
R 30,600
R 32,810
R 26,248
R 28,526
R 30,906
R 24,956
R 27,370
R 29,852
R 3,450,000
R 28,842
R 31,050
R 33,293
R 26,634
R 28,946
R 31,361
R 25,323
R 27,773
R 30,291
R 3,500,000
R 29,260
R 31,500
R 33,775
R 27,020
R 29,365
R 31,815
R 25,690
R 28,175
R 30,730
R 3,550,000
R 29,678
R 31,950
R 34,258
R 27,406
R 29,785
R 32,270
R 26,057
R 28,578
R 31,169
R 3,600,000
R 30,096
R 32,400
R 34,740
R 27,792
R 30,204
R 32,724
R 26,424
R 28,980
R 31,608
R 3,650,000
R 30,514
R 32,850
R 35,223
R 28,178
R 30,624
R 33,179
R 26,791
R 29,383
R 32,047
R 3,700,000
R 30,932
R 33,300
R 35,705
R 28,564
R 31,043
R 33,633
R 27,158
R 29,785
R 32,486
R 3,750,000
R 31,350
R 33,750
R 36,188
R 28,950
R 31,463
R 34,088
R 27,525
R 30,188
R 32,925
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BOND INDEX
R 3,800,000
R 31,768
R 34,200
R 36,670
R 29,336
R 31,882
R 34,542
R 27,892
R 30,590
R 33,364
R 3,850,000
R 32,186
R 34,650
R 37,153
R 29,722
R 32,302
R 34,997
R 28,259
R 30,993
R 33,803
R 3,900,000
R 32,604
R 35,100
R 37,635
R 30,108
R 32,721
R 35,451
R 28,626
R 31,395
R 34,242
R 3,950,000
R 33,022
R 35,550
R 38,118
R 30,494
R 33,141
R 35,906
R 28,993
R 31,798
R 34,681
R 4,000,000
R 33,440
R 36,000
R 38,600
R 30,880
R 33,560
R 36,360
R 29,360
R 32,200
R 35,120
R 4,050,000
R 33,858
R 36,450
R 39,083
R 31,266
R 33,980
R 36,815
R 29,727
R 32,603
R 35,559
R 4,100,000
R 34,276
R 36,900
R 39,565
R 31,652
R 34,399
R 37,269
R 30,094
R 33,005
R 35,998
R 4,150,000
R 34,694
R 37,350
R 40,048
R 32,038
R 34,819
R 37,724
R 30,461
R 33,408
R 36,437
R 4,200,000
R 35,112
R 37,800
R 40,530
R 32,424
R 35,238
R 38,178
R 30,828
R 33,810
R 36,876
R 4,250,000
R 35,530
R 38,250
R 41,013
R 32,810
R 35,658
R 38,633
R 31,195
R 34,213
R 37,315
R 4,300,000
R 35,948
R 38,700
R 41,495
R 33,196
R 36,077
R 39,087
R 31,562
R 34,615
R 37,754
R 4,350,000
R 36,366
R 39,150
R 41,978
R 33,582
R 36,497
R 39,542
R 31,929
R 35,018
R 38,193
R 4,400,000
R 36,784
R 39,600
R 42,460
R 33,968
R 36,916
R 39,996
R 32,296
R 35,420
R 38,632
R 4,450,000
R 37,202
R 40,050
R 42,943
R 34,354
R 37,336
R 40,451
R 32,663
R 35,823
R 39,071
R 4,500,000
R 37,620
R 40,500
R 43,425
R 34,740
R 37,755
R 40,905
R 33,030
R 36,225
R 39,510
R 4,550,000
R 38,038
R 40,950
R 43,908
R 35,126
R 38,175
R 41,360
R 33,397
R 36,628
R 39,949
R 4,600,000
R 38,456
R 41,400
R 44,390
R 35,512
R 38,594
R 41,814
R 33,764
R 37,030
R 40,388
R 4,650,000
R 38,874
R 41,850
R 44,873
R 35,898
R 39,014
R 42,269
R 34,131
R 37,433
R 40,827
R 4,700,000
R 39,292
R 42,300
R 45,355
R 36,284
R 39,433
R 42,723
R 34,498
R 37,835
R 41,266
R 4,750,000
R 39,710
R 42,750
R 45,838
R 36,670
R 39,853
R 43,178
R 34,865
R 38,238
R 41,705
R 4,800,000
R 40,128
R 43,200
R 46,320
R 37,056
R 40,272
R 43,632
R 35,232
R 38,640
R 42,144
R 4,850,000
R 40,546
R 43,650
R 46,803
R 37,442
R 40,692
R 44,087
R 35,599
R 39,043
R 42,583
R 4,900,000
R 40,964
R 44,100
R 47,285
R 37,828
R 41,111
R 44,541
R 35,966
R 39,445
R 43,022
R 4,950,000
R 41,382
R 44,550
R 47,768
R 38,214
R 41,531
R 44,996
R 36,333
R 39,848
R 43,461
R 5,000,000
R 41,800
R 45,000
R 48,250
R 38,600
R 41,950
R 45,450
R 36,700
R 40,250
R 43,900
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Residential Handbook 2013
17
GETTING STARTED
Before Saying “You’re Hired”
Ensure your estate agent is the best
W
hen you decide to buy a propert y, there are certain things you need to ask an estate agent before saying, “you’re hired”. 1. How much experience do they have? How long has the estate agent been on the job, and are they full or part time? As you search for your dream property you need someone who is going to be fully committed to helping you find your perfect home. While experience is never a guarantee of skills, real estate agents who have been on the job longer may just be able to offer you more advice and guide you on the path to your first home. 2. Do they belong to the EAAB? The EAAB regulates the estate agency profession through ensuring that a l l persons carrying out the activities of an estate agent as a service to the public are registered with the EA AB, and have a Fidelity certifcate. Also the estate agent you choose should be available on weekends, as most of the open houses will be on weekends. 3. Ask for an outline on how they will represent you T his out l ine shou ld inc lude housing inspec t ions, fol low ing t h rough on you r mortgage approval process and being present very step of the way. 18
Residential Handbook 2013
www.reimag.co.za
Thinking beyond!
Consumer protection through effective industry regulation. Ensure you use the services of a registered estate agent. Tel: 011 731 5600 / www.eaab.org.za.
GETTING STARTED 4. Will they show you houses listed by other companies? When it comes to your dream home you don’t want to be limited to one company or group, just because an estate agent is partial to their listings. 5. Are they familiar with the area you want to purchase in? An estate agent who is familiar with your area will know which houses are close to schools if you have children, or close to transport if you have to use public transport. 6. What’s their business style? Do you want a broker who phones you daily or weekly or e-mails you? How do they plan on keeping you updated on the new listings and prospects for your new home?
As you start your journey towards buying a property it is imperative you have the best team helping you achieve your goals. Don’t be afraid to ask questions, at the end of the day it’s your decision and you need to be comfortable with the people working with you.
6 ESSENTIAL QUESTIONS 1
How much experience do they have?
2
Do they belong to the EAAB?
3
Ask for an outline on how they will represent you
4
Will they show you houses listed by other companies?
5
Are they familiar with the area you want to purchase in?
6
What’s their business style?
RESOURCES EAAB
20
Residential Handbook 2013
www.reimag.co.za
privateproperty .co.za
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FINDING
Find Your Dream Property With a click of the mouse
W
hen you type ‘property for sale’ into Google you get 702,000,000 results in 28 seconds. Gone are the days of paging through newspapers or classifieds looking for a property. Now you can sit back on the sofa in your living room and search thousands of properties, narrowing your search based on criteria for your perfect home. Here are some handy tips when it comes to finding the best sites for you. Decide what you want The first thing you need to do is decide exactly what it is you want: a house, a flat, a cottage. Once you know that cuts your search down. You need to be very specific about what you want when you type in your search criteria, for example if you are looking for a two bed roomed flat in Sandton, don’t type in flat in Johannesburg.
22
Residential Handbook 2013
If the price is right Most property websites are going to have options to narrow your choice down, and one of those will be price, so you must know what your price range is,. Allow yourself some leeway when it comes to the price range. Property website or estate agent site? Don’t limit yourself to one site, search numerous sites, both property websites and agency sites. The more property you see within your criteria the better your chances of a successful property search. Check the online comments With the advent of online sites, it has become easier to find out whether you are at the right place, just browse the customer comments and see what other customers think of their service.
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You can judge their business practice and past successes and then make a decision whether they are a good fit for you. Map it out If you are not sure about the type of neighbourhood you want to buy in, it’s a good idea to use a local site, and Google Map the surrounding area to see how far they are from public transport, schools or shops. You can even go one step further and Google Map the street view and the properties in that street, before you set up a viewing. Test the town website Once you have decided on a town or suburb you can go online and see what to expect all year round, by searching for calendar events. A look through the local newspapers online will give you an idea of the neighbourhood in terms of crime and police presence. Scope out the neighbourhood A lot of online sites will give you the ten best suburbs and even give you mortgage rates and home values, www.reimag.co.za
allowing you to decide not just if you want to buy the property but also what house values in that area are, and what you can expect your home value to be, a very important factor when deciding to buy a property. Touch and feel W hile online sites are great for helping you narrow down what types of properties you want to buy. You need to see the propert y. Online shopping will get you to the front door and from then on you need to physically see property and it’s surrounds.
THE TOP THREE SITES 1 2
www.property24.com
3
www.iolproperty.co.za
www.privateproperty.co.za
RESOURCES Property24 Private Property Residential Handbook 2013
23
FINDING
Gated Estates
Is community life for you?
A
ccording to a report on gated estates, these now number a quarter of the value of South African’s total residential property
market. The popularity of gated secure living has mushroomed since 2000 and it has become one of the most desirable lifestyles available on the real estate market today. The underlying reason behind their success is safety and the homeowner’s peace of mind and ability to move around freely in the secure estate.
In its modern form, a gated community is a form of residential community or housing estate containing strictly controlled entrances for pedestrians, bicycles, and cars, and is often characterised by a closed perimeter of walls and fences. Gated communities usually consist of small residential streets and include various shared amenities. For smaller communities this may be only a park or common area. For larger communities, it may be possible for residents to stay within the community for most day-to-day activities. 24
Residential Handbook 2013
In Brazil, the most widespread form of gated community is called “condomínio fechado” (closed housing estate) and is the object of desire of the upper
classes. Such a place is a small town with its own infrastructure (backup power supply, sanitation, and security guards). The purpose of such a community is to protect its residents from outside violence. With the alarmingly high crime rate in South Africa (we are rated the eighth most dangerous place in the world) gated communities are on the rise in South Africa, they too offer sanctuary from violence and crime and more and more people are turning to this type of property. But is this type of property the best choice for you? What do they offer? Security Security is obviously an attractive quality for a gated community. A guard posted at the gate, or simply a gated entryway that requires a code to gain access, www.reimag.co.za
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FINDING will keep intruders out and keep the possibilities of burglary or home invasion very low. With a self-contained neighbourhood there is not likely to be problems with vandalism, break-ins and strangers lurking around the house or anxiety about walking the streets after dark. This is an ideal living situation for those who live alone or who would otherwise be vulnerable to criminal activities in a typical housing situation. Property Value The houses built within a gated community are often on the upper end in regards to design, beauty, quality and price. Being located within a community, houses have a better chance of gaining property value and tend to be steady during market f luctuations, according to the Barcelona Field Studies Centre. Because of these factors, houses in a gated community are thought to be better investments than some other types of housing, giving gated communities a significant advantage. Children’s Play Families with children often look at the features of a new home or neighbourhood with consideration for their children. They want a place where the kids can enjoy quality time in and out of the house, and they want them to have safe streets to walk. This is a very significant advantage of living in a gated community. The children can play in the neighbourhood with little concern over crime and are far less likely to be injured by traffic in the surrounding streets because access is limited.
appearances of houses and lawns and certain behaviours of those who live in the neighbourhood.
While these rules can help add to the property values of homes, they can also restrict residents’ freedoms because they may not be able to put certain items on their lawns such as flags or signs. Levies Residents often have to pay a lev y to their homeowners’ associations to pay for amenities and ground maintenance in gated communities. These homeowners associations can be governed either by the developer or the residents, depending on who owns the most land in the areas. Security While gated communities do offer a modicum of protection, they are not crime free and often have the problem of assisted crime. People working in the community can let in strangers or actively help criminals gain entry into your home. Gated communities are not impervious to crime, and people living in them sometimes relax their security standards, making their homes easier targets.
The disadvantages?
Is sectional title better for you? Usually, buying a house or a flat in a complex seems to be more affordable than buying a freestanding house. When you buy a section of a development, you get access to an undivided share of the common property (the communal green areas, parking, etc.) and all the owners collectively own everything that is not part of a specific section. You also get many benefits such as added security, the management of the property is shared and sometimes there is a gymnasium or a swimming pool in the complex.
Guidelines Those who live in gated communities such as subdiv isions may move into homes in these areas because they are governed by homeowners’ associations and written covenants guide the
in an area where you might not be able to afford a freestanding home, said Michael Bauer general manager of IHFM. If being part of a specif ic community is necessary, ie the schools, university
26
Residential Handbook 2013
Sectional title could be a way of owning a property
www.reimag.co.za
or sports clubs in the area, then buying into a development such as this could be the right option for the buyer.
Sectional title, in simple terms, is joint ownership of a property. All owners must contribute in the form of monthly levies in addition to the purchase price of the home. The levies cover monthly expenses of the sectional title scheme like insurance and maintenance on the exterior of the building as well as the communal areas. Owning a freehold property means the owner is responsible for all of these himself. Joint ownership in a sectional title development means working closely with other owners to ensure the property is maintained and insured properly and that the body corporate, trustees or managing agents are handling administration and levy control properly. With a freestanding home, you can make decisions on changes to any part of the home without having to consult others, ie the façade walls or outside fence could be any colour you like but in sectional title schemes the members have to stick to the overall look of the scheme. If any changes are made they have to be approved by the body corporate and they have to be in keeping with the rules of the scheme, which can be quite restrictive.
“The financial viability of the scheme is important if the buyer is applying for a bond whereas a bond on a freehold property is based mainly on the buyer’s ability to get the bond,” said Bauer. Banks will ask for the financial statements of the sectional title scheme the buyer is interested in and if these are questionable, the bond will be rejected. “This shows how important the owners, body corporate management and managing agents are in working as a team to keep the whole scheme viable,” said Bauer. www.reimag.co.za
There are rules and obligations as well in a sectional title development, the conduct rules must be read through and accepted, for example, some schemes do not allow pets.
“Buyers must also be aware of the type of scheme they are joining,” said Bauer. “Check whether you will fit into that demographic, ie if you have young children and the average age of the other residents is over 50, there might be problems with complaints about noise levels, etc. Likewise, if you are a young professional, working long hours, and have young students in your complex that are noisy at night or on weekends, it might create problems for you.” There are basic things to remember and to ask when investigating a purchase in a sectional title scheme. These are: · · · · · · · · ·
the amount of the monthly levy and what this covers; what the consequences are if you defaulted on your levy; whether the current insured value on the
property is sufficient; whether the body corporate carries fidelity insurance in case of fund misappropriation; whether the structure of the building has been changed in any way and if so, whether this was done according to the conduct rules and the scheme’s constitution; whether the scheme is managed by a managing agent, an HOA or a body corporate; if improvements were needed to the unit, what approvals will be needed; what the body corporate members’ responsibilities are; and what dispute resolution process is in place.
RESOURCES IHFM
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ACQUIRING
Insurance
More than peace of mind
A
new house brings with it a wealth of new responsibilities. One of these is that you need to consider what will happen to you, your family or your house if your circumstances change. No matter how unlikely this may seem, life is full of surprises, and you need to plan for every eventuality. The best way to make sure that you are covered in a crisis is to have sufficient insurance in place to help you through any difficult times. “There are t wo main types of insurance that a homeowner should have,” says Craig Young, Managing Executive of Insurance at ooba, S out h A f r ic a’s big g e st b ond originator and provider of insurance cover for all property matters. “In some cases your bank will insist on some form of cover; in others it is optional – but in all cases it’s a good idea.”
and lightning. Your bank will insist that you have such cover, but they can’t compel you to take their insurance offering. If you wish, you can obtain buildings insurance cover from any accredited insurer, freeing you up to compare costs, coverage, benefits, reputation and service. “Buildings insurance protects your home from costly damage caused by unforeseen circumstances,” says Young. “For instance, if your geyser bursts, the insurance will cover its replacement and any consequential loss up to a certain limit such as the costs of home repairs and painting.
Buildings insurance Buildings insurance is one of the most important policies you will purchase. It covers the structure of your home as well as all the permanent f ixtures and f ittings in it, against damage caused as a result of unexpected events like fire, f lood 28
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www.reimag.co.za
“Your home is usually your most expensive asset, but maintaining a home can be expensive, and when unplanned events occur, it’s incredibly beneficial
provides comprehensive cover in the event of death, disability, dread disease or retrenchment.”
to have this kind of insurance as a lifeline,” says Your bank may not insist that you have this type of Young. “This is why banks make it compulsory – cover, but Young advises you consider it, nonetheless. they are safeguarding your “No one likes to think of bad luck asset.” “There are two main types befalling them, but if something bad does happen to you, the best of insurance that a Bond protection insurance outcome is that you or your family Of course, when you consider homeowner should have.” won’t lose your home,” he says. buying a property, you work out whether you can afford the repayments – and What it costs if you’ve had your bond approved, obviously your When you’re buying a house, the last thing you want bank thinks so too. But both you and your bank on your plate is an extra expense. Just remember that have to count on you remaining employed and in a small monthly payment now can save you from good health. enormous financial strain later. But of course, you’ll want to know exactly how much it will cost you and “It is very important to consider what would whether you’re getting the best deal. happen to you and your family if, for some reason, you were unable to pay your bond for any period “Because insurance cover can be tailor made for of time,” says Young. “Bond protection insurance your specific circumstances, taking into account your www.reimag.co.za
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ACQUIRING situation as well as the value of your house, it’s not possible to put a single, straightforward cost to bond protection and buildings insurance,” says Young.
For buildings insurance, the structure of your house – what the building and the roof are made of – as well as the type of residency – holiday home or permanent residence – all play a role in the risk assessment and therefore, the cost of your premiums. This type of cover will always be subject to exclusions and excesses, but will cover the bulk of your expenses if the loss forms part of an insured event. For bond protection insurance, your premiums are determined in line with various socio-economic factors which include monthly income, age, gender, smoker status and level of education.
FOR BOND PROTECTION INSURANCE 1 2 3
4
5 6 7 8
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Look at the specified amount or limit of contents cover protection Have you got everything valued accurately? Are your antiques or valuables covered, or do you need to take out separate cover for these? It may work out cheaper to get them insured separately with a specialist contents insurance provider. Do you have children or animals? It could be worth adding accidental damage to your policy. Do you have any single items that need to be insured? Do you live in a high crime area? How far outside of your home are your items covered for? Does the policy cover your items when you are abroad?
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Remember, when it comes to finding a buildings or contents policy for your needs, always give
accurate and appropriate information. That’s because when it comes to making a claim, honesty is always the best policy. Your claim may be deemed null and void if you give if you give false information, fail to attend to the general maintenance in the policy or fail to carry out repair work on previous claims. Look at the specified amount or limit for buildings cover protection.
LIMIT FOR BUILDINGS COVER PROTECTION 1
2
3 4 5
6 7
How much will it cost to rebuild your home? Not just the resale value as this may differ wildly. Does the policy cover accommodation for you, should your home become uninhabitable? Does it cover outside buildings? If you are in a high-risk flood area, are you covered? In addition to the overall structure of your property, what permanent fixtures and fittings are covered, if any? Do you live in a high crime area? What about the style of your house? Do you have any unusual features? Or is your property a listed building?
RESOURCES OOBA
www.reimag.co.za
ACQUIRING
Purchasing & The Transfer What are the legal steps?
T
horough research is essential to make a sound investment. This can be achieved through a property valuation performed by your estate agent, or you can download a full Property Valuation Report for your selected property through Property24. com. With this research in hand, you can negotiate the terms of the Offer to Purchase. The Offer to Purchase contains all terms and conditions agreed upon by the buyer and seller such as the sale being subject to bond approval or to the sale of another property within a specified period of time. It is also common for the property to be sold voetstoots meaning it is sold with all defects and faults, and therefore it is advisable to inspect the property carefully and negotiate any necessary repairs as part of the Offer to Purchase. Once signed by both parties, the Offer to Purchase constitutes the Deed of Sale and becomes legally binding. An attorney can assist to ensure the contract meets the necessary requirements and that the process is smooth.
The transfer process Step 1: The Transfer Attorney, appointed by the seller, prepares the necessary documentation including the Title Deed, Rates Clearance Certificate (proof from the municipality that rates and taxes are up to date) and www.reimag.co.za
cancellation figures from the bank, and the buyer will pay transfer duty (for a property worth more than R600 000) and conveyancing fees charged by the Transfer Attorney. Step 2: The Bond Attorney prepares the bond documentation with the buyer, including the home loan account. Step 3: Once received, the Transfer attorney will submit these documents to the Deeds Office and the Cancellation Attorney will receive copies for cancellation of the seller’s bond. Step 4: Once all documents have been signed and costs paid, the information will be simultaneously lodged at the Deeds Office by the relevant attorneys for verification, and once verified, all attorneys will be notified. Step 5: On the day of registration, the bank pays out the home loan amount and the buyer officially becomes the owner of the property.
As the process can be a lengthy one. Making sure that
all necessary information is submitted and all necessary steps are taken, can avoid unnecessary delays in the registration process.
RESOURCES
Property24 Residential Handbook 2013
31
SMART MOVES
Save Money
A
And the planet
s the costs associated with living continue to rise, there are ways to cut down on your costs and your carbon footprint, ensuring you not only save money, but also do your share towards helping the planet. • •
•
• •
• •
•
• • • •
32
e sure to turn off lights when you leave a room. B Turn off machines when you leave a room (examples include TV’s, computers, radios, stereos, video games, VCR’s, and DVD players). When you go away on a trip, be sure to unplug these same machines because they have stand-by functions that consume electricity even when they are off. Fill your dishwasher efficiently and limit the number of times you run it. Turn off the water when you are brushing your teeth and take shorter showers. This will not only save water, but it will also save the electricity that
it takes to pump and heat the water. Make use of daylight hours and do not turn on lights and lamps. Use one large light bulb instead of a few small ones. One 100-watt light bulb uses less energy and gives off more light than two 60-watt bulbs. Use fluorescent light bulbs because they use 75% less energy and last longer than incandescent light bulbs. Use light bulbs that are low in wattage in areas of your house where you don’t need bright light. Make sure that outdoor lighting is turned off during the day. Use motion-detectors lights or timers. Decide what you want from the refrigerator or freezer before you open them so you don’t waste electricity by standing there looking inside and keeping the door open. Residential Handbook 2013
•
• • •
•
• • •
Before putting hot foods into the refrigerator, cool them to room temperature (unless the recipe tells you not to do this). Cook several food dishes in the oven together. Keep the oven door closed until the food is done. Defrost food before you bake or microwave it. This uses a third less energy than if you bake food that is still frozen. Wash full loads of clothing instead of smaller ones. Use the coolest water possible for washing and rinsing the clothes. Clean the lint filter of your dryer after every load. Dry full loads of clothes. Dry one load right after another because this uses less energy since the dryer is already hot. Be sure to stop the dryer as soon as the clothes are dry.
Winter tips • If you are cold, put on a sweater or sweatshirt. • Remember, you are saving up to 5% on your electric bill for every degree of temperature change. • On sunny winter days, open your curtains, drapes, and blinds to let the sunshine in to warm up your house. • Put caulking around window frames and doors from the inside. • Make sure windows and doors close well so they do not let any cold air in. • Repair any broken or cracked window glass. • Plant trees in your yard because trees break the cold winter wind before it reaches your house. • If you have a fireplace, make sure you have a tightfitting damper and keep it closed when you are not using the fireplace.
RESOURCES Eskom www.reimag.co.za
SMART MOVES
Enforcing The FIC Act
And combatting crime
that your firm accounts to another regulatory body – the Estate Agency Affairs Board (EAAB) – which is responsible for the enforcement of various compliance requirements, including the terms of the FIC Act.
The obligations of an accountable institution are summarised below:
C
riminals derive prof it through illegal activities, such as the sale of banned drugs, counterfeit goods, and human trafficking, among others. They use the country’s financial transaction system to make their profits or terror funding appear legal. Estate agents have been identif ied as being susceptible to abuse by criminals wishing to disguise the proceeds of their criminal activities, often referred to as ‘dirty money’. An example of this is where a drug dealer buys a property for cash. The funds may have been acquired illegally but, if he later resells the property, then the funds he receives on the sale appear to be legal because he has carried out a legal transaction by selling immovable property through legal channels.
To prevent this from happening in your business, you should ensure that your business complies with the requirements of the Financial Intelligence Centre Act No. 38 of 2001 (the FIC Act), as amended. Obligations of estate agents in terms of the FIC Act · Estate agents are categorised as accountable institutions in terms of the FIC Act. This means 34
Residential Handbook 2013
· · ·
You must register your firm with the FIC. This should be done online via the FIC’s website – www. fic.gov.za. A manual process for registering is also available – contact the FIC should you wish to go this route. You will be asked to provide the details of a representative of the business; it is best to list the person who will be responsible for reports you are required to submit to the FIC. (See below for more information about the reports.) You have a duty to identify your clients.
· You have a duty to keep records relating to your clients and to the transactions carried out with them. · You must provide reports to the FIC via the FIC website in the event of these types of situations occurring: · Any cash transactions of R25 000 or more; · A Suspicious and Unusual Transaction Report must be submitted if you regard a transaction as in some way suspicious or unusual in comparison with normal business practice; · A Terror Property Report must be submitted if you hold property on behalf of someone who may have been involved in carrying out terrorist activities. · You must introduce certain measures in your business to promote compliance with the FIC Act.
RESOURCES
FIC www.reimag.co.za
ADVERTORIAL
FINANCIAL INTELLIGENCE CENTRE ACT
Is your business assisting in combating financial crime?
C
riminals derive profit through illegal activities, such as the sale of banned drugs, counterfeit goods, and human trafficking, among others. They use the country’s financial transaction system to make their profits or terror funding appear legal. Estate agents have been identified as being susceptible to abuse by criminals wishing to disguise the proceeds of their criminal activities, often referred to as ‘dirty money’. An example of this is where a drug dealer buys a property for cash. The funds may have been acquired illegally but, if he later resells the property, then the funds he receives on the sale appear to be legal because he has carried out a legal transaction by selling immovable property through legal channels. To prevent this from happening in your business, you should ensure that your business complies with the requirements of the Financial Intelligence Centre Act No. 38 of 2001 (the FIC Act), as amended. Obligations of estate agents in terms of the FIC Act Estate agents are categorised as accountable institutions in terms of the FIC Act. This means that your firm accounts to another regulatory body – the Estate Agency Affairs Board (EAAB) – which is responsible for the enforcement of various compliance requirements, including the terms of the FIC Act. The obligations of an accountable institution are summarised below:
1 You must register your firm with the FIC. This should be done online via the FIC’s website – www.fic.gov.za
A manual process for registering is also available – contact the FIC should you wish to go this route.You will be asked to provide the details of a representative of the business; it is best to list the person who will be responsible for reports you are required to submit to the FIC. (See below for more information about the reports.) 2 You have a duty to identify your clients. 3 You have a duty to keep records relating to your clients and to the transactions carried out with them. 4 You must provide reports to the FIC via the FIC website in the event of these types of situations occurring: a. Any cash transactions of R25 000 or more b. A Suspicious and Unusual Transaction Report must be submitted if you regard a transaction as in some way suspicious or unusual in comparison with normal business practice c. A Terror Property Report must be submitted if you hold property on behalf of someone who may have been involved in carrying out terrorist activities. 5 You must introduce certain measures in your business to promote compliance with the FIC Act.
For further information call 0860 222 200 or e-mail us at fic_feedback@fic.gov.za
MANAGING
Getting Perfect Tenants
Is critical for success
O
nce you have signed on the dotted line and your property is officially in your ownership, it’s time to make the property
work for you and bring home the bacon. The next step in your investment property journey is tenanting your property. The only time you are in complete control of your tenants is before they have stepped in the front door, that’s why finding the right tenants for your property are a critical part of success, the wrong tenants can cause more than just headaches! Check and check again To find your perfect tenants you need to stack the odds in your favour. And one way to do this, is to check everything about the people applying to be your tenants. Relevant documents you must ask for: Credit Record Proof of identity (photo ID such as a passport or driving licence) 36
Residential Handbook 2013
Proof of current address (recent utility bill or financial statement) Last three months’ bank statements (is their
account being managed properly, or is it permanently overdrawn?) Last three months’ wage slips (for proof of income). Employer’s reference (full or part-time, length of time employed) Accountant’s reference if self-employed. Last landlord’s reference (establish whether there were payment issues or if any dilapidation was recorded)
Once they have provided you with the correct documents you can see for yourself whether they are habitual defaulters or pay on time. It is very important not to just check their credit record, with a credit amnesty on the cards for some people who are credit blacklisted, they may come up with a clear credit record but only because they have been given credit amnesty. By looking at their bank www.reimag.co.za
www.reimag.co.za
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MANAGING statements and phoning their previous landlord, ( not the current one, as the current landlord may simply
be trying to get them to move on and give a great reference to get rid of them) you can paint a picture as to the type of lifestyle they lead and what type of tenant they are. It might seem like a lot to check for a tenant but even if they are professional and look like the perfect tenants, don’t take chances, as they say act, “in haste, repent at leisure.” If in doubt, consider a guarantor If you have any doubts at all about your tenant applicants, but you would still like to proceed with them for some reason, you should ask them to provide a guarantor. The guarantor will under write the tenants’ obligations to pay the rent, make good any damage, settle outstanding bills, etc. You must vet the guarantor the same way you would vet your tenant.
ALWAYS GET A GUARANTOR Trust your instincts IF YOUR TENANTS: 1 2 3 4 5 6 7 8 9 10
38
have no previous rental history; are less than 30 years old; have less than 18 months’ employment history; haven’t worked for their current employers for more than six months; are self-employed but have less than three years’ satisfactory accounts; have been working abroad in the previous six months; earn less than three times the annual rent; are employed in an occupation that is considered changeable; are students; have low (or no) credit scores.
Residential Handbook 2013
Once all the checks have been completed, it comes down to the individual and how you feel about them. What do your instincts tell you, how have they acted and interacted with you throughout the process? If you have any reservations at this stage it is better to cut your losses and start again, another week or two spent looking for the right tenants will save you time and money later on.
THE TENANCY AGREEMENT According to the Rental Housing Act, a lease must contain the following minimum information:
1 2 3 4 5 6 7
8
9 10 11 12
the landlord’s name and address; the tenant’s name and address; a description of the property, eg its address; how much rent the tenant must pay and details of any escalation (increases in rent); any other moneys which the tenant must pay, such as water and lights; when the rent must be paid - it is usually at the beginning of each calendar month; how much deposit the tenant must pay as security for any damage he or she might cause; the period of the lease - if there is no specific period, the lease must state how much notice must be given to end it; the landlord’s and tenant’s obligations towards each other; a list of existing defects to the property; any house rules that the tenant will have to obey; a list of furniture and fittings (if the property is being let as a furnished unit).
The Agreement The law also states that landlords must issue a detailed receipt for every payment received from the tenant. If a deposit is paid, invest that money www.reimag.co.za
in an interest-bearing bank account and must give the tenant a written statement of the interest earned
Essentially, before giving your lessee the boot, you’ll need to prove that you’ve given them a range of
Evicting truant tenants There are ways to go about enforcing eviction, provided that you stick carefully to the correct legal procedures. Threats of violence and sabotage simply aren’t going to get the job done, and changing the locks on your property can constitute an illegal eviction, which will only serve to weaken your case should the matter be taken to court. So before you enforce your own brand of vigilante justice, take a moment to consider the most effective and speedy way to get the result you want.
Whilst the thought of assisting your tenant in their property search may not thrill you, you will end up saving time, money and stress by strictly adhering to the terms of the PIE Act. Property owners have, in the past, had criminal charges laid against them as a result of bypassing this element of the eviction process, so while providing a helping hand might be the last thing on your priority list, it will give your tenant very little room for legal recourse.
whenever the tenant asks for one.
Get a court order The most important thing to remember is that you cannot evict a tenant yourself. Whilst many landlords dream of frog marching their troublesome tenants off their property, eviction can only be officially carried out by a court order. While this process isn’t free, the departing tenant should be obliged to reimburse your legal fees, as well as any outstanding rent money, at a later stage.
alternative rental solutions, all within the same price range and area.
Insure yourself Whilst there’s no proven way to ensure that you aren’t housing the next Charles Manson, you can reduce your risk by taking out some form of rental risk cover. This form of insurance can at least protect you against any form of property damage, and ensure that all your rental payments and legal costs will ultimately be covered.
Offer an alternative The PIE, (Prevention of Illegal Eviction) Act stipulates that tenants being asked to leave your property need to be provided with an ‘equable solution’.
RESOURCES Property24 www.reimag.co.za
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MANAGING
Property Managers
Should you delegate?
S
hou ld you ma na ge you r prop er t y or properties yourself or employ a property management company to do it for you? The decision rests largely on your circumstances and your experience, as well as the size and number of properties you are letting. If for example you own a number of properties in one area, such as flats in a block of flats or properties in a sectional title or gated community, logistically you may need to employ a management company to deal with financial or legal aspects or the tenants themselves. A good management company can provide you
with the necessary support and full range of services to run your properties at their full capacity. As the owner of more than one property you may not want to be bogged down with all the little details. 40
Residential Handbook 2013
Alternatively you may decide to delegate all aspects of your enterprise to a management company, but what will they offer you? The management agent will act as the lynchpin between the owner of the property and the tenants who are renting it and are often responsible for: · advertising your property to potential tenants. · sourcing suitable and reliable tenants for the property; · accompanying potential tenants to view the property; · obtaining references and conducting credit checks on potential tenants; · providing you with information on the latest safety regulations; · preparing the tenancy agreement; www.reimag.co.za
Koopliede www.koopliede.co.za
Buy at
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082 466 2341 info@koopliede.co.za www.reimag.co.za
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MANAGING · organising and managing the collection of the tenant’s deposit;
· preparing the inventory and conducting a state of repair assessment on the property; · checking in the tenant and agreeing the inventory · collecting the rent from the tenant; · transferring the rental income to your account and providing you with statements of account; · managing and arranging any necessary repairs; · inspecting the property periodically and feeding back any comments to you; · providing tenants with notice at the end of the tenancy; · re-letting the property as quickly as possible and minimising any ‘down-time’; · dealing with legal aspects of the tenancy/property, including evictions, non-payment, harassment or problems with squatters. So how do you decide what to delegate and what to do yourself? Again this is where experience comes in. What are your strengths and weaknesses? If you are great at numbers and a f inancial whiz, it might
make sense for you to keep control of the financial side of your properties but delegate day-to-day responsibilities to your management agency. The main problem with managing your own investment property is usually the time and energy it takes on monthly basis. You have to carefully screen tenants, maintain applications, do the credit checks (those cost as well), ensure the lease agreements are correct and up to date with the law, inspect the properties on regular basis, collect rent, organise repairs and so on. If you are already very busy, then you can maximise your time by utilising a property management company. The same goes for legal know-how, property management agencies are up to speed on all the latest laws and legal requirements when it comes to letting your property out and managing it.
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Residential Handbook 2013
Choosing your property manager The first step in choosing the best property manager is to find one that suits your needs, so look for a property manager that specialises in your area of investments.
The next thing you want to make sure is that they manage properties. It might sound like a no-brainer, but ask them what other properties they manage, how many they manage and what services they provide that you will benefit from. Don’t narrow your choices too much, consider multiple property management firms when you make your decision, cover the basics and decide on a few companies you want to meet with. Come up with a list of questions for the companies you are going to meet with. You don’t have to show them the list, but have a checklist to ensure they will cover all your needs. Compare commission. While you don’t want to go with the most expensive firm, you also don’t want to
go with the lowest bidder. Try to find a compromise, or middle ground, someone who is charging reasonable commission and will meet all your needs. Lastly ensure that they have two very important documents, the first is a fidelity fund certificate in order to trade, and the second is accreditation with the Estate Agency Affairs Board. Some questions to ask How do they advertise vacancies? A great management f irm will be aggressive in their advertisements. You don’t want your property staying vacant for too long. Remember that you have to bear the burden of any vacancies, not the management firm.
www.reimag.co.za
How do they show properties? The process they use to show properties not
only describes the precautions they use, but also indicates whether it will be successful in obtaining quality tenants. For example, if they only show properties Monday-Friday 9am-5pm, this will decrease your odds of getting a tenant with a regular job. How do they screen tenants? This is really important. Make sure that they are using background checks. A simple background check can find any negative history and keep you from huge losses. All it takes is one bad tenant to turn you off to rental properties. How will they go about collecting past-due rents? Any legitimate firm will have a process in place. Make sure that it sounds like a good one. How will they control maintenance costs? Make sure that they will keep up with regular maintenance and find out beforehand about their
When you have made your choice it’s time for the paperwork, the contract. Make sure all the terms
and conditions are iron clad and that all the services and the fee structure are clearly set out. The term of contract should clearly define all specific dates for the tenure of a management firm in your services, including the start date and end date, if known prior to the signing of the contract. Oftentimes, property managers sign deals on a one-year basis with owners. Though you hopefully won’t have to terminate a contract with a management firm due to poor revenues or a lack of quality on their part, there may come a time when you don’t need their services any longer. This is why it’s vital to expressly indicate in an agreement that you have the right to end a contract during a given period. The right information will lead you to the right decision, and a property manager can help turn your property investments into a well-oiled machine.
processes.
How do they deal with after hour emergencies? If they don’t have a system in place for these types of emergencies, why would you pay them money in the first place? What type of accounting do they offer owners (you)? It is always good to find out what kind of accounting services they offer. Remember that great accounting means less work for you when tax season comes. What type of liability insurance do they have to protect you from lawsuits? This one is really important. You always want to be covered in this business. www.reimag.co.za
RESOURCES Just Property
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IMPROVING
Buying A Renovator’s Dream
Visualise the potential
B
uying a home that is in serious need of renovation is not for everyone and can be riddled with disaster. However, for those
who do have the know-how and finances, it could be a very profitable and rewarding endeavour. Adrian Goslett, CEO of RE/MAX of Southern Africa, says that the difference between a successful investment and a money trap lies in choosing the right fixer-upper home from the start. According to Goslett, there are a few reasons why certain investors opt for these kinds of homes, such as the fact that with less competition in the market for fixer-uppers, they are
generally lower-priced properties in spite of the market conditions. There is also a large potential on the return of investment at resale, with many investors buying fixer-upper homes with the sole intention of selling them for a profit at a later date. Making the right decisions from the beginning will have an impact on the end result of the property’s investment prospective. The perfect home that everybody wants may be hidden under a variety of elements that would normally turn many buyers away, such as peeling paint and a sagging ceiling. An investor looking to find the ideal fixer-upper will have to see past all that to visualise the home’s true potential. 44
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www.reimag.co.za
Goslett gives investors looking for the ideal fixerupper some pointers to consider. 1. Location No matter what kind of property a buyer is interested in, one aspect that will always need to be considered is location. A propert y’s location will largely determine its value once it has been fixed up and put on the market. If the house is in need of repair and so is the neighbourhood, there may be a risk of overcapitalising and having a nice house in a bad area. From an investment perspective, it is always better to purchase property in a desirable area that is close to a range of amenities – the rule is to rather buy the worst house in the best suburb than the best house in a suburb which is not well located. 2. Composition Generally the most sought after type of home in a particular area is the one to choose. If most of the buyers in an area are looking for a three-bedroom home, then don’t buy a two-bedroom one, or if sectional title or estate properties are the way to go, choose an investment home where demand is strong. 3. Design The general layout and design of the fixer-upper home needs to work. Moving walls or rectifying a home that has been designed badly can be very expensive. The layout of the home should flow and be practical. For example, if a buyer has small children they would not want bedrooms to be on opposite sides of the property. 4. Condition It is important to consider the overall condition of the home to decide whether the renovations are manageable or require major changes. If too much needs to be done to make the house liveable, it may be worthwhile looking elsewhere. Aesthetic improvements are typically less costly and take less time than other modifications. www.reimag.co.za
LESS COSTLY EASY FIXES 1
Filling small cracks, repainting both interior and exterior.
2
Sanding and refinishing wooden floors, tiling or laying down new carpets.
3
Updating lighting with contemporary styles.
4
Refurbishing or replacing skirting boards.
5
Fixing broken windows.
6
Adding a deck.
7
Resurfacing kitchen cupboards.
8 9
Upgrading bathroom fixtures. Replacing doors.
POTENTIALLY COSTLY FIXES 1 2
Shoring up foundations. Adding additional rooms, a garage or moving walls.
3 4 5 6
Replacing window frames throughout. Replacing the roof. Replacing all plumbing and electrical. Pouring concrete for driveways, sidewalks, steps.
7
Complete kitchen or bathroom remodels (even though these changes can add value to a home).
Goslett concludes by saying that if investors are unsure of anything they should get a professional home inspector to have a look at the property for any major defects that could be very costly to repair. Buyers wanting to purchase a fixer-upper should rather make sure they know what they are getting themselves into from the beginning of the project, than find out at the end.
RESOURCES RE/MAX Residential Handbook 2013
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IMPROVING
Raise The Value Of Your Property With DIY
T
here are a lot of small things you can do
to your property to add value to it. And whether you decide to do it yourself or hire an expert, you don’t want to spend loads of money. Here are the best and least expensive ways to boost the value of your property without having to break the bank. Floor appeal If you have dated, old or dirty carpets, it is time to pull them up. A lot of houses have the most beautiful wooden floors underneath them, hidden by carpets. So why not sneak a peak at what lies under your carpets? If you don’t find what you are expecting, and you have to buy the wood yourself, it’s a really good idea to speak to a professional about the best type of wood within your budget. There are many manmade variations to wood that look as good as the real thing, so shop around. 46
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Same thing goes for vinyl f looring — you’re going to have a hard time selling if it’s old, torn or stained. Replace it with a clean, neutral vinyl or vinyl composite tile. Moving or removing internal walls to add space Be very careful about knocking down walls inside your home, or you could cause the ceiling or roof to collapse. There is a large trend towards open plan homes and open space. Making your home more open plan will add value and is a cheaper option than extending your property. But this type of improvement will need to be done by professionals to ensure your ceiling doesn’t end up on the floor. Updating the windows and fixtures New double-glazed PVCu windows can add considerable value to a property and in the lower end of the market are considered essential by most buyers, www.reimag.co.za
www.reimag.co.za
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IMPROVING regardless of their style or lack of it. PVCu windows require very little maintenance, are energy efficient
and, depending on design and installation, can be very secure. It is often only worth replacing windows that are either beyond repair or inappropriate in terms of style, or where they could add more light. Where windows need replacing, they should be replaced like for like although it will be necessary for them to be double-glazed to meet the current building regulations. If you have heavy window coverings, replace them with simple shades. The front door Since your front door is one of the first things guests and neighbours see, making your front entrance magnificent can go a long way in enhancing your home’s attractiveness and your pride of home ownership. You might be surprised to learn that the most prominent feature of a house, the front door, is the first thing visitors and passers-by notice, you need to make sure your front door says your property is amazing and doesn’t let you down. A splash of paint and more A fresh coat of pa int can create a magica l transformation, but have you also thought about painting old built-in wardrobes? If you are unsure, try coating any suspect surfaces first with an undercoat. At the same time, change all the handles on any built-ins/cabinetry. New fittings Bathrooms and kitchens can be expensive to refurbish. However, imagine how they would look with a simple makeover of new taps, handles, towel rails and mirrors. If you have more than one bathroom this can also add a sense of cohesion. A modern, high pressure shower head can make a difference between love or like in the bathroom. Storage ideas It’s often overlooked, but when buyers look at a new 48
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home they’re often thinking about where they will put their favourite items. Kit sheds are a great way to add
storage to a forgotten corner of the yard. Alternatively, it can be as simple as adding some brackets and shelves to an existing garage, or think about creating some safe storage space in the roof if there’s room. AND THE DON’TS Gardens Don’t destroy your garden. Building an extension at the expense of your garden can actually reduce the value of your home. Outside space is always desirable for future buyers - it’s important to get the balance right. Losing room Losing a bedroom in your property, for any reason, will devalue your house. If you’re considering losing a bedroom in order to create a bathroom or study, think again. Don’t go garish Garish and ‘unique’ kitchens and bathrooms will have a detrimental effect on value. Just because you like lime green walls doesn’t mean your tenants or prospective buyers will.
Water works Swimming pools or jacuzzis are unlikely to cover the installation costs. They will also use a lot of electricity and can become very expensive to maintain. If you must have one over the other, a swimming pool is more likely to appeal to a family than a jacuzzi. Keep it neutral Decoration needs to be neutral - just because you love bright colours and patterns, doesn’t mean prospective buyers will. Also think twice before wallpapering or adding permanent decorations to your property, you may love them now but will you still want them in five years and will they be costly to replace and update? www.reimag.co.za
We finance what others don’t We finance what others don’t We finance what others don’t We finance what others don’t
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Or
*Terms & Conditions apply
Visit our website www.tuhf.co.za for more information *Terms & Conditions apply *Terms & Conditions apply
IMPROVING
Picking the perfect colour
for your property
3. Consider your neighbours The house next door can give you paint colour ideas, but don’t copy your neighbour exactly. Choose colours that set your house apart, w it hout c l a sh i n g w it h ne a r by buildings.
1. Honour history If you’re about to paint an older home, you’ ll
probably want to use a historically accurate colour scheme. You can hire a pro to analyse old paint chips and recreate the original colour. Or, you can refer to historic colours and select shades that might have been used at the time your home was built. 2. Jazz up the past In some neighbourhoods, homeowners f ly in the face of history. Instead of choosing historically accurate colours, they paint their houses modern colours to dramatise architectural details. Using bright colours on old architectural details can produce startling and exciting results. But before you buy 10 gallons of bubblegum pink, it’s a good idea to look at what your neighbours are doing. A fluorescent-coloured Victorian that looks splendid in San Francisco will seem wildly out of place in more conservative neighbourhoods. 50
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4. Borrow from nature The landscape around your house is blooming with colour ideas. Trees may suggest an earthy palette of
greens and browns. A beach setting might suggest vivid blues, turquoises, and coral colours. Even the garden in your front yard can inspire exciting colour combinations. 5. Check the roof Your house is your canvas, but it is not blank. Some colours are already established. What colour is your roof? Your paint colour doesn’t need to match the roof, but it should harmonise. 6. Look for things that won’t be painted Every home has some features that will not be painted. Does your house have brick walls? A natural wooden door? Will steps and railings remain their existing colours? Choose a colour scheme that harmonises with colours already present on your house. www.reimag.co.za
LoweJHB 314978/OC
Before you buy a top-priced paint have a look at a top-quality one instead. Our Gold Medal range comes in a vast range of colours, a choice of long-lasting textures and ďŹ nishes - but at a common sense price. Gold Medal gives you the best without burning a hole in your pocket. Look for it at leading retail outlets, who provide high quality paints at affordable prices. Visit our website at www.medalpaints.co.za T H E R I G H T Q U A L I T Y M AT T E R S
www.reimag.co.za
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IMPROVING
Give Your Garden TLC
W
And improve your kerb appeal
hether you are attempting to entice tenants or have decided to sell your propert y, one thing that is often overlooked is kerb appeal. An attractive and wellmaintained landscape can add as much as 10% to the value of your home. Getting your garden into top shape doesn’t require large amounts of money or time; here are the top tips to make your garden a green pleasure instead of an eyesore. Spruce up outdoor containers. Container plants, especially large tropicals, add considerable interest to patios and doorways where would-be buyers enter and exit the house. Such displays also demonstrate the endless possibilities for designing with container plants. Touch up the mulch. Nothing spruces up a place like a new application of mulch, so apply a fresh layer in all your garden beds. The colour enhances the contrast of the surrounding plants and makes everything pop. What’s more, mulch is relatively cheap and easy to apply. Plant some instant colour. Seasonal colour makes the landscape pop as well, and flats of annuals are also relatively inexpensive. Go for a splash of several colours or a more monochromatic scheme, whatever fits in with the look of your home.
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Shape unsightly or overgrown trees and shrubs. Regardless of the season, it’s a good idea to tackle any overlooked pruning chores because nothing says neglect like a bunch of dead branches. The idea is to show how well not only your house but your garden has been maintained. It’s okay to prune deciduous trees and shrubs any time of the year. Tend to perennial beds. Tidy up herbaceous plants, such as annuals and perennials, that don’t look as good as they should. If a plant is in such bad shape that it needs to be removed, either replace it or stick a decorative pot in its place. Clean up water features. Get rid of any visible algae, remove leaves and clean filters so that the water is crystal clear. After all, a water feature that doesn’t look good or function properly can be an instant turnoff. Repair faucet leaks. A leaking faucet suggests that there may be other problems elsewhere in the plumbing, and that can be an instant turn-off to tenants and buyers. Power-wash dirty surfaces. Consider buying or renting a power washer to clean paved surfaces. With very little time or effort, you can make grungy, grimy surfaces look brand-spanking new. Power washers also do a great job of cleaning fences, as well as brick and vinyl siding.
www.reimag.co.za
IMPROVING
Time To Build
The perfect home office
W
orking from home has huge benefits: you no longer have to commute and spend hours and money getting to and from work; with the right space, your home office is a few steps away. Office with storage space If you are a field based sales rep, freelance writer or designer, you will need some storage space for props or products. If this is a permanent base you may need to accommodate files for work. One way of creating an office space with extra storage space is adding a mezzanine to your garage for office space and then using the ground floor as storage space. Alternatively you could modify a basement or small room.
TIP If you use roof space to create an office, large glass windows can open the space up and give you plenty of natural light. Portable, flexible and mobile space If you require a portable or f lexible workspace to www.reimag.co.za
connect to your company server or for checking emails, or are setting up an Internet or telemarketing business, all you need is a desk and a computer. Building a home off ice suite under the stairs or simply adding an all-in-one unit to a redundant corner of your home can achieve this. By using wireless Internet you can keep the space tidy and free from clutter. Your mobile space could also double up as space to conduct personal business or for your children to do their homework. Public safety Does you work involve other people, such as childcare or hairdressing or physio? If so you will need to consider your neighbour’s privacy and the Residential Handbook 2013
53
IMPROVING health and safety of your clients. By making safety a priority, you will ensure that work-related accidents
don’t occur on your premises. If you intend to practice work with the public from your home, you may be subject to work hour restrictions or layout restrictions in terms of the space used to conduct the business.
TIP Make sure your current building and contents cover is adequate to cover you working from home and enquire whether you need additional policies to cover clients/ customers. Workshop space If your job is more manual, along the lines of logistics, handicrafts or painting and framing, you may need to consider building an extension onto your property.
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The size of the extension will depend very much on your current requirements and business plans for the future. If your needs are short term, then you might want to convert a basement, garage or outbuilding. If you are considering building an extension onto your property or altering your property to meet your work needs, you may require planning permission.
Your tech needs Your technology needs will vary according to what work you are doing from home. The basics will entail a router, a broadband line and Internet package. With so many great deals on right now, you can pick up fast Internet for relatively cheap, try axxess or MWEB. If you are working on multiple computers a wormhole switch might make life a lot easier, allowing simple plug & play file swapping and content sharing across multiple platforms. Your other needs will be a printer, a scanner and a phone, and then your home office is complete.
www.reimag.co.za
STORAGE
EEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE
STORAGE
EEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE
Eelocation
Etorage
Eall Me: Eel: 021 680 5336
Eall Me: Eel: 021 680 5336
removals@storagecube.co.za
removals@storagecube.co.za
STRATEGIES
Cleaning Crime & Grime Urban renewal
U
rban renewal is not a new concept, dating back to the 19th century in developed
nations, it has played an important role in the history of demographics around the world.
So what is urban renewal? Quite simply put it’s the process where an urban neighbourhood or area is improved and rehabilitated. The renewal process can include demolishing old or rundown buildings, constructing new, up-to-date housing, or adding in features like a theatre or stadium. Urban renewal is usually undertaken for the purposes of persuading wealthier individuals to come live in that area. Urban renewal is often part of the gentrification process. By enhancing a neighbourhood and revitalising it, people are encouraged to buy or build in that neighbourhood, small businesses are encouraged to trade and slowly the area is revitalised with the influx of money. But does it work? 56
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Two places where urban renewal can be seen most clearly are in Woodstock in Cape Town and in the Johannesburg CBD.
Woodstock Situated alongside the Bo-Kaap lies Woodstock. It has often been referred to as the poster child for gentrification. Once a bustling seaside town, the ease of access to the harbour saw the face of Woodstock change into an industrial behemoth. The very first glass manufactured was done so at the Woodstock Glass Factory in 1879. Despite the successful nature of it’s industrial business in the 20th century, crime and drugs saw the neighbourhood value plummet as buildings fell into disrepair and litter dotted the streets. So what changed? Woodstock ’s designation as a priorit y Urban Development Zone (UDZ) came with significant www.reimag.co.za
tax rebates for urban upgrades and aimed to support the CBD’s expansion eastwards. This played a key role in kick-starting the first wave of large-scale commercial developments in 2007. Also, as the face of the area slowly changed and became ‘trendy’, with buildings like The Old Biscuit Mill and restaurants attracting younger and trendier crowds, Woodstock became a sought - after area. Who are these new residents? They are mostly young, white educated professionals who are searching for a convenient place to live, close to town but in a more affordable area. And with the whole of South Africa battling crime, they are not worried about the crime rate in the area. Many of the old Victorian houses in Upper Woodstock have been renovated and have given the street view in Woodstock a much - needed makeover. Lower Woodstock still remains the ugly duckling in the Woodstock family, as the divide between the two areas is evident. Is it all good? Rising property values are often too readily assumed
to benefit local homeowners, while in fact they have put severe strain on old-established residents, who have had to cope with rising municipal rates due to property re-evaluation. According to the AntiEviction Campaign, some families have not been able to afford the escalating rates, leading to their eviction and removal. And the outcome? While the gentrif ication effect has its negative qualities, the revival of Woodstock outweighs the negative attributes. An area once slipping into decay, with rising crime and buildings in disrepair can only benefit from the process of urban renewal and the renovation and restoration that it brings. Johannesburg Johannesburg has put substantial resources into www.reimag.co.za
turning around the central business district (CBD), a victim in the 1990s of capital flight to the northern suburbs. Crime rates are down thanks to intensive policing; occupancy rates are up, thanks to a combination of quality properties and low rents; investment is increasing as confidence improves; and cleanliness has returned, thanks to an intensive campaign from Pikitup, the City’s waste collection utility. The Gauteng government, the biggest tenant in the inner city with 120 000m², has major plans to develop the area around Market Square into a government precinct. Demographics The inner city has 217 000 residents in 37 000 dwelling units. Some 800 000 commuters enter the city every day, and 300 000 - 400 000 migrant shoppers visit the city each year. The city has 7 million m² of floor space and 3 million m² of office space. The office buildings represent a R19 billion investment, and the housing a R1.2 billion capital investment. The plan The government in Johannesburg has put substantial
resources in the CBD to encourage an attractive environment, which will attract both residents and business. And with the government driving the urban renewal, more investors have bought buildings in the CBD with an eye to refurbishment and reselling. Along with private investors the government attempted to meet the needs of the city, namely economic rejuvenation. Their strategy for urban renewal include projects which look at uplifting not just the area but the actual residents. Urban renewal offers investors the chance to get in at the ground level of an area, and be a part of the renewal process, which can be very profitable as property prices rise substantially, making the property in the area more valuable. Residential Handbook 2013
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STRATEGIES
Changing The Inner City TUHF leads the way 1. Please provide some background on TUHF? In response to the evasive redlining and the urban decline of the inner cities and particularly the inner city of Johannesburg, the huge demand for rental housing and the lack of available liquidity, TUHF was established to take advantage of this opportunity. So in 2003, a number of organisations including the National Housing Finance Corporation,(NHFC) the Inner City Housing Upgrading Trust and NURCHA pooled resources to form TUHF and based on best lending practices originally developed in close operation with Shorebank Chicago USA, provided a platform for lending in the inner city to landlords in the rental housing sector. Today, TUHF has evolved into a financially viable organisation. 2. What was your wow moment, the moment when you realised that TUHF was going to work and be able to change the inner city? TUHF’s wow moment occurred in December 2004, when after 18 months TUHF had grown a book that had sufficient quality and sufficient size to record its first month of operating profit, breaking through the break even line as quickly and as strongly as it did. This illustrated that there was a strong demand for commercial property lending and TUHF’s offering was beginning to prove that this market opportunity ran into the billions. 58
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3. What message can you give to businesses looking at TUHF as an investment opportunity? For existing investors that are requiring a commercial financier, TUHF offers tailor made financial solutions and advice based on in depth market knowledge. Further, TUHF provides the best structured all round packages to meet investor requirements. We are well networked in the inner city and our confidence in what we do provides a good basis on which good investment decisions can be made. For prospective investors, they
should be confident of the underlying demand of rental housing in the inner cities. The reality is that it is based on a multi sector economy which has, over the last 10 years, yielded high demand in the 18000 units that TUHF has financed. In support of fixed income and other debt financiers - TUHF provides a means for debt investors that delivers hard commercial returns with many impact investing attributes such as urban regeneration, low income housing, black economic empowerment, access to finance and all TUHF’s investments meet the requirements of the newly gazetted financial services code. 4. TUHF, is celebrating 10 years of a” Good Business, doing good,” provide details on some of TUHF’s achievements and successes over the years? TUHF has had a remarkable first 10 years. TUHF’s www.reimag.co.za
consistent growth in finance since inception proves that our slogan “a Good Business, doing good” is embedded
in everything that TUHF does. All of TUHF’s achievements and success can be contributed to all our funders and clients. To name a few, in 2004, TUHF secured an interest free loan from the National Housing Finance Corporation of R50 million and established, with the Gauteng Partnership Fund, the Inthuthuko Equity fund which assisted in the financing of TUHF’s first black entrepreneur, Isaac Chalumbira. In 2006 TUHF reported that approved loans had doubled from the previous year and over 2000 units had been financed. In 2009 TUHF expanded operations in Gauteng and opened their first regional office in Durban, in this year TUHF had extended finance to over 100 entrepreneurs. The passing of the R1 Billion mark in TUHF’s loan book was the highlight for 2010. The opening of our second regional branch in Port Elizabeth ended our year in 2011. In 2012, NHFC, Futuregrowth and the Public Investment Corporation committed R125 million of additional capital and in the decade of operation TUHF’s number of BEE clients exceeds the 100 count. 5. What is your vision for TUHF and the affordable housing sector? Our founding vision will always remain “to have a R5 billion loan book and be a national organisation serving all cities that experience urban decline problems”. The underpinning principles to support TUHF in achieving this vision is to operate TUHF as a professional commercial property financing corporation exhibiting best practice in everything that we do. From financial administration, our corporate governance and our world class IT system, we know that TUHF is a best principle lender and that is beyond question. The vision for the affordable housing sector is to offer an alternative to the 40x40 mentality (meaning 40 square metres within 40km of the city). This means that the affordable housing sector in the inner cities should come with integrated residential development opportunities based on established infrastructures, www.reimag.co.za
improved and increased urban densities and in that they should be close to economic opportunities and
social services such as schools, parks, hospitals and clinics. The affordable housing sector should create opportunities for individuals close to places of work so that there is easy to access social services. However, on an economic level, the affordable housing sector should not create massive new infrastructures but rather use and develop what already exists. 6. Who is eligible to apply for funding from TUHF? TUHF targets entrepreneurs who live and or work in inner cities areas. People who have taken the time to do research to get a good understanding of what is happening in the inner city market. TUHF particularly targets people in the property industry, this can include anyone from caretakers, artisans, construction workers and property managers. In addition to that TUHF targets people in the safety and security industry such as f iremen, nurses, teachers and other people who show an understanding and ability to be able to handle the multi facet aspects of real estate investment, like technical, interpersonal and contractual components but most of all, TUHF will finance any good project in the inner city.
7. What does the next five years look like for TUHF? Over the next five years, TUHF’s focus will be on completing the national expansion programme into other inner cities within South Africa. TUHF also hopes to have a substantial increase in our ability to raise large volumes of debt finance from between R700 million to R1 billion per annum, this will assist TUHF to increase its operating capacity to meet the proven demand for its products and services and to continue to improve on its product offering.
RESOURCES TUHF Residential Handbook 2013
59
INNOVATION
The Facade Of The Future What will our homes look like?
Sky – Terra Towers A San Francisco based designer, Joanna Borek-Clement, is seeing cities in the skies. Not in San Francisco, however. Her inspiration is the shape of neuron cells. The cities in the skies will be interconnected towers, so instead of skyscrapers blocking out the sun, it’ll be cities keeping the sunlight out. The Sky-Terra towers offer many options from public parks, to greenbelts, playing fields, jogging paths, amphitheatres, pools or bathhouses – all with the aim of providing people with access to open space. The towers are supposed to reduce the urban heat island effect.
The Wolke 7 When it comes to travelling homes, some prefer the land and some prefer the sea… but in the future, some will choose the sky! The Wolke 7 flying home concept has modern creature comforts and then some… not to mention, style that looks straight out of Sky Captain and the World of Tomorrow. Designed by Timon Sager, the concept has a totally futuristic feel to it.
Rainwater will be used for landscaping needs.
Reboot House Reboot is a conceptual house designed by Victor Vetterlein to be completely self-sufficient. The pod-like house makes use of solar cell paint, wind turbines and rainwater collection to harvest energy. The internal environment is digitally controlled and operated by voice-activated sensors, remote controls and touch pads, or remotely from a mobile phone or computer. Reboot is self-sufficient and eco-friendly. 60
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Water Discus Hotel First it was water villas in the Maldives, allowing g uests a glimpse of reef life from above the surface. Now, hoteliers seem hellbent on luring us beneath the waves. Star Trek meets The Undersea World of Jacques Cousteau in this computergenerated image of the Water Discus hotel (above), scheduled to open in Dubai with backing from a Swiss company. Designed by Deep Ocean Technology, its 21 suites will be housed in two main discs – one above water, one below – and facilities include a bar and a dive centre. www.reimag.co.za
RPI specializes in the procurement of repossessed properties in the Western Cape at 20-40% under the current deated market value.
WE OFFER
BUY-TO-LET: Passive Retirement Income (Rental factors of up to 1%) BUY-TO-FIX-TO-SELL: Income Generator BUY-TO-LIVE: 20-40% more value for your money STRATEGY: Equity, Rental Factor, Break-even-point TRANSPARENCY: Zero Risk CONSOLIDATION: Cash Back in Your Pocket UNDER ONE ROOF: Bonds, Trusts, Rentals, Insurance TAKE CHARGE: Never Lose Control of Your Money Examples of completed transactions Address
We Paid
Sold For
42 Gillian Street, Eversdal R 1 200 000.00 33 Selbourne Down Street, Welgedacht R 840 000.00
R 1 650 000.00 R 1 250 000.00
We attend sheriff auctions on your behalf to buy income baring properties at the lowest possible prices. In excess of 250 successfully completed transactions. RPI has undoubtedly established itself as the market leader in the repossessed property investment industry.
Let us do the same for you www.rpinvest.co.za I info@rpinvest.co.za
Luther 082 321 1497
INNOVATION is located at Denver, CO, United States. The company has desidned a mixed-use apartment, retail and parking
California Roll House California Roll House by Korean designer Christopher Daniel of Violent Volumes is a futuristic concept of a prefab home designed to be assembled and disassembled in record time. This house was designed for arid environments and is wrapped into an energy efficient shell that reflects heat from the sun.
structure. Weave Urban Housing is a design proposal for a 160 unit mixed use apartment/retail/parking structure in Denver CO. The project aims to raise the bar on apartment living for young professionals, a group of renters who demands sophistication and amenities in their housing. M1A’s goal was to develop a superior product for this group without increasing project costs, by finding a means to allocate a larger percentage of development funds to building materials and enhancements to the interior.
The Moon Villa Urban Tree Houses Population growth and consequent crowding can leave little room to live in big cities. But Jason Lubutkah of Jason David Designs in New York City has an idea: why not build houses that cantilever across city streets, using up space that would otherwise be wasted? The homes would be constructed off site and then raised to their new location.
Designed by the Royal Haskoning Architechten, the Moon Villa is a spherical habitat, a metaphorical reference to the Earth, that is a small ecosystem on the moon. The transparent villa, designed for Quest magazine, contains a green living environment where house and garden are intertwined, as a contrast with the dark and desolate lunar landscape. The interior is one large space without walls, with only closed spheres in places where privacy is required, such as bedrooms and bathrooms. Stairs are unnecessary: the 1.20metres between the different levels is easy to bridge in the gentle lunar gravity. A rotating screen that moves with the sun, equipped with solar cells and diaphragms, controls the temperature and energy supply.
RESOURCES Weave House This is a project by Meridian 105 Architecture and it 62
Residential Handbook 2013
Forbes
www.reimag.co.za
At GIAProp we offer you investment opportunities specifically taylored for inivestors, whether you are an experienced investor or just starting out. We have something to suite you. We have cash flow positive properties, long term investments and even something for the speculator.
• • • • •
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LESSONS
Be Streets Ahead
R
Tips for success
ichard Wakelin co-author of Streets Ahead: How to Make Money From Residential Property, offers these seven tips for successful property investing: 1. Go for capital growth This is the most important consideration when buying an investment property. Capital growth will increase your equity or “net worth” more quickly than home loan repayments alone. Research annual median values and track recent sales to identify high growth areas. Look for streets or precincts featuring architectural uniformity with a broad appeal. 2. Inner city is best In general, capital cities are the prime location for an investment property as they tend to enjoy ongoing demand from buyers and tenants and solid economic activity. The inner city suburbs tend to produce the most sustainable
and relatively rapid patterns of long-term capital growth as virtually all the available land in the inner city is fully developed and demand for quality residential property consistently outstrips the supply. 3. Add value Choose a property that can be inexpensively improved. A fresh coat of paint and a new carpet can add value to your investment and increase your rental returns. Be aware of any unseen structural works such as re-stumping and re-wiring as they can be expensive to repair.
4. Invest for the long term Time in the market – not “timing the market” – counts most! As you never know when the market has peaked or troughed until after it has happened. The longer you hold a high quality investment the better. 5. Be tax smart The tax advantages of negative gearing are a key feature of property investing. Negative gearing involves borrowing to invest. Take advantage of tax benefits such as negative gearing, but be aware that saving tax without achieving consistent growth will never confer financial independence. 6. Location, location Purchase a property that is close to essential and desirable facilities. That means within walking or a short driving distance to schools, public transport, shopping areas and leisure and entertainment options such as public parks, cafes, restaurants and cinemas.
Sometimes you can identify pockets with future potential. Look for precincts with the same characteristics as established prime areas but a lower buy-in price, as they often qualify as genuinely undervalued. Watch what first home buyers are doing. If they begin moving into and gentrifying a particular area in large numbers, you may well have found an undervalued area. 7. Knowledge is power As with any investment class, always research your property purchase carefully and keep a close eye on market trends. Monitor ‘big picture’ factors like interest rates, economic growth, government policy, demographic trends and local developments.
RESOURCES Richard Wakelin
64
Residential Handbook 2013
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