Is cash really king?

BY BONNY FOURIE bronwyn.fourie@inl.co.za

Experts give the pros and cons of buying for cash and advise on attaining a second home in Mauritius

Q: WHAT are the benefits of buying a home cash and how does one afford to do this?

A: There are several benefits to purchasing a home with cash. Beyond saving the cost of interest charges, buyers will also stand a better chance of having their offer accepted by the seller – especially when the seller is in a hurry to sell. These sellers might even be willing to accept a lower cash offer over a higher offer pending home finance approval.

However, finding the necessary funds to afford a cash offer is no easy feat. Unless the buyer has inherited a large sum of money or has recently sold a business for a large sum of money, finding enough available cash to purchase a home without any credit can be complicated. My advice is to start small and work your way up.

If the goal is one day to purchase a home in cash, I would suggest starting with an affordable home in a desirable suburb that will grow in value and can be paid off within five to 10 years. Once the house is paid for in full, the homeowner can sell it and use the whole amount, plus the profit generated from the sale, to purchase a new home in cash.

The alternative to this is to save aggressively to afford to purchase a home in cash from the very outset. My advice to those who attempt this method is to find the most affordable place to rent while saving up to purchase. – Adrian Goslett, regional director and chief executive of Re/Max of Southern Africa

Q: The market is said to be favourable at the moment but we are struggling to sell our house. What could we be doing wrong?

A: If your property is in the right area and price range for the current market, you should be attracting an offer. If you are still struggling to sell, you need to look at either your price or your agent.

Keep your asking price relevant to current selling prices and don’t wait too long for a higher price as it might never come. Do not dismiss offers too quickly unless they are completely off the mark. If an offer is close enough, or the agent advises that it is a good offer compared to current selling prices in the area, accept it.

The best offer comes in the first month, thereafter buyers will move on to competing properties.

If your house has been on the market for a while and is just not selling, listen to your agent’s advice in terms of why the property is not attracting offers, especially since we are in a market where it is easy to access mortgage loans and conditions are favourable for buying.

Ensure your property is in top condition with all maintenance done including fixing or replacing what is broken; painting the interior and exterior; and decluttering. Buyers will always look to discount your price if they spot something wrong with the house.

If your property is in great condition, and the price is fair in relation to the current selling prices in the area, and you are still battling to attract an offer, it is time to change your agent. Look for an agent who is achieving sales success in the current market. And stick to a sole mandate. – Samuel Seeff, chairperson of the Seeff Property Group

Q: We are looking to buy our first home, and I want to buy in a suburb, although I could be convinced to live in or near a modern commercial hub. What things should we bear in mind when deciding?

A: Residential property prices tend to increase the closer one gets to a commercial hub. So, bear in mind that there are nearby suburbs that offer similar benefits without the premium price tag. Safety is a priority, so look for developments and homes within a boomed neighbourhood that provide perimeter electric fencing, CCTV surveillance, armed response or a panic button linked to an off-site response room. – Tyron Baird, of HB Realty

Q: We want to buy a second property in another country and are quite keen on Mauritius. Is this country a good choice? And what options are available in terms of residency there, as we will ideally live between both countries?

A: South Africans make up the second largest number of foreign investors in Mauritius, after the French. They are drawn to the island’s political stability, strong economy, productive business environment and recognised rule of law, as well great tax incentives, excellent schools, low crime rate, world-class health care and fantastic quality of life.

Now, with borders reopening and interest rates at record lows, a lot more South Africans are expected to push play on plans to relocate their families and businesses on to Mauritian soil.

Buying property is actually one of the easiest ways to get Mauritian residency. All you need to do is invest in one of the designated real estate schemes. Investment options include the Property Development Scheme, Integrated Resort Scheme, Real Estate Scheme, Smart City Scheme and G+2. Each scheme has its own benefits and price points, with buy-ins ranging from 6 million Mauritian rupees (± R2m) to $370 000 (± R5.4m). Most South Africans tend to look for properties between MUR8.5m and MUR20m.

Favourite locations include Black River and Tamarin on the west coast.

As for financing, most Mauritian banks offer mortgages to foreign buyers. Interest rates vary depending on the currency of choice. One thing to be aware of is the maximum loan-to-value ratio for foreigners, which is about 70% of the appraised value of the property.

Loan terms also tend to be capped at 15 years, which means investors need to prepare for a sizable deposit and shorter repayment period than they may be used to at home. – Isabelle Hardy, branch manager for Rawson Properties Mauritius

Mauritius is attracting South African property buyers for a number of reasons, including its political stability. PICTURE: GUILLAUME BAUDUSSEAU/UNSPLASH