Should you invest in a new or established area?

There are pros and cons to both sides, so experts advise investors to do their homework to find out which would suit them best

Q: WE ARE new rental property investors. Should we buy in a new, developing area or an established neighbourhood? What do tenants want?

A: Factors that help guide investors make a decision in this regard include the cost of repairs and maintenance, existing and future suburban demand, as well as houseprice appreciation and transfer duties.

The biggest detractor against investing in older homes is the possible repair and maintenance costs.

When buying an older home, there may be some maintenance and repair work to be completed to bring the home up to scratch before leasing it to tenants.

The possibility of ongoing repair work is also greater on older properties.

However, to offset these costs, these maintenance expenses can be deducted from the rental income to reduce the investor’s taxable income.

As an upside, there tends to be higher demand for older homes in more established neighbourhoods than for newly built homes. Most new homes are found in expanding suburbs that will grow in demand over time as the neighbourhood becomes more established.

For investors, this means they can often charge more in rent, and might enjoy lower vacancy rates on older homes in more established suburbs, where demand for the area already exists.

In addition, if an investor purchases in a new development where there is an abundance of similar homes on the market all at the same time – such as in an apartment block or sectional title estate – they will have to compete for tenants which will put pressure on rents and might affect vacancy rates.

But this is also where one of the most enticing factors of buying a newbuild comes into play. For those who are patient, the potential long-term return on investment on a new-build can sometimes outstrip that of an older home in a more established suburb. Because demand in new suburbs is not yet as high as it is in established suburbs, a new-build can cost less than an older home. If the suburb grows in demand over time, the investor could benefit from much greater returns on the original purchase price. – Adrian Goslett, regional director and chief executive of Re/Max of Southern Africa

Q: If I sell my home on a sole mandate, what should the agreement stipulate in order to make sure the agent is actually working hard to sell my home?

A: For any mandate, open or exclusive, the agreement needs to be in writing and should stipulate a number of key things. These include the listed asking price of the property, the time frame that the mandate is for – start and end date – and the agreed-upon commission structure.

It also includes any other terms and conditions that will apply with regards to the sale of the property.

A ‘disclosure document’ confirming the condition of the property forms part of the mandate document. This is a legal requirement.

The agent then has confidence they have all the details about the property they are introducing to the market.

The task of choosing only one agent and agency can be daunting, so I recommend you do the following:

• Ensure the agent that you interview has a valid Fidelity Fund Certificate and is registered with the Property Practitioners Board. Ask for a copy of this registration certificate for both agent and company.

• Find an area-established agent and agency with good client reviews and testimonials.

• Use an agency that has experience in your particular neighbourhood and written and verbal referrals to back this up.

• Look into whether the agency provides regular training and whether the agent understands current market conditions.

• Take a look at all the companies’ online channels – website and social media.

• Chat about what the marketing process offered will entail. – Michelle Cohen, principal at Leapfrog Johannesburg North East

Q: We love our home, and have been proud to have people over for visits, but it does not seem as if they find it very appealing, which is hurtful. How can we make it look and feel as good to visitors as it does to us?

A: The beauty of your home is often the very thing that makes you fall in love with it – how the contrasting colour wall brightens up a once-boring room or a fresh coat of paint, with beautiful complementing curtains, brings a regal look to a simple structure.

What’s interesting to see, and this we speculate has a lot to do with social media trends, is that many homeowners are taking ownership of their own style. The DIY lifestyle has become a viral sensation, with many people doing extraordinary things with a limited budget.

Social media platforms, like TikTok and Pinterest, have become playgrounds for DIY homeowners taking simple and minimalistic properties and turning them into paradise.

It is amazing what thrifting through a second-hand store or shopping online for used furniture can do to take your home to the next level.

The benefits of recycling and re-using once forgotten items to bring new life to your home makes it all the more exciting. This trend has knock-on effects on how people identify value in their own home. – Richard Gray, chief executive of Harcourts SA

Q: As a landlord, I know the steps I need to take when vetting a tenant but are there other things I may be missing? Like not-so-obvious red flags?

A: Many landlords overlook these steps in the tenant screening process:

Employment history: Some prospective tenants’ short employment histories can tell a story. Job hoppers or people who run into trouble in the workplace can sometimes display these behaviours in their home life too.

Criminal history: Performing a criminal background check may sound extreme but this is a standard part of the hiring process in many industries and rentals should be no different.

General behaviour: Often there are red flags from the very first engagement with a tenant. In some cases, they are hard to reach or can be extremely difficult and demanding for no apparent reason. – Grant Smee, managing director of Only Realty

INVESTING in a new development, or buying an existing home, have advantages and disadvantages. PICTURE: MAX VAKHTBOVYCH/PEXELS