Saturday, 30 June 2007
So good morning to you all!
After writing my article this week about Buy To Let Mortgages I realised that I'd left out the part about:
"Now that Buy To Let has become the BIG THING for property investors in South Africa, Rentals, well unfortunately, they're going up!"
So this article is for those of you that are renting.
South African tenants face major increases in rentals over the next couple of years. According to the Record newspaper, the massive movement of people from outskirts of South Africa to the city centres are forcing rental prices up. Along with this the demand for apartments and flats to be built cannot keep up with the demand for rentals themselves.
With property prices booming in SA, more and more people are starting to move towards the rental market. The problem we're have is that investors are finding building prices are just astronomical at the moment and this is slowing down development of new units. You average price to build in Sandton for instance is now around R20 000 a square metre for an apartment. According to some reports, expect rental prices to increase in the region of 10% over the next year.
It's not all doom and gloom for those of you who are in the rental market. According to Chris Green of Wizard Midrand, there's a very good option for those of you who are wanting to start investing in some property. SYNDICATES or SYNDICATIONS as some know it, is the latest craze in property investments. As a youngster who doesn't have enough money to invest in a property themselves, this is a way to get your portfolio going.
Syndications allow you to buy property with a group of people. This enables you to split the costs amongst 5 or 10 other people (maxmimum of 43 allowed), enabling you to afford that investment that always seemed out of reach. If you're interested in finding out more about this contact Wizard Midrand on +27 12 341 2223 and ask for Chris Green.
Have a super weekend all...
Wednesday, 27 June 2007
Top Ten Tips for Buy To Let!
1. Choose the Right Property
Location, location, location...
2. Choose the Right Mortgage
Check the amount you can afford. Remember that with the National Credit Act of South Africa it's no longer 30% of your income that's taken into account on your qualification but what you can afford after your expenses have been deducted at the end of the month.
3. Work out Costs and Income
Work out how much your monthly mortgage repayments will be and whether your rental income will exceed this.
Remeber to look and see whether you can afford your mortgage repayments if the interest rate increases again (most likely to go up another 0.5% in the next 6 months). Another thing to consider is that should your tenant dissapear, can you afford to pay the mortgage costs for the next 3 months?
4. Buy To Let 'Hidden Costs'
Don't forget your bond costs. There's registration costs, transfer fees, attorney fees, Stamp Duty and posts and petties. Check out the Bond Costs tab at the top of this page.
5. Choose a Professional Rental Agent
If you choose your rental agent wisely, you may be lucky enough to find someone who, manages your tenant for you. This includes collecting rentals arranging agreements etc. This is not required as they may charge an additional monthly fee but may come in handy if your buy to let appartment is not within driving distance.
6. Ensure you have the Right Insurance
Check with your insurance broker what you need to cover you.
We offer you low premiums and a cash OUTbonus.
7. Sort out your Taxes
You have to pay income tax on any rental income you receive, although you can deduct some expenses.
8. Get a Fully Flexible Mortgage
Make sure that your mortgage originators choose the correct option for you. Buy-To-Let options are available out there.
9. View Buy To Let as a Long-Term Investment
Buy To Let is a long term return. Expect this return to peak at around 5 years in. Don't expect to make a quick profit on rental income.
10. GOLDEN RULE
If you have a extra R500 a month, throw it into your bond account. Where else are you going to get 13% interest on your money. DAILY...
Friday, 22 June 2007
Thanks for the frank and open emails I have received lately and just to touch base here are some of the real deal answers.
I, and my whole family, Wife, son, sisters in law, brothers in law etc are in the property business and not only do we do financing (Mortgages) but we do a lot of what you want to do. We buy, invest, build, sell etc as this is a great business to be in and the risk lies with you 100%.
Firstly let me answer some simple questions examples are R 20,000 income (Gross) and R 500,000 purchase price.
1. You can buy as many properties as you want. The key is can you afford them. Most folks think that by buying a property for e.g. R 500,000 and having a bond for R 5500 per month and renting it out for R 5000 per month automatically means you can qualify for another R 500,000 house.
The basic rule (An there are always variances between banks) is that Your income of R 20,000 allows you to spend about 30% thereof on a home loan so you can afford R 20,000*30% = R 6,000 per month.
When you have additional rental income the average the banks take into account is 60-70%(Lets say 65%) of this. So if you are renting for R 5000 per month you can add R 5000*65%=R3250 to your R 20,000 salary = R 23250 * 30% = R 6975 - That's what you have to pay bonds from a qualifying perspective.
In truth if you have a good surplus of money left after your normal expenses food etc this will assist the credit manager at the bank in giving you slightly more.
With the interest rate where it is now (Even when the bank give you a better rate (Concession) you can work on about spending R 1,100.00 per month on every R 100,000 borrowed from the bank.
2. So you can own as many properties as you can afford ON YOUR OWN, WITH A SPOUSE, WITH FRIENDS, IN A CC, TRUST or COMPANY
3. Maximum people in a mortgage/ownership go crazy but in a legal business a max of 49 else it must be a company-public
4. If you stand surety for someone in a loan the banks view that as a 100% commitment for the full loan in your name even though you are not paying the bond etc SO be very careful here.
5. Taxes/Penalties - You don't face that for owning BUT you will pay Capital gains Tax when you sell and make big profits. However remember you will always pay tax on income in any case, there is no getting away from this. In fact you should dream of paying the receiver of revenue a million rand tax because then you have made some serious money!!!
6. Typical the shortest time is one year, but you can sell immediately after taking ownership. The penalty is 3 months interest of the mortgage. Sometimes its worth it. This is actually not a big deal if you are making a good profit on the sale. i.e on R 500,000 bond the interest is about R 4500 per month initially so you may be billed with a 3*R 4500 penalty = R 13,500.00. But if your profit is R 55000 then its worth it.
7. Buying vacant land and developing later not a bad idea, however getting a 100% loan on vacant land is less possible and usually if you get this its over 15 years vs 20 years and your monthly payments are higher.
8. Buying off plan can sometimes seem cheaper but trust me the developers build everything into the development costs so nothing is free.
9. With all deals there are attorneys fees for transfer and Registration of the bond and your safe bet is to work on about 7% of the deal. i.e R500,000*7% = R 35,000 It will be less than this but build in this factor ALWAYS If you save use the money elsewhere
10. Lastly - Make sure your mortgage has an access facility - this is where you become your own banker and start saving money
I hope this assists all you budding property moguls!!!!!
If you want us to do an affordability study for you we will and that will clearly tell you where and what you can buy email me
Have a great weekend
Wednesday, 20 June 2007
Has everyone been sucked up in the PANIC by the National Credit Act (NCA)!
Is the NCA a KILLER TORNADO....TA DA!!!!!!!
Actually guys and girls this is a great thing for us and if we don not panic we will start seeing great results....AND HOPEFULLY THIS LEADS TO A RATE REDUCTION (DO YOU HEAR UNCLE TITO!!!)
What was 5 days to getting a home loan granted, is now a bit longer, about 7 to 10 working days...Whats great about it all is that we see for the first time...
1. Folks looking carefully and what they spend their money
2. Folks saying..maybe I should manage my money better (Do some consolidation) - If you want help here call me.
3. The banks getting to actually offer you something substantial that will NOT put you at risk when interest rates jump.
4. Folks buying for themselves versus buying for investment - it looks like we will see a lot more fractional ownership deals happening - If you want info email me. Remember financing here is trickier but oh so do -able.
5. If we adhere to the NCA, curb our lust (For spending of course), work towards slowing inflation down and getting investors in, then Uncle Mboweni must listen and hear the cry of the fish eagle!!!!
The storm will burst when we understand that the NCA (National Credit Act) is no monster...its a cool tool so use it to your advantage.
Friday, 15 June 2007
STRIKE at THE DEEDS OFFICES.
SO does this mean we will not be able to buy and
sell property - what with the striking and all that.
Does this mean that our title deeds will not be put
into our names???
Role players in the property sector reckons the impact of the strike are starting to take on proportions that could have astronomical financial implications for estate agents, home buyers and sellers, building contractors and attorneys.
Well I know that this is a time to have a great look at what the NCA has done for us, get your ducks in a row, because believe me - Your property will be registered and you will start paying fees BUT MOST IMPORTANT
If you have paid deposits and fees etc and are being delayed MAKE SURE THAT YOUR MONEY is being kept in an INTEREST BEARING account for your benefit.
May the striking force be with you!!!!!!
Have a cool weekend folks - Go Bafana, Go Bokke, Go Mbeki!!!!!
Thursday, 14 June 2007
Monday, 11 June 2007
About an hour ago I came across an article see Loopholes in National Credit Act. It's articles like this that really get my blood boiling because it makes originators look bad when they have to help clients...
According to Fin24 and John Chapman director of Rabie Property Group, there's a GREAT loophole in the new national credit act system, whereby if you register the bond in a CC or a Trust you'll bypass all the NCA laws and regulations.
1. As John mentioned, registering a bond through a CC just makes no sense due to the TAX benefits you would have to sacrifice.
2. What he forgets to mention is the following:
If you register a bond in a trust or cc i.e. ANY LEGAL ENTITY your bond costs are more than double.
For example on a bond amount of R 1 000 000.00 your costs would be R39370.00. IF you register the bond in a CC or TRUST you costs are R94 370.00. That's 3 x the bond registration costs that you'd normally pay.
BE CAREFUL WHAT YOU READ AND ALWAYS DOUBLE CHECK.
Friday, 8 June 2007
I'm pleased to announce the winners of the Wizard Hampers! What had me a little baffled was, how I was going to announce the winners by name when I don't know half their names and posting their email addresses up on my site, DUH! NO!
Then I realised, hello WizardMan, wakey wakey, it's a BLOG, they want links! So I'm going to announce all 10 winners by advertising their sites.
Well done to all and thanks to those who have participated in and helped promote the South African property BLOG.
The Wizard hampers winners are:
1. South Africa BLOG - http://www.southafricablog.co.za/
2. RLDaly - http://rldaly.wordpress.com
3. Cape Town Daily Photo - http://www.capetowndailyphoto.com
4. CharlNet - http://charlvn.za.net
5. Property Loan - http://www.propertyloans.co.za
6. Live The Life - http://www.actionsport.tv/wordpress/
7. Wildlife Property South Africa - http://wildlifepropertyinsa.blogspot.com/
8. Webtrepreneur.co.za - http://www.webtrepreneur.co.za/
Two more sites to be announced as soon as I have the links ;-) Call me blonde.
Thanks Again from the entire Wizard Team.
When you spot a property which "potential" for big returns, be careful you don't just invest in an area where the property prices are stabilising. Look for the next area with potential growth. It may be a shot in the dark and it may be the incorrect choice, but the fact of the matter is that in South Africa right now, you cannot go wrong. You'll always make a good return on investment "provided you don't over capitalise".
If it means you need to rent out the property or live in an area that you've been avoiding for years, hey it's a sacrifice you should be willing to make for good returns. In the end it is your future you're looking after.
The question is where do I start? Do your research, make sure you drive around on Sunday's and look at those show houses. Call the agents, tell them what you're looking for. Give them a selection of choices in terms of area's and try not limit their choices too much.
If you don't have enough time to check things out , use your online resources, that's why they're there. A good place to start is MyRoof.
Thursday, 7 June 2007
Well it's not the kind of news I love telling people however there's a good solution...
What this allows you to do now is earn a extra 0.5% interest on any EXTRA cash you put into your bond account, over and above your monthly installments.
Get clever people utilise this to your advantage.
If you're unsure or you'd like to know more about this call us @ Wizard.
Previous Articles posted by Wizard - Interest Rate hike SO WHAT!?!?
Here's some cool reading and tips for those of you who are online property and real estate professionals. WizardMan's TOP 5 most useful online real estate sites sites in S.A. It'll probably change next month, but what the hell, it'll give me another topic to write about! So for now, this is my TOP 5. Any new additions or sites that you may think are awesome, please add them to the comments section.
Number 1 on my TOP 5 real estate sites list this month is:
RSS Pieces (ok, sorry I know I said it would be S.A's top sites but this site is worth it). A great site, that teaches you how to BLOG for real estate, what topics to write about and if you're running short of idea's, IT'S DA BOMB!
Number 2 on my TOP 5 real estate sites list is:
If you're looking to do a property search then GRAVITY is your site. A great new initiative by a South African company.
TOP 5 real estate - NUMBER 3:
Well I'm afraid that with all this HOOHA about the new credit act we couldn't leave out the good old National Credit Act regulators. It's a good resource and if there's anything you need to know about the new credit regulations, this is the site to visit.
Number 4 or is it 24!
Property 24. They've got up-to-date news (most of the time) and well it's good all round, news and financial portal. Thanks Naspers or is it Media 24!
Finally Number 5...
Where would property in South Africa be without Private Property. Love these guys. Love what they do and how they work. We need more companies like this in South Africa that can help the lower income sellers sell their properties without having to pay those huge commissions!
So that's it for TODAY! TOP 4 most useful online real estate sites with WizardMan's Number 1 resource site included ;-)
Saturday, 2 June 2007
This is a city to die for, and lets not even talk about that night life! AWESOME!
Anyway, just a quick reminder that next week is the last week for people to get their free Wizard Hamper, so signup to our newsletter.
The hamper is worth R200 and it's free stuff people. AT LEAST SIGNUP and then if you don't like the newsletter you can unsubscribe? Doggy, maybe but I don't mind!
Enjoy the rest of your weekend.
Oh and p.s. The petrol price is rising 26c next week so fill your cars up!