Monday, 31 March 2008

Buy-to-let, it's not dead, it's just tough!

Pre NCA people were reveling in the buy-to-let market. With home loans being dished out to South Africans at a rate of knots and affordability not even coming into the equation, people were really making alot of money in the buy-to-let market.

South Africans weren't feeling the brunt of the home loans with interest rates being at a lovely 9.5% and living costs, including fuel, bread and your daily expenses were at an all time low.

Many have made a absolute fortune from buy-to-let, but the credit crunch threatens the sector.

Buy-to-let is not dead!!! Even with the falling property prices in South Africa and constant pressure on our interest rates, the only thing that's changed, is that it's become tougher. In fact many landlords are looking chuffed saying prospects are looking bright right now, for the first time in years, because the housing market is weakening. It's become a buyers market again and that's a good thing.

The real trick to buy-to-let though is that your rental needs to cover a minimum on 85% of you home loan. Rising property prices and interest rates have made this target extremely tough to achieve but at the same time have helped increase the rental market and value thereof.

Prices are not falling quite the way we've wanted them to and the penny has still to drop with vendors, but the market is changing. We've had signs of downturns in prices before, but they haven't materialised. This time it's for real...

Keep your eye out for Buy-to-let...

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