Buying cheaper property to rent out

derp

Member
Joined
Apr 27, 2021
Messages
70
I'm considering buying a cheaper (under R1mil) apartment to invest in and rent out.

What are your thoughts on doing this?
 

slayer

Active Member
Joined
Jun 26, 2020
Messages
106
Few things:

Are you making a profit after paying levy + bond and other expenses..?
If so, be ready to tell SARS about it as applicable..
Are you ready to deal with difficult tenants who are a nuisance to other tenants/residents in some form or other..?
Can you financially cope if a tenant does not pay rent for one, two etc months..?
Are you ready to deal with maintenance issues for this property and your live in property, assuming you own that one too..?
 

Rudolph Hart

Well-Known Member
Joined
Jun 21, 2020
Messages
815
The rental market is weak right now - the low interest rates mean that people who have still got jobs can get bonds and buy their own homes and those who’ve lost their jobs or business due to covid aren’t able to pay rent. Long term it’s probably a good idea, but you might have to accept a low rent or have it unoccupied in the short term.
 

Tribs

Well-Known Member
Joined
Mar 29, 2020
Messages
8,957
Location
Centurion
I'm considering buying a cheaper (under R1mil) apartment to invest in and rent out.

What are your thoughts on doing this?
I have friends who have bought and built several houses. These are keeping them in money while SAA sorts its shit out. The one is a pilot and they have been without work for more than 300 days now. My friend is an artist and so makes money from training kids and selling her works. So the houses have helped a lot. They are busy building their 4th now.
 

Johnatan56

Well-Known Member
Joined
Jun 22, 2020
Messages
1,530
Location
Vienna
I have friends who have bought and built several houses. These are keeping them in money while SAA sorts its shit out. The one is a pilot and they have been without work for more than 300 days now. My friend is an artist and so makes money from training kids and selling her works. So the houses have helped a lot. They are busy building their 4th now.
The question is more if their return on investment was worth it, as in did they make more money than they would have compared to e.g. leaving it in a bank account with fixed interest.

You can't just blanked statement if good/bad, it's really a case of can you pick up a house on bargain, can you manage that property from your location, can you handle the chance of months of loss/damages to that property, etc.
 

Tribs

Well-Known Member
Joined
Mar 29, 2020
Messages
8,957
Location
Centurion
The question is more if their return on investment was worth it, as in did they make more money than they would have compared to e.g. leaving it in a bank account with fixed interest.

You can't just blanked statement if good/bad, it's really a case of can you pick up a house on bargain, can you manage that property from your location, can you handle the chance of months of loss/damages to that property, etc.
For them, luckily, it is yes.
 

derp

Member
Joined
Apr 27, 2021
Messages
70
Few things:

Are you making a profit after paying levy + bond and other expenses..?
If so, be ready to tell SARS about it as applicable..
Are you ready to deal with difficult tenants who are a nuisance to other tenants/residents in some form or other..?
Can you financially cope if a tenant does not pay rent for one, two etc months..?
Are you ready to deal with maintenance issues for this property and your live in property, assuming you own that one too..?


Are you making a profit after paying levy + bond and other expenses..?


Probably not a profit, I reckon the rental will cover the bond but maybe not levy etc. Maybe if I'm lucky.

Are you ready to deal with difficult tenants who are a nuisance to other tenants/residents in some form or other..?

I have never done this before, and I'm hoping personally vetting the tenant and sussing them out will help mitigate this risk factor somewhat.

Can you financially cope if a tenant does not pay rent for one, two etc months..?

Yes, the reason I want to go for a cheaper place is because I want to be able to afford repayments fairly easily even if it's not occupied.

Are you ready to deal with maintenance issues for this property and your live in property, assuming you own that one too..?

Yes. The place I'm looking at has been recently renovated, so it's in good shape at the moment, but will do thorough look at before buying.
 

slayer

Active Member
Joined
Jun 26, 2020
Messages
106

Are you making a profit after paying levy + bond and other expenses..?


Probably not a profit, I reckon the rental will cover the bond but maybe not levy etc. Maybe if I'm lucky.

Are you ready to deal with difficult tenants who are a nuisance to other tenants/residents in some form or other..?

I have never done this before, and I'm hoping personally vetting the tenant and sussing them out will help mitigate this risk factor somewhat.

Can you financially cope if a tenant does not pay rent for one, two etc months..?

Yes, the reason I want to go for a cheaper place is because I want to be able to afford repayments fairly easily even if it's not occupied.

Are you ready to deal with maintenance issues for this property and your live in property, assuming you own that one too..?

Yes. The place I'm looking at has been recently renovated, so it's in good shape at the moment, but will do thorough look at before buying.
Remember, there are additional legal costs associated with tenants who refuse/cannot pay when time comes for trying to evict them.. over and above losing rental income, you are also paying for those legal costs..

Maintenance is ongoing, especially when the place is occupied, when wear and tear will rear its head in one way or another.. it's good the place is renovated, just make sure as far as possible, whether it was done properly or not.. any issues with the renovations will only show when the place is occupied..
 
Top