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.I'm considering buying a cheaper (under R1mil) apartment to invest in and rent out.
What are your thoughts on doing this?
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.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.
For them, luckily, it is yes.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.
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..?
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..
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.