Real Estate Investor Magazine South Africa Real Estate Investor Magazine - May 2017 | Page 24

potential restrictive clauses), Heritage (which can stop
or delay developments) and any Municipal by-laws or
Building regulations that may apply.
Always do a full inspection of a property to look for
structural damage and the like before putting in an
offer to purchase.
Understand sectional title versus
own title ownership
According to Benhard Wiese of Cape
Coastal Homes, own title ownership
involves full ownership rights and
responsibility for a piece of property, such
as a free-standing home, cluster house,
or a small holding. These rights and
responsibilities extend to the property, its
improvements, and the land it is built on.
Sectional title ownership, on the other hand, entails
separate ownership of a unit or section of a building, on
a common property, within a complex or development.
Townhouses, flats, apartments, and semi-detached
homes are all examples of Sectional Title Units.
If you buy into a sectional title scheme, you will
own a common property and share all the rights and
responsibilities for that property with other owners.
This means you will pay a monthly levy towards the
upkeep of the property, which will cover insurance
premiums, security, cleaning staff wages and salaries,
and water and electricity for the running of the
common property. You will still have to pay for your
unit’s rates and taxes and your monthly water and
electricity consumption, but the rest of the property
maintenance costs are shared.
It is important to understand the pros and cons of
each ownership type before buying or investing in
either ‒ so be sure to do your homework.
The experts advise the following
for your investment property
journey:
• The purchase price of a property is key. Determine the
price you are willing to pay and stick to it.
• Look for properties that can be subdivided or
renovated.
• The ability to add a flatlet to the property at relatively
low cost will increase its rental income.
• The income potential of a property is more important
than its capital growth potential.
“Searching for undervalued properties makes perfect
sense, and targeting distressed sellers is an excellent
strategy,” advises Pierre Van Den Berg of ThanksToProperty.
Van Den Berg cautions investors against getting
overly emotional or excited about the first bargain
property they find: “You will do extremely well for
yourself if you manage to stay calm and patient,
and supress the hype. Look at as many properties as
possible and do lots of homework.”
He also maintains that it is important to determine
to what degree you can be assured of a constant and
above average rental to cover as much as possible of
your bond payment and other expenses.
According to Gert Van Staden of P3 Investment
Group, while you don’t need every investment property
to be a bargain, you should also never pay too much for
an investment property either. A CMA will help you
determine the right price for a property.
“Look at what comparative properties in the area
have been sold for. Look at the values of similar
properties in other, similar neighbourhoods,” advises
Van Staden. He agrees with Van Den Berg that
property investors should always keep a lookout
for ‘motivated sellers’, which he describes as owners
needing to sell quickly, whose main motivation won’t
be price. These include sellers in financial trouble,
deceased estates, or sellers who are emigrating or
relocating. His final tip: always negotiate for a reduced
price with a seller.
ACCORDING TO MICHAEL MAUBOUSSIN,
THE TOP TEN ATTRIBUTES OF GREAT
INVESTORS INCLUDE THE ABILITY TO:
1 Understand numbers
2 Understand value
3 Assess strategy
4 Compare
5 Think probabilistically
6 Update their views effectively
7 Acknowledge behavioural biases
8 Know the difference between information and influence
9. Understand the importance of position sizing
10 Read
RESOURCES
P3 Investment Group, ThanksToProperty,
Which Mortgage, Standard Bank, My Bond Fitness,
Just Property, Cape Coastal Homes, MSN, UFS,
Mortgage Choice
Visit www.reimag.co.za to set up your MBF profile and obtain a fast
and accurate home loan estimate within minutes.
20
MAY 2017 SA Real Estate Investor
www.reimag.co.za