Six rules for buying property
Category General News
Real estate investors all have differing reasons for purchasing a property, whether it is for personal use, to resell at a higher price or to rent out for some extra monthly income. No matter what the reason is, there are a few guidelines that should be noted if homeowners want to get the most out of their investment.
Property buyers need to attract the right tenants and make the right decisions if they want to see a good return on their investment, so here are six rules to follow when buying a property in South Africa.
Firstly, ask yourself why you are purchasing the property as this will place emphasis on different features of the house. If you are looking to move in and use it yourself, features and comfort are more likely to appeal to you. If you are wanting to lease it out, you’ll need to think what prospective tenants would want, such as proximity to public transport and shops.
Researching an area in person, rather than on the internet, will give you a clear picture of what’s around that will appeal to you or a tenant. You can get some more insight into the location by visiting it during different times of the day to see what the traffic is like, how safe it looks and how noisy it is before making the purchase.
Property prices are influenced by their location, sometimes even by the street on which they stand. A relatively cheap property in a popular area will be a better investment than an expensive property in a less appealing suburb. The location is more likely to affect the value of a property over time than the actual house itself.
Doing the sums
A good investor will always apply good property buying principles, looking at the location, the value per square metre and the estimated rental income. By weighing up these costs with the potential rental income, a property buyer can evaluate how profitable the property will be.
Buyers looking for a personal home will need to look at what work needs to be done on the property to fix it up. An estimate of the cost of repair jobs will be a good way to see if purchasing the property will be worth it over time.
For the more serious property investors who are looking to build a portfolio, they need to consider their long-term goals. These goals will direct them to their choices and will guide their decisions down a certain property path. Staying focussed will keep you motivated and on track.
Planning ahead is also important for one-time buyers. They need to think about what they would like to get out of the property in the next couple of decades. By acknowledging this, it will influence their decision to purchase a certain property.
The majority of buyers need financial assistance when purchasing a home, so it is vital to do everything you can to improve your credit score before asking for a loan. Applications for financial assistance are more likely to be granted to individuals with good records of paying back debt.
Keeping a clean credit record is essential, so find out your score and seek assistance from a financial advisor on how to make sure it is improved. Similarly, buyers must ensure that they have enough money for a deposit, as asking for a loan for the deposit is not ideal.
Is it good enough for you?
If you’re looking to buy a property as a rental investment, you need to consider more than just the rental yield. Put yourself in the shoes of the tenant and ask yourself if you would be happy to live there. If the house or the location don’t appeal to you, then the property probably won’t appeal to a tenant either.
Make a sound investment and ensure that you have considered these six points when buying a property - this will maximise the return on your investment and is likely to increase in value over time. Whether you want to move in yourself or rent it out, a good home is a carefully considered home.
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Author: Berman Brothers