An empty investment is not an investment at all - achieving success in the rental market
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It is also a great way to get your foot on the property ladder as rental income will often cover a large portion of the mortgage repayments in the case of bonded purchases says Lorraine-Marie Dellbridge, Rentals Manager for Lew Geffen Sotheby's International Realty in Cape Town's Southern Suburbs.
"Not only is the interest rate currently lower than it has ever been, property prices in Cape Town are also more accessible than they have been in many years and buyers have a lot more options than usual".
"However, with semigration to the Western Cape on the increase, this window opportunity will not last long, especially in the more sought-after areas with excellent amenities and schools" she says.
Although the rental market is currently overstocked, with Covid-19 vaccinations now on track in South Africa, and tourism likely to pick up again soon, many of the rental properties will once again become short-term lets.
"In other words," says Dellbridge, "now is the perfect time to enter the market and the best way to make the right purchase is to speak to rental agents in the area as they will know exactly what prospective tenants are looking for and how much they are willing to pay".
"It can be a costly mistake to make assumptions. For instance, if an area is popular with young families, then a two or three-bedroom flat would be a better investment than a one-bedroom apartment, even if it has better finishes".
"And, if you are buying property in an estate or complex, it is essential to add scheme management to your list of priorities when choosing property, especially if there will be budgetary restrictions going forward".
Sectional title levies are used to cover various expenses such as insurance, administrative fees and the maintenance costs of the common property and on-site facilities - the more amenities there are and the larger grounds, the higher the levy.
"When deciding on a property, try to look at it from a tenant's viewpoint and ask yourself what will attract them. If it is in a suburb near a university, why would a student rent your property rather than another?" Dellbridge asks.
If it is in a family suburb, consider what a family would need from a home, including proximity to schools, parks, and convenient shopping.
Dellbridge cautions investors to carefully consider their options before making a final choice and to head advise when it come to pricing the property for rent.
"One needs to reconcile that the rental that is achieved may not cover all the expenses such as the bond, levies, and property rates for up to three years and that you may still need to dip into your own pockets to top this up, especially in the current market".
Author: Property Wheel
