Results 1 to 4 of 4

Thread: Property investment - struggling to find good returns

  1. #1
    Silver Member
    Join Date
    Aug 2014
    Location
    Johannesburg
    Posts
    310
    Thanks
    26
    Thanked 17 Times in 15 Posts

    Property investment - struggling to find good returns

    Hi all,

    I've been shopping around for some new buy-to-let property investments.

    I've cased about 40 different properties in JHB northern suburbs and set up a comparison spreadsheet and all of them have a shortfall i.e rental doesn't cover the bond + expenses.

    The properties I've been targeting are 2 bedroom apartments in the 900k - 1.2m range, they typically rent for between 8k-12k. After paying bond, interest, rates, levies, maintenance and management fees I have to bankroll an extra R1000 (roughly). Oh and this is based on a 20% down payment.

    Is it possible to find positive cashflowing properties from day one or is this shortfall the norm?

    It's a bit frustrating because I don't want to buy liabilities and don't want to speculate on capital gains, I want positive cashflowing properties and can't find them.

    Any real estate people out there experiencing the same thing?

  2. #2
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    20,980
    Thanks
    3,055
    Thanked 2,463 Times in 2,068 Posts
    Blog Entries
    12
    The feedback I'm getting from the local property market is "there's a shortage of stock". From experience, that most often does not mean there's a lack of property available on the market; it means there's a shortage of property of the type that is in demand and is appropriately priced to sell! Your findings pretty much reflect much the same thing, I guess.

    To some extent it's probably being driven by both sides of the equation - sellers are still expectant of at least inflation linked price increments, while investor purchasers have had two .25% increases in interest rates to accommodate in their viability calculations, which requires a capital cost reduction to compensate when all other elements are equal.
    The trouble with opportunity is it normally comes dressed up as work.

  3. #3
    Diamond Member Justloadit's Avatar
    Join Date
    Nov 2010
    Location
    Johannesburg
    Posts
    2,671
    Thanks
    88
    Thanked 544 Times in 460 Posts
    Blog Entries
    1
    Another issue to take into consideration, with the new building regulations with respect to insulation and alternative water heating energy, the cost to build a new home far surpasses the same type of already built home.
    So existing homes cost will creep up as they will be more in demand as they fall under the previous building codes.
    Victor - Knowledge is a blessing or a curse, your current circumstances make you decide!
    Solar and LED lighting solutions - www.microsolve.co.za

  4. #4
    Silver Member
    Join Date
    Aug 2014
    Location
    Johannesburg
    Posts
    310
    Thanks
    26
    Thanked 17 Times in 15 Posts
    Everything seems over priced to me, in some suburbs you can rent a 4 million rand penthouse for 25k/month, its better off to just rent and invest the surplus in your own business.

Similar Threads

  1. [Question] Residential property investment
    By Parkhere in forum General Business Forum
    Replies: 7
    Last Post: 03-Mar-16, 01:36 PM
  2. Property Investment - Tax Benefits
    By rfnel in forum Tax Forum
    Replies: 10
    Last Post: 24-Oct-14, 07:55 PM
  3. [Question] tax on profit or loss on investment property
    By flaker in forum Tax Forum
    Replies: 5
    Last Post: 06-Nov-12, 08:22 AM
  4. [Question] Property as Investment
    By anakin in forum Tax Forum
    Replies: 8
    Last Post: 29-Jan-12, 09:46 PM

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •