There are some rules that every property buyer should follow in order to get the most out of their property purchase.
Despite many changes in the property market in recent years, there are some “golden rules” that investors need to keep in mind. So says Adrian Goslett, CEO of RE/MAX Southern Africa, who adds that while the emerging market has presented some great investment opportunities, buyers need to be careful and make the right decisions to get the most out of their property purchases.
6 golden rules for buying property in SA
1. Do your homework
The first question you need to ask is why you are buying the property. If you are buying the property to live in, your perception will be emotionally influenced by things that appeal or don’t appeal to you. If you are buying the property to lease out, aspects that appeal to would-be tenants such as easily accessible transport and proximity to shops should take precedence. Although the Internet can act as a valuable tool in this regard, Goslett says nothing replaces checking out a location for yourself, preferably more than once and at different times of day.
2. It’s the little things
Subtle differences between two areas can impact the property price. Notes Adrian: “It is vital that buyers understand why property values differ from suburb to suburb or even in some cases from street to street. It’s better to purchase a property that costs less but which is located in a sought-after area that offers more, than to purchase an expensive property in an area that has limited appeal. A property’s location will have more impact on its appreciation potential than the house itself.”
He adds that buyers who are looking at purchasing an investment property with the intention of renting it out need to remember that different things appeal to different people and that identifying their target market is essential. Investment buyers should also look at how much rental stock is available in an area before purchasing a buy-to-let property. If the area is saturated with buy-to-let property, chances are your investment will fall flat.
3. Back to basics
Sound property buying principles never go out of fashion. These include aspects such as the property’s location, the value per square metre and the potential rental yield – these will always be the key criteria on which an investor should make a decision.
4. Have a plan
From an investment perspective, investors need to think about where they would ideally like their portfolio to be in the long-term. Setting goals will assist buyers to remain focused and will give them something to work towards.
5. Dump the debt
Although there are a fair number of cash buyers in the market, the majority of buyers will require financial assistance from a bank to purchase a home. Adrian says that buyers can ensure that their application for finance has more chance of success by reducing their debt levels and keeping a clean credit record. Having a deposit is also a must for those looking to purchase property.
6. Would you live there?
While the potential to make a profit on a property purchase is important, it should not be the only factor that is considered. Adrian points out that the basic principle of purchasing a property is that if you wouldn’t want to live in it, it’s not likely many others would either. The property has to appeal to the buyer and they have to want to own it or lease it.