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Cape Town – While the immediate future offers little relief for South Africa’s struggling consumer, there are those whose finances allowed them to take advantage of investing in property, a property tax expert said.
“Now is definitely the right time to get into the property market,” said Johan Swart, a tax manager at Legal and Tax. “Currently the supply of property in South Africa is greater than the demand, which means that there are plenty of good deals.
“Those who do find themselves in a buyers’ market and who are in a position to see the slump through, it is no longer a matter of whether they should buy or not, but rather what to buy before the balance shifts in favour of the sellers again,” he said.
Property is one of the few investments that yield a return, while your investment itself grows in value. An example, Swart said, would be the purchase of a residential property for R1m, generating R8 000 rental income per month, which means that your return on the investment is 9.6% per year.
What’s more, the property itself might be worth R1.2m in two years’ time – which translates into a capital growth of 20%.
He said many developers were sitting with too much stock and were lowering their prices to offload the properties.
Swart gave these tips:
- Ask banks for a list of their repossessed houses and keep your eyes open for houses going on auction – this can be a tremendous bargain!
- You may also look at buying a house that needs some renovation, but be careful and get an expert to give you a good indication of what it will cost to turn a major renovation project into your dream home.
- Don’t be blinded by low price, because you still want to make sure that you are buying a good investment.
- Always look at the crime statistics in the property’s area, as this will have a direct impact on the value of the property you invest in.
- Maybe consider the tremendous growth shown in the coastal regions, or the fact that inner city real estate has tripled in Gauteng.
- When purchasing apartment real estate, do note that the smaller units appreciate in value the fastest and earn the best rents in relation to the capital outlay. For example, two R1m units will probably give a better return than one priced at R2m. With one unit, the risk is focused and concentrated on a single tenant – but spreading one’s risk is one of the oldest and wisest investment strategies and has always been favoured by landlords.
ALSO READ: Tax implications when investing in property
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