Shopping for an investment property?
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Shopping for an investment property? Follow these vital guidelines
With the advent of spring, comes the inevitability of final examinations and the property market generally starts to feel the impact of increased demand for sectional title apartments or townhouses. “A fair amount of this activity is due to parents seeking accommodation for children who will be either setting of to university or are moving out of res and require digs,” says Mike Greeff, CEO of Greeff Christie’s International Real Estate.
“Investors seeking these types of properties will be able to cash in on a very healthy demand for rentals,” says Greeff. He advises would-be investors to plan carefully before taking the leap. “A lot of research and preparation should precede the decision to start looking for a good investment property and then even more targeted research should precede the actual purchase.
“When you seek income from a rental property, it’s important to ensure that you have taken into account all potential expenses so you don’t utterly wipe out your potential returns,” says Greeff.
He offers ten guidelines to follow when seeking an investment property you plan to rent out.
1 Location – “It’s the real estate mantra, but location, and by association, neighbourhood remain the most important factors in every decision to purchase a property,” says Greeff. “Your address will determine not only the calibre of your tenants, but how often you will have to find new ones,” he adds.
2 The current rental “landscape” – “Consult a reputable rental agency for up-to-date advice on the current number of rental properties listed in the neighbourhood,” says Greeff Rentals principal, Glenda Taylor. “Ideally a high amount of listings is a signal of a typical seasonal surge, but you want to be sure it’s not indicative of a problem with the neighbourhood,” adds Taylor.
3 Crime and security – “Find out about the local neighbourhood watch, speak to those in charge and consult the security company most used by the residents. Investigate all the security elements currently installed in the block and unit you’re considering. If you need to upgrade security, factor this cost against potential future income,” says Greeff.
4 Schools – “Properties in the vicinity of schools, or with easy access to school transport, the Jammie Shuttle or public transport will widen the array of potential tenants,” says Greeff.
5 Business hubs – “Neighbourhoods in and around established or growing business centres are invariably great investments as they attract employed, salaried individuals, who for obvious reasons are favoured tenants,” suggests Greeff.
6 Amenities – Sporting grounds, gyms, shopping malls, hospitals and other amenities are a huge draw card for potential tenants. “Central locations tend to be good investments, but make of point of understanding the demographic of the location as this varies widely across urban areas, and be sure that you will be satisfied with tenants likely to be attracted to the area of your focus,” says Greeff.
7 Rates, levies and insurance– As a landlord, you will be responsible for rates based on a municipal valuation. “You should also speak to the body corporate or Home Owners Association to ascertain the cost of levies and factor these into your rental income,” says Greeff. Insurance is a necessity and this will be included in the levy when it comes to insuring the block, but enquire what your liability would be for your unit, as this will be an additional expense to factor in.
8 Future Development – “Enquire at the local municipality about future plans and developments in the neighbourhood,” advises Greeff. “Ask about zoning and business rights. If you want a quiet secluded property, you don’t want to unwittingly be investing in what could become a noisy bustling business hub,” adds Greeff.
9 How much rental to charge – “A qualified and experienced rental agent will be able to assist you to ascertain a rental which is in line with the current area’s market,” says Glenda Taylor.
A qualified rental agent will safeguard your asset. “Your property is a valuable capital asset, and in many cases, your livelihood and the legacy you'll leave to your children,” says Glenda Taylor. ”If you're considering renting out your property, a reputable rentals agency will take care of time-consuming credit checks, deal with the ins and outs of the new Consumer Protection Act and assume the hassle of monthly management, so you're free to enjoy your rental income,” adds Taylor.
Author: Greeff Properties
