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DIY financial investing: Home sweet home

6/27/2019

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Where do you want to stay – in a big house with a lawn, in a small apartment?

Do you want to stay in the big city, or in a small hamlet? There are many questions to consider when deciding where and how to live, and much has nothing to do with money, as we saw in What is a financial investment? Financially the big question is, of course, “to buy or not to buy?” Is a house an investment?

House prices generally go up, although some years may show much better growth than others.
On average, over the long term, this growth is very close to inflation. This is to be expected. Houses are constructed from bricks and mortar and other materials, all of which become more expensive, in line with inflation, as years go by. And the wages of builders and architects, as well as the land on which a building stands, also tend to go up with inflation.

A home then, which grows with inflation, but also requires some maintenance, is not a financial investment. As a rule, property is only a financial investment when it is rented out.

For many people, the best strategy is this: Buy the cheapest property in which you can live comfortably. Invest the rest of your available funds in assets that actually beat inflation.

 
Some advantages of owning your home

  • Most people need a loan to buy a house. Any extra money you have can now be paid into this loan account. This is a very good financial strategy because the interest you are charged on your loan is usually a lot higher than the interest you earn when depositing your money at a bank.
  • If you lack the self-discipline to save every month, then paying off a loan is a well-structured way of making sure that you save some money every month.
  • There is a real tax advantage to staying in your own place. If you buy a house and rent it out, then you have to pay tax on the income, even if you use the money to rent a place for yourself to stay in.  However, if you stay in your own house, then there is no tax to be paid. You are effectively renting the house from yourself, but without having to pay tax.
  • You can maintain and improve your house while you stay in it. If you do this in a cost-effective way, you may add real value to your property.

Some disadvantages of owning your home

  • A house is not a very liquid asset. The time and money involved in acquiring and disposing of a house usually mean that you have to keep it for a long time.
  • You might live in an area where renting is very cheap. In such a case you should rather rent a house and invest the remainder of your money elsewhere. Ideally, you should live in the kind of property which you can rent out to others at a good return if you do decide to leave.
 
​Article referenced from:
https://www.thesouthafrican.com/business-finance/is-buying-a-house-a-good-investment/

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Property Practitioners Act: What landlords and tenants need to know

6/19/2019

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The Property Practitioners Act now just needs the president's signature to come into effect, and when it does it will bring about many significant changes in South Africa's property sector.

It will not only replace the Estate Agents Act, which has been in force since 1976, but will considerably broaden the scope of that legislation to cover commercial property brokers, bond originators, home inspectors, home owners’ associations, companies selling timeshare and fractional title, property developers and property managers as well as “traditional” estate agents.

The new legislation also defines a managing agent as anyone who collects or receives any money payable in respect of a leased property or business undertaking or who provides, procures, facilitates, secures or otherwise obtains or markets financing for or in connection with the management of leased properties.

Protection for landlords and tenants

Thus everyone who sets up in business to let and manage rental properties will now fall under the provisions of the new Act as regards trust accounts and the management of client’s deposits and monthly rentals, for example, and that means better protection for both landlords and tenants. All managing agents will also need to hold a valid Fidelity Fund Certificate (FFC) in order to claim commission on any new or renewed leases.

The Act also provides for a new Board of Authority to replace the current Estate Agency Affairs Board, as well as further protection for landlords, tenants and other consumers of property services in the form of a separate and independent Property Practitioners Ombud to deal with any complaints against property practitioners.

The new law allows for both mediation and adjudication as part of the process for dealing with such complaints, and this should help the Ombud’s office to resolve most matters quickly and efficiently. However, it is important to note that disputes between tenants and landlords will still need to be taken before the Rental Tribunal.

Other important provisions of the new legislation for landlords and tenants to note include the following:

  • A defects disclosure form is now a mandatory part of any property sale or lease agreement. The Act says that a property practitioner may in fact not even accept a mandate to sell or let a property without a disclosure form from the seller or landlord. What is more, if a disclosure form is not included in a sale or lease agreement, that agreement will be interpreted in law as if no defects or deficiencies were disclosed.
  • The buyer or tenant of any property can request the sale agreement or lease in whichever of SA’s official languages they prefer, and the seller or landlord or managing agent must comply. To assist them, sample contracts in all languages are to be provided on the new Board of Authority’s website.
  • In order for a property practitioner to legally claim commission on a property sale or lease, every other property practitioner in their agency must also hold a valid FFC. To qualify for an FFC, the practitioner themselves must produce a current tax clearance certificate and any appropriate BEE certification. What is more, practitioners who don’t have a valid FFC when a sale or lease contract is signed could be required to refund any commission paid by the property seller or landlord, on demand.
 
​Article referenced from:
https://www.bizcommunity.com/Article/196/569/192035.html

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How to maintain your home and its value

6/12/2019

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Property professionals agree - nothing maintains your home’s value better than regular maintenance. A good home maintenance plan will safeguard against mishaps such as clogged drains, burst pipes and leaking roofs.

​A preventative maintenance plan will also guard against an insurer rejecting a claim due to maintenance-related faults. 

The condition of a property is often a deciding factor in securing a buyer, and the interior and exterior being in prime condition will make it more attractive and easier to sell. Over time, annual maintenance costs average around one percent of a property’s value. So, if your home cost R2 million you should plan to budget R20 000 a year for ongoing upkeep, repairs and special projects - from the weekly garden service to annual chimney and roof check-ups and repairs.


Maintenance programme 

The best way to keep on top of home maintenance is to have a systematic maintenance programme, including regular weekly or monthly tasks as well as seasonal and annual jobs. The plan should cover a home’s general appearance, including manicuring the lawns and caring for plant life and repairing plumbing, electrical, heating and air conditioning problems.

The basics would include:
  • Clear drains and gutters before the rainy season. 
  • Attend to broken glass, perished putty and rusted window frames as quickly as possible. 
  • Touch up chipped and peeling paint regularly to avoid expansion. 
  • Call in pest control services as required. 
  • Replace faulty globes. 
  • Check for and repair any water leaks. 
  • Check the main electrical panel for rust or water marks which would indicate moisture          penetration.Periodically turn all breakers off and on to ensure they are in working order. All fuses should be tightened. If the panel is warm to the touch or smells of burned insulation, contact an electrician. Keep the area around the panel clear for easy access.

Ideally, you should have cash available to cover emergency repairs and large occasional expenses. You could set up a separate savings or credit card account for these, and deposit funds each month so that you don’t end up paying steep credit card interest for a major repair. If you have a big expense, be sure to replenish the account for the next big-ticket job.

Where possible, do the jobs yourself to save on labour costs, and hire professionals for dangerous or especially difficult jobs. Two or three pairs of hands can make the most difficult jobs much easier. Offer to help neighbours with their routine repair projects and they will return the favour when you need them.

To do the hard work, you’ll need a list of reliable artisans, starting with a handyman or general contractor who can handle a broad range of jobs. Since contractors usually charge a call-out fee, wait until you have at least two or three jobs that can be done all at once.

Ask around for the names of an electrician, a plumber, a carpenter and a painter. With each, start with small projects to be sure you’re satisfied with their work.


Annual tasks 

Doors and windows – Replace broken or cracked panes of glass and apply new putty where needed. Finishes should be checked for paint deterioration and rot. Also ensure that all seals around doors and windows keep drafts out. Correct insulation around doors and windows will result in big savings on heating and cooling costs. Check that door frames are properly fitted. Bent door frames or those showing some movement during a relatively short period such as six months may indicate structural problems.

Roofs – Inspect tiled roofs for damaged, loose or missing tiles which should be repaired or replaced, as a leaking roof can cause serious water damage. Check flat roofs for any blistering or bubbles. Make sure all debris is cleared from the roof and cut away any trees or branches that make contact with the roof.

Chimneys – Check for loose or damaged bricks or mortar and have chimneys swept professionally once a year to remove build-up of creosote and other flammable by-products inside the chimney flue, if you burn wood. For gas-burning appliances, a licensed gas technician should be called to check that they are operating properly.

Gutters – Keep gutters and downpipes clear of leaves and debris to prevent clogging. They should also be checked for blockages and leaks from holes or joints. Some sections may need to be resecured to walls or resloped to ensure they operate correctly. Remember to always make sure that water drains away from the house.

Paint - adds more than just aesthetic appeal to a home - it also acts as a protective layer against the elements. Paint prevents metal areas from rusting and wooden areas from rotting. Repaint sections that have blistered or bubbled, peeled or cracked.

Walls and ceilings - should be inspected for cracks in interior finishes and any damp areas. Fill any cracks and voids to allow for easy monitoring of movement between inspections. Note any water stains on the interiors and monitor regularly. Moisture or damp within walls will cause paint to bubble, and damp in the ceiling could cause sagging or even collapse.

Patios and decks - Wooden decks must be properly sealed. If water is poured onto the deck and it beads the sealing is intact, but if the water is absorbed, the wood must be sanded down and resealed. All wooden sections should also be checked for rot and insect infestation. Also ensure that steps and railings are properly secured.

Fixtures - Check for any leaking taps in the kitchen or bathrooms, which usually result from washers that need to be replaced. Make sure toilets are sealed and secured to the floor. Listen for toilets that run continuously. Check grouting and sealant around all bathroom fixtures and renew as necessary. The smallest amount of water seepage through the grouting can cause mould and rot behind tiles.

Garages – Inspect the walls of the structure for cracks, damp and evidence of movement. Check all wooden components for evidence of rot or insect infestation and paint or treat as necessary.

Driveways and pavements – Check these areas for cracks and wear, and correct hazardous uneven sections. Redirect sections that cause surface water run-off towards the house.

​Article referenced from:

https://www.bizcommunity.com/Article/196/568/191275.html

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SA property trends: Cape Town still number one in value

6/5/2019

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A survey recently carried out by Lightstone has revealed a range of statistics that will be of interest to anyone keeping track of property trends in South Africa today.

Lightstone calculated that of the 8 million registered properties in South Africa, 83% are residential.

These 6.7 million homes have a combined value of R5.4 trillion, with Gauteng accounting for some R2 trillion of this figure. 67% of the total are freehold properties, 18.3% are in estates (a figure almost double that of 15 years ago) and 14.2% are sectional title units. The average value of the estate homes is roughly three times that of normal freehold properties.

Gauteng remains the province with the densest residential properties as regards value and volume. Figures for SA’s municipalities show that Cape Town values are way ahead of the rest, with residential properties worth R1.6 trillion. Johannesburg comes second with R0.94 trillion and Tshwane third with R0.54 trillion.

The number of homes in the Western Cape and Gauteng together is just over 50% of the total value
for the country, but in value terms these two provinces account for 66% of South Africa’s homes. In Johannesburg Bryanston, Morningside and Midstream are the highest overall value suburbs, while in Cape Town Sea Point, Rondebosch and Fresnaye have captured the most value.

At R19.3 million, Llandudno has the highest value per home. The far less expensive middle bracket Cape Town areas of Sillwood Heights, Hospital Hill and Voëlklip saw the highest price growth in the last year.

Lightstone’s survey also reveals that single, female residential buyers in Cape Town, have increased in one year to just over 71 700 - a figure which is almost 15% higher than that of their male counterparts.

The data confirm yet again that Cape Town remains a favoured precinct for property investment, with greater stability and, on average, steadier growth than other metropolitan areas. Prices here continue to be well above the average for South Africa.

Article referenced from:
https://www.property24.com/articles/sa-property-trends-cape-town-still-number-one-in-value/28532
 

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    5. As your own personal realtor - we'll coordinate with our service professionals and other agents in the process, so you don't have to - not only will it eliminate stress but you receive a seamless service.

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