How to be a property investor pro
One of the many reasons why direct property investment consistently produces superior returns is the fact that it allows an investor to retain firm control of his or her investments.
This is the view of Dr Koos du Toit, CEO of P3 Investment Group who says many investors, confused by the wide range of investment vehicles and mechanisms, which are often shrouded by foreign-sounding 'financial' jargon, simply hand over their hard-earned money to an unknown third party - be it a financial adviser, a banker or an asset manager, without really understanding the investment option they implicitly select.
In doing so, he says these investors relinquish responsibility for their money and their financial future. “They have absolutely no control over their investment and can do nothing to influence the performance of their investment, except to hope that this third party will deliver on the promises made."
On the other hand professional property investors, explains du Toit, have empowered themselves with knowledge of how property investment works.
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Pitfalls of selling property privately
Those who choose to sell their home privately should do so with their eyes wide open to the potential pitfalls that can arise.
Tony Clarke, MD of Rawson Properties says there will always be one or two property sellers who, rightly or wrongly, think the commissions paid to estate agents are unjustifiable.
Such sellers will be tempted to go the DIY route and try to sell the property on their own, he says.
Without discussing whether this is a wise move or not, but assuming the seller does go it alone, Clarke has some words of advice for those choosing the private selling route.
He says the first piece of advice is to recognise that the private seller is targeting a different market.
“The buyer who goes to an estate agent recognises that he will probably have to pay a market related price and is possibly up against other buyers.”
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Can common use areas be 'rezoned'?
A Property24 reader asks:
I live in a Sectional Title complex with 50 units in Montana, Pretoria and I hope you can assist me.
A Special General Meeting has been called to "rezone" our gardens inside units to exclusive use. Also to allocate exclusive room / space for each unit to erect a carport should they wish to. They also intend to have alterations to the old rules of conduct approved at this meeting.
They have informed me that only 20% attendance is required to pass these resolutions.
This seems strange to me as these are enormous decisions. I would appreciate your comments.
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Be wary to pick the right rental agent
With finance for residential property purchases still hard to come by, demand for rented property has improved greatly and buy-to-let investors are again evident throughout the Cape.
This is according to Lanice Steward, MD of Anne Porter Knight Frank who adds that in some less affluent areas 70% of bond applications are still being turned down.
Steward says very few property investors are able or willing to find and manage their tenants themselves and have to rely on rental agents to do this for them – for better or for worse.
Rental agents as with any other group, she says, vary greatly in dedication and ability - some are excellent while others really should not be in this line of work at all.
She says before an investor appoints a rental agent, he should make certain that the person has a track record of checking on and assessing tenants’ previous rental and credit history. Any tenant who has been blacklisted by credit bureaux should be suspect as should any who have fallen behind on previous rent payments or been disruptive in their communities.
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Beware of cash strapped builders
With prices of between 10 and 20 percent lower than those charged by builders in 2009, developers are eyeing commercial property developments.
According to Org Geldenhuys, managing director of property of Abacus Divisions, there are an increasing number of property developers buying stands and building properties due to the low cost of building.
“If you were thinking of building, now is the time to do it without a doubt.”
He warns that developers must ensure that they choose a builder who is financially sound and will not go bust before completing the project as a large number of builders are currently under financial pressure.
Geldenhuys says there are only seven stands left to be purchased at the R2 billion office park development, Route 21 Corporate Park, in Irene.
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Business rescue tricky for landlords
The ‘business rescue procedure’ now made possible by the Companies Act for ‘financially distressed’ companies is likely to be used with increasing frequency in the next year or two.
This is according to Garth Watson, a director of Gunstons Attorneys, who explains that a company can be placed under business rescue by its board of directors if they agree to this. However, the State has to believe that the company is indeed financially distressed and that there is a reasonable prospect of rescuing it.
At the same time, any affected person may apply to court to place a business under business rescue.
The business rescue procedure, says Watson, cannot by law be implemented if the company’s finances are in reasonable shape or there is no real prospect of it being rehabilitated. Furthermore, the procedure may be cancelled if the requirements set out in the Companies Act relating to such procedures are not strictly complied with.
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Home sellers warned to keep promises
South African estate agents are warned to ensure there are no deceptive phrases in sales documents as stated in the Consumer Protection Act (CPA).
This is according to the Institute of Estate Agents that explains that the CPA protects the buyer against misleading verbal statements by any person acting on behalf of the seller.
It is particularly insistent that people with limited education or speaking another language should have all agreements carefully explained to them.
Anton du Plessis, chief executive officer of Vineyard Estates, says a recent High Court case (Guthrie and Another vs. Etango Game Lodge and Another) shows just how careful sellers must be in making promises they may not be able to keep – whether this is done in the official sales document or the property’s advertising.
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6 misconceptions about home loans
Information on how to apply for bond finance to help purchase a home has been disseminated by SA’s banks and bond originators in a steady stream for some years.
Yet says Rob Lawrence, national general manager of Rawson Finance, he and his team find themselves daily dealing with false assumptions which often reveal a deep-rooted ignorance as to the rules of property purchasing and how to finance these transactions.
Lawrence is now in the process of distributing a short memorandum on this subject to Rawson Properties’ 146 franchisees countrywide. He says this should “help scotch some wrong ideas” on the part of aspirant home buyers and avoid wasting unnecessary time in the home loan application process.
Entitled “Six common misconceptions about home purchase finance”, Lawrence’s memo lists the following as beliefs that most commonly lead to problems:
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