Tips for se­ri­ous prop­erty in­vestors

Lesotho Times - - Property -

WHETHER you are a sea­soned in­vestor or just start­ing out, know­ing where to find in­vest­ment prop­erty is one of the big­gest chal­lenges fac­ing real es­tate in­vestors. So, how do you know when you have dis­cov­ered the right in­vest­ment match?

1. Start­ing your search Although an ex­pe­ri­enced real es­tate agent can help you in your search, you should start look­ing for your in­vest­ment on your own. You need to un­der­stand the prop­erty mar­ket and be se­cure in your decision, and be­lieve you haven’t been swayed by a smooth talk­ing agent.

The most im­por­tant thing is to have an un­bi­ased ap­proach to all the prop­er­ties and neigh­bour­hoods within your price range.

Your price or in­vest­ing range will be guided by whether you in­tend to ac­tively man­age the prop­erty (be a land­lord) or hire some­one else to man­age it.

If you in­tend to ac­tively man­age it, you should look for prop­er­ties which are no more than a two hour drive from where you live. If you are go­ing to get a man­age­ment company to look after it for you, your prox­im­ity to the prop­erty will be less of an is­sue.

2. Neigh­bour­hoods The qual­ity of the neigh­bour­hood in which you buy will in­flu­ence the type of ten­ant you at­tract and how of­ten you face va­can­cies. Look at the cars parked in the drive­ways, how neat homes on the street are - do you see lots of for sale or to let signs?

3. Rates, taxes and le­vies Th­ese fees are de­pen­dent on your prop­erty type and are paid to the au­thor­ity that ser­vices your prop­erty, such as a body cor­po­rate or mu­nic­i­pal­ity. If you are buy­ing a free­stand­ing prop­erty you will be charged monthly for mu­nic­i­pal rates and taxes.

This charge cov­ers the ser­vices pro­vided by your lo­cal mu­nic­i­pal­ity, such as sew­er­age fa­cil­i­ties, roads main­te­nance, street light main­te­nance and refuse col­lec­tion.

If you are buy­ing a sec­tional ti­tle prop­erty such as a prop­erty in a com­plex or a flat, you will be charged le­vies. Th­ese are the costs in­volved in run­ning the com­plex, and in­clude mu­nic­i­pal rates and taxes, limited build­ing in­surance cov­er­age, re­pairs and main­te­nance.

High prop­erty taxes may not al­ways be a bad thing if the area is an ex­cel­lent place for long-term ten­ants, but the two do not nec­es­sar­ily go hand in hand. The mu­nic­i­pal­ity’s as­sess­ment of­fice will have all the tax in­for­ma­tion on file, or you can talk to home­own­ers within the com­mu­nity.

4. Schools Your ten­ants may have, or be plan­ning to have a fam­ily, so they will need a home near a good school. When you find a prop­erty near a school, you need to check the qual­ity of the school, as this can af­fect the value of your in­vest­ment. If the school has a poor rep­u­ta­tion, it will be re­flected in the prop­erty’s value.

Although you will be mostly con­cerned about the monthly cash flow, the value of your prop­erty comes into play for when you even­tu­ally sell.

5. Crime No one wants to live next door to a crime hotspot. Go to the lo­cal po­lice sta­tion or a lo­cal se­cu­rity company for ac­cu­rate crime statis­tics for var­i­ous neigh­bour­hoods, rather than ask­ing the home­owner who is hop­ing to sell the house to you.

Items to look out for are van­dal­ism rates, se­ri­ous crimes, petty crimes and re­cent ac­tiv­ity (growth or slow down). You might also want to ask about the fre­quency of po­lice pres­ence in your neigh­bour­hood.

6. Em­ploy­ment and business dis­tricts Lo­ca­tions with grow­ing em­ploy­ment op­por­tu­ni­ties tend to at­tract more peo­ple - mean­ing more ten­ants.

If you no­tice an an­nounce­ment for a new ma­jor company mov­ing to the area, you can rest as­sured that work­ers will flock to the area. How­ever, this may cause house prices to re­act (ei­ther neg­a­tively or pos­i­tively) de­pend­ing on the cor­po­ra­tion mov­ing in. The fall back point here is that, if you would like the new cor­po­ra­tion in your back­yard, your renters prob­a­bly will too.

7. Ameni­ties Check the po­ten­tial neigh­bour­hood for cur­rent or pro­jected parks, malls, gyms, movie the­atres, and all the other perks that at­tract renters. Ci­ties, and some­times even par­tic­u­lar ar­eas of a city, have loads of pro­mo­tional lit­er­a­ture that will give you an idea of where the best blend of pub­lic ameni­ties and pri­vate prop­erty can be found.

— Prop­erty24

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