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 longterm 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.

8. Build­ing per­mits and fu­ture de­vel­op­ment The mu­nic­i­pal plan­ning de­part­ment will have in­for­ma­tion on all the new de­vel­op­ment that is planned. If there are many apart­ment blocks, busi­ness parks or malls go­ing up in an area, it is a sign that it’s a good growth area.

How­ever, watch out for new de­vel­op­ments that could hurt the price of sur­round­ing prop­er­ties, for ex­am­ple, de­vel­op­ments which re­sult in the loss of an ac­tiv­ity-friendly green space.

The ad­di­tional apart­ments or new hous­ing could also pro­vide com­pe­ti­tion for renters, so be aware.

9. Rents Rent is the bread and butter for your rental property, so you need to know what the av­er­age rent in the area is. If charg­ing the av­er­age rental price is not go­ing to cover your bond pay­ment, taxes and other ex­penses, then keep look­ing.

Be sure to re­search the area well enough to gauge where the area is head­ing in the com­ing five years. If you can af­ford the area now, but ma­jor im­prove­ments are in store, and taxes, rates and levies are ex­pected to in­crease, then what could be af­ford­able now may mean bank­ruptcy later. — Prop­erty24

Newspapers in English

Newspapers from Lesotho

© PressReader. All rights reserved.