All Your Op­tions

Re­gret­ting not count­ing your cents way sooner in life? Don’t worry: there’s more than one way to buy a home

Cosmopolitan (South Africa) - - WORK -

SAVE FOR A DE­POSIT

Sav­ing is be­com­ing more and more dif­fi­cult thanks to in­creased liv­ing costs, but it’s not im­pos­si­ble. ‘I sug­gest tem­po­rar­ily liv­ing [with your par­ents] for a pe­riod of time,’ says Mar­ion Mays, founder of Thalia Stan­ley Group, a wealth ad­vo­cacy and in­vest­ment-men­tor­ing firm. If this isn’t a vi­able op­tion, Mays sug­gests tak­ing on a part-time job to boost your cash flow, mak­ing your own lunches, car­pool­ing to work, and sell­ing any un­wanted cloth­ing or fur­ni­ture.

TOP TIP If you’re a first-time home buyer, you may qual­ify for a 0% de­posit. Try Ooba.co.za to find out whether you qual­ify.

BUY WITH A FRIEND OR A SIB­LING

Fi­nances fall­ing short of your dream prop­erty? Dou­ble your cash flow by join­ing forces with a sib­ling or a trusted friend. Nikki, 28, took the plunge with her lit­tle sis­ter Is­abella, 22. ‘ We re­alised we’d be much bet­ter off pool­ing our money and buy­ing some­thing to­gether,’ she says. ‘ The best thing about it

is I fi­nally own a house and share the bond with some­one I trust.’

Two buy­ers means two sets of opin­ions, so be­fore you even start your prop­erty search, clar­ify your ex­pec­ta­tions with each other. ‘I went to a few show houses and would show Is­abella my short list, but there was al­ways some­thing she didn’t like,’ Nikki says. To avoid any dis­putes later on about who owns what, be sure to draw up a le­gal agree­ment. ‘ We de­cided from the start that it would be a 60- 40 split with the de­posit, and I live at the prop­erty.’

TOP TIP ‘Make sure you’re aware of the other per­son’s fi­nan­cial habits, and en­sure you’ve got a sim­i­lar mind-set,’ says Nikki.

GET A FIXER- UP­PER

Just be­cause you’re good at putting to­gether flat-pack fur­ni­ture doesn’t mean the reno life is for you. But if you have a vi­sion, de­ter­mi­na­tion and a tight bud­get, read on.

‘Ren­o­vat­ing al­lows you to be cre­ative and ex­plore new ideas and tech­niques,’ says ren­o­va­tor El­yse Knowles. ‘And you can bring an old home back to life.’ It could also al­low you to buy a cheaper home in a neigh­bour­hood you pre­vi­ously couldn’t af­ford. But on the flip side, be pre­pared to get dirty! ‘ The tough­est part about ren­o­vat­ing is liv­ing through the chaos while do­ing it,’ says Knowles. It’s not a quick process – and if you want to save while do­ing the project, you have to live there!’ TOP TIP Make bud­gets a pri­or­ity, says Knowles. ‘You have to fig­ure out from the start how much you would like to spend, and have a con­tin­gency plan in case some­thing goes wrong.’ On av­er­age, add 10% of your bud­geted amount.

ASK YOUR FAM­ILY FOR A LOAN

‘When pur­chas­ing a home or an in­vest­ment prop­erty, it’s wise to bud­get for at least a 10% de­posit plus enough to cover all as­so­ci­ated costs, in­clud­ing lawyers’ fees and pest and build­ing re­ports,’ says Mays. These costs can add up. For ex­am­ple, ac­cord­ing to SARS ( Sars.gov. za), trans­fer duty on a prop­erty that’s val­ued at more than R750 000 is three per­cent of the value above R750 000; a house with a buy­ing price of more than R1,25-mil­lion is sub­ject to trans­fer fees of R15 000 plus six per­cent of the value over R1,25-mil­lion.

You can get an es­ti­mate of trans­fer fees at Raw­son.co. za/ trans­fer- cost- cal­cu­la­tor.

The re­al­ity is, you may need help cov­er­ing these costs. ‘ When ask­ing par­ents or grand­par­ents for help, demon­strate that their needs have been fac­tored into the equa­tion,’ says Mays. ‘ Think about how the loan of funds will af­fect their liveli­hood – when they will get the money back, whether they’ll be re­spon­si­ble for debts or if they have an in­ter­est in the home you’re buy­ing.’

TOP TIP ‘Have all of the facts in writ­ing and en­gage an ex­pert to ex­plain how a “parental pledge” works,’ says Mays. ‘ This shows you’re com­mit­ted and have done the ground­work, and that you’ve saved and worked out whether you can af­ford the re­pay­ments.’

CHOOSE AN IN­VEST­MENT PROP­ERTY

‘ There are a few ba­sics prop­erty in­vestors should aim for,’ says Mays. ‘First, get your bond preap­proval so you know ex­actly how much you can bor­row. Then, do thor­ough re­search and seek out ad­vice from ex­perts. If the num­bers don’t stack up, it’s not an in­vest­ment. In­vest­ments are bought based on num­bers and logic, not emo­tions.’ She sug­gests hav­ing a safety-plan fund of 10%.

TOP TIP Yes, we know this is an in­vest­ment prop­erty – but if it is an op­tion, live there for the first year. You may qual­ify for fees sav­ings or lower in­ter­est rates and cap­i­tal gains tax.

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