I’ve just bought a home and now I’m be­ing trans­ferred – what do I do about it?

Weekend Argus (Saturday Edition) - - PROPERTY -

PROP­ERTY is a long- term in­vest­ment, so don’t buy un­less you’re in it for the long haul.

It’s a com­mon piece of ad­vice for buy­ers, but it’s not very use­ful when life doesn’t stick to the plan. What do you do when you’ve just bought a home and you find your­self be­ing un­ex­pect­edly trans­ferred to another city, coun­try, or even con­ti­nent?

Should you kiss your in­vest- ment – and all the money spent ac­quir­ing it – good­bye? Or are there bet­ter op­tions that won’t leave your fi­nances in quite the same mess?

“It’s a tough sit­u­a­tion,” says Bill Raw­son, chair­man of the Raw­son Prop­erty Group, “and cer­tainly not ideal from a stress point of view. A lot of peo­ple in this predica­ment do choose to sell and ab­sorb any losses they in­cur, but this is not the only – or nec­es­sar­ily the best – op­tion avail­able.”

Raw­son says that, thanks to the costs in­volved in mak­ing a prop­erty pur­chase, the losses on a sale made im­me­di­ately af­ter buy­ing the prop­erty can be ex­treme. “To break even, you’d need to cover your orig­i­nal pur­chase price, as well as your bond, trans­fer and le­gal fees, and the com­mis­sion your es­tate agent will earn.”

“If you bought your prop­erty for R1 mil­lion, that means adding around R50 000 to your list­ing price to cover the bond and trans­fer fees you paid, and at least another R55 000 for the com­mis­sion that your agent will earn. That brings your list­ing price to R1.105m – over 10 per­cent more than you paid a few months be­fore. The chances of achiev­ing that kind of growth over such a short pe­riod are very slim.”

Thank­fully, there are other op­tions that don’t in­volve tak­ing a huge fi­nan­cial knock.

“In­stead of sell­ing, I al­ways urge home­own­ers in this kind of sit­u­a­tion to con­sider let­ting their prop­erty,” says Raw­son. “You can choose to rent a prop­erty for your­self in your new city, or ap­ply for another bond and in­vest in a sec­ond prop­erty to add to your port­fo­lio.”

Rent­ing a home for your­self while pay­ing off your orig­i­nal bond is the sim­plest and least fi­nan­cially-de­mand­ing op­tion, but a sec­ond pur­chase may not be as dif­fi­cult as you think – and the re­wards can be high.

“Banks are very strict about grant­ing sec­ond bonds,” says Raw­son, “and in nor­mal sit­u­a­tions, peo­ple sel­dom have the ad­di­tional in­come to qual­ify for more than they are al­ready pay­ing on their first home.

“How­ever; when peo­ple move for a new job or a pro­mo­tion, it’s of­ten be­cause of a fairly sig­nif­i­cant pay raise. This in­creased in­come, com­bined with the rental in­come from their first prop­erty, may well be enough to con­vince the bank of their abil­ity to ser­vice another loan.”

As an ad­di­tional in­cen­tive to en­cour­age your bank to grant you another bond, Raw­son sug­gests look­ing at any prop­er­ties in pos­ses­sion, or dis­tressed sales they may have on their books.

“Banks are of­ten more gen­er­ous with bonds on prop­er­ties they al­ready have a vested in­ter­est in,” he says, “and th­ese kinds of sales also tend to be very well priced, and of­fer great value to buy­ers on tight bud­gets.”

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