Author Topic: Where to begin?  (Read 1378 times)

TheGameCat

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Where to begin?
« on: October 11, 2016, 12:23:14 PM »
Good day all,

I've recently invested in my first property - luxury single bed apartment in a very good area. I purchased the apartment at the last development phase - so it wasn't exactly a bargain, but not bad either.

At the time I just purchased because I needed a place to stay and didn't want to rent. I was fortunate enough to be able to afford to buy.

Anyhoo, I've found myself greatly interested in real estate and would like to make this a source of income. I able to fully pay off my apartment in 3-5 years and plan to keep investing. However, I constantly hear about tricks and tips the masters of real estate use in order to get ahead, find the best deals and dodge taxes.

Does anyone have advice on how to proceed with my next investment? Are there any strategies I need to look into? I feel like there's a well of information, or a completely different game everyone is playing which I'm missing out on. I don't really know more to it other than simply spotting a good purchase and paying it off.

Do you guys do the finding and purchasing of property yourselves, or make use of agents? I've also come to notice there's a few property investments groups which allow services such as finding good deals and investing for you (though I'm mostly skeptical of these). Does anyone make use of such investment group?

I plan to buy to rent. So I'll definitely get tenants for my second property.

Enigma

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Re: Where to begin?
« Reply #1 on: October 11, 2016, 12:56:39 PM »
Everything is about location.  Not exactly sure yours...  With that being said many people start with their first rental property being the first place they lived.  I would recommend when you are almost done paying off your new primary residence in 3-5 years that becomes your first rental property and you buy another place for yourself.  Keep doing this a few times and you will know exactly what the renters will face and what expenses you will have.

TheGameCat

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Re: Where to begin?
« Reply #2 on: October 11, 2016, 01:14:16 PM »
My apologies, I'm in South Africa, Cape Town.

Thank you for your feedback :)

arebelspy

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Re: Where to begin?
« Reply #3 on: October 23, 2016, 06:59:56 AM »
My apologies, I'm in South Africa, Cape Town.

Thank you for your feedback :)

That's a whole other ball game.

However, I constantly hear about tricks and tips the masters of real estate use in order to get ahead, find the best deals and dodge taxes.

Why do you think any of that type of thing would be relevant to you?

You need to look at what works in your local market, the landlord/tenant laws there, etc.
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SwordGuy

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Re: Where to begin?
« Reply #4 on: October 23, 2016, 09:14:21 AM »
The best place to begin would be the pinned threads on this Real Estate and Landlording section of this forum.

There is a list of books there.  See what you can find at your local library.   See if you can find some good recommended books that specifically deal with South African real estate.   Read.   Read some more.  And go back and read the good books again.   Gallinelli's book is particularly good at teaching how to run the numbers to determine if it's a good investment or not, though be sure to double check it against SA laws.

A quick google search shows there are Real Estate Investment Associations in South Africa.  There appears to be some sort of real estate investment summit (conference) in November of this year.    Get active with any group you can.  Lots of good info and contacts there.  Ditto if there are any SA-focused blogs or websites.

Third, recognize that buying a home to live in is not the same as buying a home as an investment.   If you buy a home at a retail price to live in, you are merely lucky if you can rent it at a profit while you are still paying your mortgage.   You have to run the numbers up front - before you buy - in order to make money.   

In your case, you're expecting to pay off your mortgage and then rent it out.   Yes, you can make money that way.   But, could you make MORE money if you sold the property and bought stock instead?  Or bought one or more properties that were more suitable for investment?

Example:

In my town, I can buy and fix up a house for $50k.   It becomes worth $80k after I do that.  I can rent it out for $800 a month, with an annual expected profit of $4800 after expenses, vacancy reserve, and a sinking fund for big repairs.

I own my old home free and clear.  I could sell it or rent it.  If I sell it, I could buy 3 and 1/2 houses like the ones I detailed above.   If I rent it, I can make maybe $9600 a year, or just 2 smaller houses worth.   



Metric Mouse

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Re: Where to begin?
« Reply #5 on: October 23, 2016, 05:30:52 PM »
Everything is about location.  Not exactly sure yours...  With that being said many people start with their first rental property being the first place they lived.  I would recommend when you are almost done paying off your new primary residence in 3-5 years that becomes your first rental property and you buy another place for yourself.  Keep doing this a few times and you will know exactly what the renters will face and what expenses you will have.

This may work as an 'easy' way into a first property, but often times the numbers on a home one wants to live in are much different than the numbers for a rental.