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    Home»Property»Why it does not pay to own an investment house
    Property

    Why it does not pay to own an investment house

    The Free StaterBy The Free StaterApril 2, 2022No Comments3 Mins Read
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    This is not the first time I am talking about the importance of owning your own property and I am not about to say something contradictory.

    I will just state facts as they are.

    Many people think that owning a house and renting it out is a good investment – sorry to let you know that it is not.

    Sure, there are people who can make money out of buying and selling houses but this is only where you can buy a bargain such as at a sheriff’s auction, fix it up yourself and resell it at a good profit.

    But that is really hard to do unless you really understand what you are doing.

    At an auction, not only do you pay the price of the property that you offered, but you also have to pay a 10 percent fee to the sheriff and all outstanding accounts for rates and taxes, electricity, water etc.

    In sectional title schemes you would also need to pay the outstanding levies on top of this before you can take transfer.

    These outstanding amounts can be huge.

    When taking transfer of the property you will need to pay the transfer and bond costs – about eight percent of the price you paid.

    Now the property is yours, and hopefully you don’t have an illegal tenant to contend with.

    It is quite possible that you are going to have things to fix or modernise to help you get the resale price you want and you are going to have to look after the property while you own it in terms of paying rates and taxes, water, electricity, security and garden maintenance.

    Putting the property on the market through an estate agent is likely to cost you six-eight percent of the selling price as a sales fee.

    Though you can try to sell it yourself to save these fees, there is a reason why estate agents exist.

    They know all the ins and outs and have a steady supply of potential buyers.

    Just pricing your property so that it sells can be a nightmare.

    Buying and reselling a house is not an easy thing to do – it is quite easy to make a loss.

    Think very carefully before going this route and make sure that you have the skills to accomplish what you set out to do at a profit.

    • Mike Spencer is the founder and owner of Platinum Global. He is also a professional associated property valuer and consultant with work across the country as well as Eastern Europe and Australia.

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    The Free Stater is an independent English-language newspaper published in and for the Free State province of South Africa that offers authoritative and trusted journalism cutting across various quality-of-life issues.

    Email Us: editor@thefreestater.co.za
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