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Is property a good investment?

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I am often asked whether property is a good investment or not.

Just like a piece of string the answer must always be “it depends”.

Why do I say that?

In my mind when you buy the right property with the right intentions then property is by far the best investment you are ever likely to make.

While some of the big multibillionaires made their money from railways and oil and latterly Bill Gates from computers, most made their money from property.

Property accumulates value over time.

A house bought today for R1 million can easily be worth R2 million in 10 years’ time.

You don’t have to do anything, you just have to be the owner.

But unlike other investments that grow based on created value, property also provides annual income.

So, while your property is keeping up with inflation just by being there, it is also providing you with a place to live or rental income from a tenant.

When you take this into account by adding the annual increase in price to the rental income you can look to very high overall income.

Take for instance a five percent property inflation in a very low inflation scenario plus the rental that your tenant pays and you get the picture.

“It depends” relates more to whether you bought the right property in the first place.

Buying a property in an area that is going downhill would not be a good idea versus buying a property in an area that is improving.

One skill that serious investors in property have is that of buying first in new schemes or developments.

This means that not only do you buy at the opening price but you have a choice of the best units.

There is an automatic increase in price as later phases in the development are invariably sold at higher prices.

Your choice of building to buy will also influence future growth.

Buying into a building that needs high maintenance will mean ongoing maintenance costs compared to a low maintenance building.

The low maintenance building will be more attractive to potential buyers and receive higher offers when selling compared to the same design high maintenance building.

If you have the ability to upgrade or remodel a building you would be able to buy a poor property in a good area and by upgrading turn it into a profitable investment.

The same applies to buying into poorly financed and badly run buildings where changes in management can turn around a building and create exceptional value.

Lastly, I would suggest taking the long-term view.

While builders can buy, fix up and sell at a profit, real investors in property have an eye for the long term.

Buying a property, paying it off, then using the value of the first property to buy a second and have both properties pay off the bond on the second and then use those two properties to buy a third to pay off that bond even more quickly to buy a fourth property, a fifth, a sixth and so forth.

Those are the people who make money in the long term.

What it really boils down to is to buy the right property at the right price at the right time.

Need help? Just contact Mike Spencer of Platinum Global and he will help you set up your property buying strategy.

  • 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.

Property

Gas it out, give Eskom the boot

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ALTERNATIVE SOLUTION . . . Gas can be used for heating water, ovens and stoves in general

Electricity has simply become unaffordable. And, as if that’s not enough, it’s not always available.

In recent months, the power utility has been churning out media statements explaining the loss of generation at various power stations and pleading with consumers to use electricity sparingly.

While the updates are important, consumers naturally expect electricity to be available whenever they turn on the switch.

The recent tariff hike of over seven percent in Mangaung Metro has proved quite steep to most households and it might not be far-fetched to expect another round of hikes in the coming months.

I strongly believe it’s now time to seriously consider other practical solutions to end this double inconvenience of high prices and inavailabilty of electricity.

Alternatives like solar and gas could ease the problem quite significantly but it comes at a cost.

In fact, the installation costs might be quite discouraging, but once the systems are in place, there are no major expenses to be incurred – this including solar electricity, solar water heaters and gas.

Electrical geysers chew electricity while solar heaters are effective and efficient.

Natural gas is also a realistic alternative.

The system is cheaper to install by far and gas cylinders normally last for months.

Gas can be used for heating water, ovens and stoves in general.

Larger systems can also have central heating.

Gas is readily available and suppliers have delivery services for 10kg cylinders and above.

And unlike electricity, gas geysers only heat water on demand, which means that you don’t sit around with pre-heated water in your geyser.

It only heats on demand.

And when cooking, pans heat up quickly and, importantly, cool down when the gas is switched off.

It is a different type of heat and is great for making oven bread.

Worth a try!

  • 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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Langenhoven Park chain store robbed

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SHOP ROBBERY . . . The Walk Centre in Langenhoven Park

Bainsvlei police in Bloemfontein have launched a manhunt for suspects involved in business robbery at a chain store at The Walk Centre in Langenhoven Park on Wednesday.

The complainant, who is the manager of the shop, told the police that two men walked into the shop pretending to be customers before robbing the shop.

“Suddenly they pulled out firearms and accosted the four cashiers and instructed them to walk back into the complainant’s office,” police spokesperson Lieutenant Colonel Thabo Covane said in a statement.

“The suspects robbed the shop of different brands of cellular telephones as well as an undisclosed amount of money, and fled the scene in a white Renault Clio with registration number HRT 558 FS,” he added.

Police were called to the scene and they are now investigating a case of business robbery.

Covane said anyone who might have information that could lead to the arrest of the suspects may contact Captain Thapelo Motseki on 082 466 8405 or call the SAPS Crime Stop number: 08600 10111. Alternatively, information can be sent via MySAPS App. – Staff Reporter

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Property

Duets are sectional title too

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A duet unit is by definition a two-unit sectional title scheme. Or at least is supposed to be.

However, I have seen these mini schemes with up to five units. Not sure how they get away with it.

Either way they are still mini sectional title schemes and have to be treated like their big brothers – but they aren’t.

Usually, each owner has their own rates account, own water and electricity account and just does their own thing. But that is where the complications come in.

Some owners have a bond and thus insurance. Some bought cash and forgot.

A body corporate is supposed to have a body corporate policy on all the buildings.

Let’s say that there is a fire in an insured unit but it also results in the building down of an uninsured unit.

And because this is a body corporate and all parties are trustees that are expected to have a body corporate policy, they will be equally negligent.

That means that the owner will have to pay 50 percent — or whatever the Participation Quota (PQ) ratio is — of the uninsured unit owner’s loss.

Would you like to be in that position? I don’t think so.

The same applies to maintenance.

So, if your neighbour thinks that his roof needs to be replaced, you will be liable for that same PQ part of the replacement cost.

The trouble is that nothing will happen while everyone is happy and things are running smoothly, but when there is a major problem, people look for solutions to their financial crisis.

It’s not worth it.

Run your mini scheme properly and contact Community Schemes Ombud Service if your neighbour won’t.

  • 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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