|The criteria for buying a property may change depending on what you are planning to use it for, says Steve van Wyk, Seeff’s MD in Centurion.|
Investing in a property you are planning to let out (buy-to-let) criteria:
- While the neighbourhood you choose to buy in for this purpose is important for reasons such as rental demand and resale value, you don’t necessarily have to personally like the neighbourhood, nor does it have to be close to your place of work as you are not planning to reside here yourself.
- If a property you are buying for investment purposes needs work done in order for it to be in a “rentable condition” you will probably have a tight time frame in which to complete any corrections or alterations before running the danger of ending up with a vacant property. When you own a buy-to-let property you should always keep it in a good condition to ensure that there is adequate rental demand for it.
- Strong rental demand in the area is vital.
- Like in the case of buying a property to live in you need to determine what the rates, taxes and monthly levies will be because this is payable by you (the owner). Also consider whether you will be able to service the bond even if you do end up with a vacant property for whatever reason and keep in mind that monthly levies could be high.
Investing in a property you are planning to live in criteria:
- While personal preferences aren’t as important when investing in a buy-to-let property, compromises are harder to make when buying a property you are going to live in. You should be able to see yourself in a buy-to-live-in property on the long term and therefore it is crucial that you like the property and feel comfortable with the amount of bedrooms, neighbourhood etc. Likewise the property you live in should also be in close proximity to your place of work and the activities and amenities you regard important.
- While the property you live in also requires effort you have a longer time frame in which to complete any alterations, additions or renovations because you will not be inconveniencing any tenants (only yourself).
- Rental demand is not as important as with buy to let property. Resale values are however, especially if you are not planning to reside there forever.
- In addition to rates, taxes and levies you will need to pay the bond as well with no rental income from tenants. Will you be able to afford it?