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Advice on my first property investment

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Super Contributor
Im looking to buy a small 2 bedroom duplex as a kind of pilot project to my investment portfolio. There are a couple of problems with this particular problem. The complex itself is not a good one, in that it is not well maintained, there are a number of nigerians and its just not somewhere i would like to live. The duplex itself needs some work, but i dont think it will cost me over 10k to fix. We have been having problems gaining access to see its condition inside, but i have managed to reduce the price from R240 000 to R190 000 with the possibility of it reducing further should there be more damage inside. The owner is well aware of this and is willing to reduce. In fact she has had so many problems with the tennants that she actually just wants a quick exit from the property. I have heard from neighbors that the property operates as a brothel etc. On the positive, the complex has had some improvements over the years, and the average rental for this particular type of home would be between R3000 and R3500 excl water and lights. average selling price for this type is also between R250 000 and R300 000, but have heard rumours taht its very difficult to sell. rentals are very quick apparently, and i dont intend selling the investment for a very long time as essentially it must fall in as part of a larger portfolio. I have been advised to purchase as part of a trust, or in my personal name, but i would have liked the business to own the house, so im a bit undecided. Essentially i want to use this asset to grow or build bigger property assets. Your advice would be greatly appreciated, as i am about to jump into this investment over the next 3 weeks or so.
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36 REPLIES 36
Not applicable
sectional title is a bugger if you are trying to make improvements. You have body corporates to deal with. And if the seller is unable to deal with her tennant problem, what makes you think you can? Buy quality at a cheap price - don't buy sh11t at a cheap price, that is my advice
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Frequent Contributor
Clearly the body corporate is not maintaining the property. Is there overcrowding? Get the financials, minutes of the last AGM and house rules from the managing agent, speak to the trustees, do they live on the premises? find out how often they meet. Unless you are prepared to get actively involved as a trustee to turn things around, don't touch it. Problematic complexes like this can take up to ten to fifteen years to turn around.
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Not applicable
If you want to be exposed to property as an asset, why not buy a property share,(Redefine,Growthpoint, etc). ? They look after the prop and you don't have to chase rents and deal with tenant damage. Especially if there are dodgy tenants in the complex. Example; If you had owned property in Hillbrow 30years ago you would have been very wealthy, if you own property there today, you cannot give it away.!
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Not applicable
Amen brother - on the listed property comment!
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Not applicable
and they give you an 8% yield - rather than the paltry 4% that you would get (excl maintenance costs) from your own
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Not applicable
I've a two bedroom flat in good repair with a good tennant in a reasonable area of muizenberg.property is fully paid. I want to sell the flat to pay off the balance of the bond on the house I am living in, and get rid of expensive debt. It has been on the market for a year and various banks have turned prospective buyers who would have qualified away. The body corporate cannot produce financials and management agency ( ie debt collector) is useless. Dead in the water! unless I get a cash buyer, I am stuck with it. the levy gets raised every year to try and catch up on maintenance and arrears.To confirm one of the previous replies: if you do not want to get involved as trustee and loads of headaches - stay away.
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Frequent Contributor
Ther are many other good buys out there, decide what you want and search for it. Don't buy just because it is cheap, there is a good reason it is so cheap. If you have the cash, rather go for a listed property fund. If you need finance look for a good buy somewhere else, trust me, you don't want to be a slumlord.
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Not applicable
I think you have asked and answered your own question! If these units are a problem BEFORE you even own them and are not costing you a cent yet, imagine what a black hole they will become once you DO own them. Equate owning them like you're living there. Does that give you a nice warm feeling? Would you be able to invite your mother over for tea? Your friends, mistress, boss? No? Thought so. Neither will that divorcee with 2 snotty spawn. Now imagine you take that 400k and slowly start to learn too trade the ALSI index future. Heck, if you're not making at least 5 gorillas a DAY in 6 months, THEN go and think about buying a pile of bricks. Shrug. Asked. Answered.
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Not applicable
I think you have asked and answered your own question! If these units are a problem BEFORE you even own them and are not costing you a cent yet, imagine what a black hole they will become once you DO own them. Equate owning them like you're living there. Does that give you a nice warm feeling? Would you be able to invite your mother over for tea? Your friends, mistress, boss? No? Thought so. Neither will that divorcee with 2 snotty spawn. Now imagine you take that 400k and slowly start to learn too trade the ALSI index future. Heck, if you're not making at least 5 gorillas a DAY in 6 months, THEN go and think about buying a pile of bricks. Shrug. Asked. Answered.
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Not applicable
apologies on the double post. Oh, and: You cannot put a shine on *****e. And: Cheap *****e is just that - *****e. You say the average price is 340k? Now think about what you buying at 190k will do to the average.
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el_nino
Contributor
Take ur R200k and invest it in the Coronation Top 20... U can thank me later...
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el_nino
Contributor
Take ur R200k and invest it in the Coronation Top 20... U can thank me later...
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Highlighted
Super Contributor
ITS only an asset if it makes you money.... and its only an investment if it offers growth... this brothel you are buying is nirther..unless you are buying th ebrothel.. and then thats a different story
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Frequent Contributor
Mr S. Why even consider this place? It is NOT worth it. Bottom Line = stay away - far away... from Rubbish.
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Super Contributor
For goodness sake - stop trying to get free financial planning advice on this site - its an abuse of this forum for reasons that don't need explaining. There are answewrs to all your questions but you need to pay a competent adviser for advice.
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Frequent Contributor
patrys jys n aap. why cant the guy ask a question ? at least mr.s is out there looking for opportunities , unlike a fowl who wont take any chances !!!
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Not applicable
Hey John, Be carefull of Brothels, - -The one that caught fire, - - Some came running and some ran coming.
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Super Contributor
I see no problem in asking individuals who are not out to get a quick commission for advise, in fact the best advise is free...i see no problem with it....i guess you pay your 'advisor' big time commission for his 'advise'....is he wealthier than you? chances are not, so why use his advise? its a pity how these guys take ppl for a ride gosh... thanks for your input
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Super Contributor
thanks!! i dont understand why people cant keep their negative, useless comments to themselves...
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