I tend to agree with both of your comments, but owning flats +- R400 000 - R600 000(which yields a great return a few years back, are causing much frustrations in management with tenants having no respect for one's property, and continous breakages) - hence I have over the past 2 years preferred property loan stocks (Growthpoint/Redefine)/unit trust (SA Corp)as no hassel of tenants. Rental increases now 8% if you lucky, then late rental payments, rental agents fees and then repairs and maitenance - not much of a return - although, I can gear the properties up to purchase other properties. (suppose pros and cons). But the banks' stringent policies on homeloans today, also restrict one's ability to gear the property, especially access bonds eg: 1 Property: Value R1m owe R400 000 = @ 80%Loan to value R800 000 less R400 000 = R400 000 available. 2 Property: Value R700 000, owe R150000 = @80% loan to value = R560 000, less R150 000 = R410 000. Now the bank's say, as we have access to R800 000 + R560 000 = you must prove your affordability (net of your tenant income, as tenants come and go) - and to protect the client (and the bank) - yawn - they say we must prove affordability for the full access amount. Secondly, the bank is now charging for "un-utilised funds", as apparently they have to borrow capital to cover our limits on the access bond. (Thanks NCA and Basel 1, 2 and 3). What about last 10 history of sound financial management, good conduct of bank accounts....seems we getting burnt for others inability to manage their cash flows... Suppose if your investment strategy is "capital growth" which most of us seek, I am still an accumulater of these shares for the longer term as part of a diversified portfolio(as they will have there turn again as an important investment asset), although now they are appearing a bit under pressure. Just my two cents worth...
