listed property vs buy to let

[#1]

I have often thought this over, and my decision always leans towards listed property vs buying my own to let. With RDF, for example (my listed property stock of choice), I get a yield of 9% per annum, whereas my own property returns about 4%-5%. With the listed property, if I wanted to sell, I can do it in 5 minutes. My flat would take around 2-3 months. With listed property, I pay total fees of around 1.5% - with the flat - probably around 5%. I don't have any tennant hassles, maintenance costs, and vacancies to deal with in a listed property. Listed property costs me 1.5% to buy as well, vs transfer duty, occupational rent, bond registration, laywers fees, maintenance, and repair costs. So why own my own then? Well, I can improve it - (thereby add value) and I can gear it 100%, which cannot be done long term with listed property, unless I borrow against my current homeloan. And lastly, I don't think I can offset my tax on listed property yield against the interest paid on the homeloan I borrowed against. So conclusion, my thoughts are back on listed property

[Blik]

There was a debate about this about a year or so ago - either here or on Tickertalk. Most people seemedd to agree that you get a better return by either owning listed property or commercial property as opposed to investing in a second buy-to-let house or flat. Mainly because of the costs incurred during ownership and on sale of the property. The main benefit seemed to be that by buying a second house, a bank would give you a nice fat loan and one could get students to pay a portion of that off. I am currently looking to buy a second house to let out to students, and am weighing up all pros and cons. I keep coming back to the fact that this is the one form off investment that a bank will actually give me some money to buy. They dont seem to understand my concerted effort and argument for a loan for 50 cases of Kanonkop Black Label!

[#3]

well I would have thought that having a bunch of students unattended in your property would have been considered a 'con' rather than a pro

[Blik]

good quality post-grad students can often be great here in the City of Saints. Dont let to First years, second years or third years.

[BlueDolphin]

Same questions mulling here. So I do both. My RDF for this fin year (from 1 March) is sitting at 14%, capital growth and div. Property at +- 8% , assuming 0 capital growth. The net on townhouse of K500 is K3.5, and that is by using agent, I never see or speak to tenants. The advantage of rental income is it is steady stream of income versus 1 or 2 times a year div. Oor 50 jaar sal ek beter antwoord hAƒAª - with hind sight!

[topgun]

http://www.beeld.com/Suid-Afrika/Nuus/Hoer-belasting-vir-die-eiendom-kom-20110714

[#7]

now there is a situation that has f%@#$ up written all over it. It is not a SARS tax, but a municipal property tax. Meaning our esteemed and extremely competent municipal councilers are going to charge 4 times higher rates and taxes to those that rent out their property, vs those that live in it. So how on earth are they logistically proposing to do this? They have no way of knowing if your are the owner or renter. They have no way of actually knowing who is residing in the property. If our esteemed councilers can't even collect on electricity bills, what makes them think they can sort this one out? Bring it on!!

[#8]

So the same people that can not afford to buy will not be able to rent if the landlords adjust the rent to accomodate the added tax. Shame.

[richardw]

The ANC is getting pretty good about taxation - "extract the maximum amount of feathers for the minimum amount of hissing".

...except they don't care about taxpayers hissing, only their voting base. So the feather extraction is a free-for-all.

[THRESHOLD]

Buying a single property is akin to having a portfolio made up of one stock. It is highly risky. In fact it is even worse since the stock won't cost anything to own. You also won't have to "manage" the stock - the company will employ staff to do that for you. The company has lawyers to deal with claims - you have no hope as any sort of legal action will run into hundreds of thousands in the blink of an eye. You can sell a stock with minimal spread loss and .3% brokerage. The median property will cost nearly 20% to rotate if you are the catalyst on both buy and sell side and thus the cause of costs on both legs. ADD to this the fact that a property can take YEARS to move - at a "decent?" price. AND then there is the political risk!!

[BlueDolphin]

Equity have the risk of loosing all or 90% of its value. Any share has that risk. Property for sure is long term and less likely to become zero valued.

[SimonPB]

thres .. I got bad news for you .. no I cannae even say it ..

[SimonPB]

err tell that to people who bought in hillbrow in the 70's ..

[BlueDolphin]

But they still have the property and not only the share certificates. And they are still renting out in Hillbrow. From Rentbay coza : 7 Jul 2011 A¢A_A" Rental: R 3000. Bedroom(s): 2.0. Bathroom(s): 1.0 in HILLBROW

[SimonPB]

maybe .. or their building has been hijacked .. thew get no income but still pay rates ..

[THRESHOLD]

OK - I'll say it for you - You a-g-r-e-e!

[prancing_horse]

Forget residential, commercial and industrial are the way to go, and owning the latter two will always smoke listed property (that is what they are anyway)because of gearing.been there , done that for over 40 years.

[richardw]

No single house is less risky than the STX40. We're not saying put it all on one stock. We're saying one house (or even 5 houses) vs the market, because you can pick and choose in the market and get your money out as fast as you like.

[THRESHOLD]

At the risk of being accused of "pulling rank" - I have substantial property holdings (although less then before thanks to price falls and disposals.) The complications are monumental. I bought for speculative reasons - so it was the land I wanted - not some silly structure. BUT even so... The long-term returns on property are poor - and during the great depression - it was almost worthless. In fact (despite popular ignorance) the best asset class once the dust had settled - was high grade companies with decent dividends.

[prancing_horse]

There is risk in anything and everything on this Earth.Even the very best company today will on day mature and die.Believe it or not.