Things to Know Before Buying a Property
There are several things that need to be considered when one is investing in property for the long term. These are as follows:
- Types of Commercial Property: This really goes without seeing. You should decide the property type that you would like to settle for, right before you invest. One of the primary considerations is whether you want property for any retail joint or a proper multi-storied office. Regardless of what you choose, you should make sure that the property has the potential to be rented out as well as being sold; sometime in the future. This way, investing in commercial property is pretty similar to investing in residential property. Because whatever you choose in the end has to rake in a real good profit. Commercial properties in Cape Town and Johannesburg are really worth the investment as they’re known to attract the most profitable rents.
- The Tenure: You should do well to keep in mind that most leasehold properties are much cheaper when compared to the freehold. However, if the rental income is sufficiently able to cover the whole mortgage prices; then you need not really worry about the future. Since a majority of investors want to sell their property and move on to the next one (once they have generated profit), it really would be the best to choose a property that would be suited to the initial budget.
- The Location: Location should be one of the foremost on which you should be basing your decision on. Location does matter a lot when it comes to questions of tenure. In turn, both of these are affected by the location chosen by you. If you’re buying a property near a college or university, then it is likely to be high-priced, since it would be in high demand among students for rental purposes. The story is similar in case of properties which are located close to bus terminals, community habitats and office complexes.
- Property Tax: Property tax, of course, should be a major consideration before buying any kind of property. You can use expert advice or property estimation software in order to gauge the correct prices of a plot of property, and accordingly arrange for funds or loans.
- The Mortgage Loans: A majority of banks provide up to about eighty per cent of the property value with a payback period that stretches to anything between fifteen to twenty years. Due to this reason, you should be ideally picking the best location that there is; (depending on, of course, your budget) and the rental yield. There is a huge possibility that your rental income may not be able to cover the mortgage in the initial period. However, if the location of your property is a good one, then it is possible to get a much higher rental yield in order to bridge the gap much quicker.
- All the Additional Costs: All the other costs which are affiliated (but not related to) with the property, also need to be taken into consideration. All these costs are incurred from (but not really limited to) the renovation and maintenance fees. As the owner, you need to maintain the workability of the property in order to attract clients. You also need to keep your home in the best condition possible.