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21 Apr 2014

I get asked this question SO MANY TIMES: " What property can you get me that is a Good Investment?" Here is my personal opinion, based both on my experience as a Realtor specializing with the sales or these entry level, flat/apartment type properties, as well as my experience as a Property Investor, owning some of these properties myself.

I get asked this question SO MANY TIMES: " What property can you get me that is a Good Investment?" Here is my personal opinion, based both on my experience as a Realtor specializing with the sales or these entry level, flat/apartment type properties, as well as my experience as a Property Investor, owning some of these properties myself.

It’s really just about finding a balance that you are comfortable with. Let me explain:

In some complexes and areas, you can get a very high rental yield, but complex management, general overcrowding, maintenance & safety issues are not great. In other very “upmarket” complexes, however, the rental income yields are low & selling prices high as sales there are more driven by live in owners, buying from an “emotional” rather than an investment based motivation.

My personal preference is an area like Oakglen which is a middle class, average good area, close to all major access routes, close to major business centers, mall & places of work, yet still affordable enough to be “entry level” and well suited to younger, average salaried working people, who would have purchased a unit if they could, but are just "on the edge" of affordability and unable to get together large deposits required by the banks, yet have the earning ability to afford rental payments that are often not much less than a bond repayment they would be paying if they were able to purchase.

In these complexes, there is also a well balanced resident occupancy of young & old, owner & tenant & a broad spectrum of race & socioeconomic profile. In other words, these complexes are not entirely occupied by tenants. (It is never a good sign if only tenants occupy). It is also important to look at & know the background & history of the body corporate, it’s managing agents & the general track record of a complex both financially & maintenance wise.

Now, of course everyone is looking for this type of unit. Existing investors hold onto theirs, as their rental returns are great. (Especially if the bought before the previous “boom”). The young people who bought before the “boom” have double the value locked in their home's capital, yet their incomes have not kept pace with the property market. So for them, although they potentially could have a large deposit, the gap between their apartment’s value & the “next step up” is simply not within their “affordability”. So these young buyers stay in their apartments way longer as well.

Thus, the rule of supply & demand prevails & for every reasonably priced unit coming available in such a niche area, there is currently a large pool of investors & 1st time buyers that are buying these up, often before it is really necessary to advertise them, as we know who will be prepared to commit to a purchase the moment we are lucky enough to get a unit available.

All this simply means that I need more properties for my buyers, so if you own an apartment, flat or townhouse, in the Northern Suburbs, and are considering selling it, please call or email me & I will be happy to assist.

Flat & Townhouse Specialist Menno van Mechelen (W)021 910 3300, (C)082 465 1057 Email: menno@webafrica.org.za https://www.facebook.com/Menno.FlatSpecialist?ref=hl