Page 130 - Wedding Essentials & Essential Groom Issue 7

STEPS TOWARDS BUYING A HOUSE
Step 1 - Knowledge
Knowledge is power so arm yourself with as much knowledge as possible. Read books, research the Internet, browse newsletters and chat to family and
friends that are active property investors. You’ll soon pick up trends and dos and don’ts that could make you substantial profits on your investment.
Step 2 - Buy in a slow market
As indicated in my introduction, the timing is perfect to pur- chase properties on your terms from frustrated sellers. History tells us that the window of opportunity is narrow because the market always comes back in time much stronger than before.
Step 3 - Buy in an emerging market area
Given the stagnation of price increases in affluent suburbs,
it’s prudent to buy in emerging market areas where proper- ties are still affordable and offer room for substantial capital growth. The areas that your parents once frowned upon, below the tracks so to speak, are now the new definition of position, position, position.
Remember, it is better to own a property in a less prestigious suburb than rent a property in a prestigious suburb.
Step 4 - Find a property that needs some TLC
Properties that need TLC can often be purchased at prices that are well below the properties true market value. If you are able to give the property a cosmetic facelift you can add substantial value to the property in a short space of time.
Please note that by cosmetic facelift I mean painting, carpets, lights, cupboards and landscaping. Given the cost of building materials at present it is best to avoid properties that require major structural renovation.
Step 5 - Take out all the risk
In my book I dedicate an entire chapter to the agreement of sale which I believe is the most powerful investment tool ever invented. Property is one of the few investment classes that can be purchased subject to the fulfillment of what is known as suspensive conditions. Knowing how to use these conditions in your favour doesn’t only completely de-risk any property transaction, but can even make you money before you’ve even taken transfer.
It’s also prudent at this stage of the process to take advice on the pros and cons of owning property in your own name or in a legal entity such as a trust, company or close corporation.
I highly recommend that you read this chapter of my book before you fill in any offer to purchaser a property.
Step 6 - Financing the deal on your terms
Although banks will bend over backwards to finance property deals, they will first bend you over backwards to get the best deal for themselves. Most property purchasers are so relieved to be granted finance from a bank that they forget that every- thing in the banks letter of grant is negotiable.
Step 7 - Grow your portfolio
Following my steps above your property will eventually be worth much more than what you paid for it in the banks eyes. On application, the bank will allow you to access these addi- tional funds that can be used as a down payment on your next property. This process can be repeated over and over until you have built up a substantial property portfolio.
Jason Lee has a BA LLB degree from the University of Cape Town, and has in recent years acted as legal and corporate advisor to Cape Town based property financiers in multi-million rand deals in both South Africa and abroad. Jason is the co-founder of TCB Properties, a dynamic property investment and development company. For further assistance with buying, developing or investing in property contact Jason Lee at Jason@tcbproperties.co.za.
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