Do you need help selling an investment property?

Selling your investment property?

Looking for an Estate Agent to sell your investment property because it’s just not working out?  Not getting the return you need or have tenants that just don’t pay the rent.  The risk is huge and its hurting your disposable income to keep your investment property.  There are so many reasons why investment properties don’t work out.  Here are a few reasons:

  • Some tenants that pay late and after the bank collects their share, or they don’t pay at all,
  • There are tenants that just leave in the middle of the night and steal fixtures?
  • And there are tenants that refuse to leave,
  • They can be negligent or even malicious which leads to costly repairs.
  • Tenants get retrenched,
  • And then, there is upkeep and routine maintenance because your investment needs to be maintained.

This all leads to you having to fork out some costly repairs when you least expect it.

Reasons for buying an investment property

  • Your aging parents need a roof over their heads because they may be struggling financially.
  • Buying a holiday home for your family down at the coast or Clarens, the Vaal, or somewhere equally nice.
  • Buying investment property that you rent out.

Options when investing in property

You could consider buying off-plan like I did – avoiding major transfer costs.  My investment property was bonded so I needed the rent to cover my monthly repayment amount.  Remember, tenants come and go and good tenants become bad tenants.  Unemployment is high. And a really nice complex today could be not-so-nice next year.  The quality of tenants in a big complex can deteriorate quickly and before you know it you have loads of unsavory tenants that sit at home all day doing goodness knows what.  Then security becomes an issue and levies increase.

Other options include buying distressed properties and doing them up.  Buying low and selling high.  If renovating is your thing there is a great deal to be said for this strategy.

Property as an investment

I am no expert but I have dabbled with an investment property.  My investment property strategy came from a book that was recommended about 10 years ago.  My strategy was to buy low and bond in the R500,000 range and I put down a deposit of R100,000.  This resulted in my rent covering the monthly repayment amount.  My plan was to work with an agent who would manage all the day-to-day requirements.  This included the lease, the vetting process, the sourcing of ITC reports, and the reference checks.  Rental Agents generally charge a percentage of the rental income as a fee and will also charge additional fees to market your investment property when a tenant leaves.

The Long Game

Rental income in my retirement years – that was my long game.  And, one can argue that property values generally, increase over time if you are in the right location and you look after your property.  If the location of your investment property is good the demand should be high.  If you are patient and you have time you could make money.  But is that really true? I never considered the cost of the interest on the bond.  I did not understand compound interest and recently I heard someone say that compound interest was the 8th wonder of the world.

Investment Property – yes or no?

It’s your call but I can say do your research before you take the plunge.  Consider these costs over time:

  • Transfer costs
  • The value of compound interest, especially if you are putting down a deposit.
  • The interest you pay over time while your property is bonded.
  • Additional life insurance costs.
  • The percentage you lose every month on the rental income because your agent needs to earn a living.
  • The ongoing costs to find new tenants, especially when you lift the rent every year to keep up with inflation and the repo rate.
  • Property gains tax.
  • Upgrades to security and maintenance.

Although it’s hard to find an advisor who agrees with the property as a sound investment option, one qualified financial advisor from Cape Town went one step further.  He reckoned (Feb 2019) that investing in property was insane!  He outlined in a real-life example from Stellenbosch that this example yielded a mere 3.6% before tax That’s just not competitive, is it?

Selling your investment property

I Googled ‘estate agent in Randburg’.  The results were prolific.  There were 18 pages of search results which really meant nothing.  But, when I started phoning around I soon found that not all the agents were successful or even prominent in my area. Eventually, I settled on the Agency that was renting out my unit.  So, I settled for 2nd best because finding the right agent was painful.  I had my reservations too.  I felt that Agents who primarily rent are not necessarily good at selling properties.  Perhaps that applies to some of the smaller unknown brands though.  I did look around for other agents but it was painful.  Incidentally, that’s why we started this business.  I got tired of phoning around at my expense to find the right Estate Agent to sell my property.  Now if you Google Estate Agent in Randburg you will find us easily – and we connect Sellers with prominent agents in their area.

Steps when you sell

I started my process to sell my investment property by getting a property valuation But, I did not want to unsettle my tenants.  I needed the rent to cover the bond while the property was on the market.  Well, that backfired.  My tenants left but that made viewing the property a little easier.  The unit stood empty for about 3 months which hurt, but I did sell and I did make money.  The process for me was to start with a property valuation.  I had to decide if the asking price I could get was good enough.  If you feel you need more growth, then you need to bite the bullet for a bit longer.

What have I learned

I should have asked for or drawn a property valuation on my investment property at least every 2 years.  This would have managed the fall-out from my tenants who left sooner than I would have liked. Tenants face curveballs too.  That includes retrenchment, divorce, or even marriage if it impacts your investment income.   Always work with a good rental agent and make sure you have a good relationship with this agent.  Do your homework. Understand what other investment options you have.  I personally do think I did well off my investment property when I sold it, I just struggled with the drama it brought into my life more often than I would like to admit.

Estate Agents – want to know more about KW?

Keller Williams (USA) is a top real estate brand to work for.  If you are an estate agent and want to know a little more drop me an e-mail.   If you would like to leverage world-class technology to the benefit of all our stakeholders across the value chain and end up with a win-win every time, then let’s touch base.  Also, read what makes Keller Williams the best!

Get in touch

So, if you need a valuation done on a property anywhere in Randburg or elsewhere in Jhb, we can help.  Give us a call on telephone number (064) 549-3123.  Alternatively, drop us an e-mail at kwselect@kwsa.co.za.  We have a vast network of almost 1,500 top Keller Williams agents at our fingertips who are all just dying for the opportunity to partner with you to sell and conclude your property transaction in record time.

If you want to view all the Keller Williams properties across the country, click on our website to start the search for your dream home.  Need help getting a pre-approved homeloan, it’s free and our strategic partners will find you the best rate over 20 years!  And finally, if you are thinking of putting your property on the market and need a free property valuation, click here!

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