\u201cProperty is a long-term investment; don\u2019t buy unless you\u2019re in it for the long haul.\u201d It\u2019s one of the most common pieces of advice buyers hear, but it\u2019s not very useful when life doesn\u2019t stick to the plan.<\/p>\n
What do you do when you\u2019ve just bought a home and you find yourself being unexpectedly transferred to another city, country, or even continent? Is it a case of kissing your investment \u2013 and all the money spent acquiring it \u2013 goodbye? Or are there better options available that won\u2019t leave your finances in quite the same mess?<\/p>\n
\u201cIt\u2019s a tough situation,\u201d said Bill Rawson, chairman of the Rawson Property Group, \u201cand certainly not ideal from a stress point of view. A lot of people in this predicament do choose to sell and absorb any losses they incur, but this is definitely not the only \u2013 or the best \u2013 option available.\u201d<\/p>\n
Rawson said that thanks to the costs involved in making a property purchase, the losses on a sale made immediately after purchasing the property can be extreme.<\/p>\n
\u201cTo break even, you\u2019d need to cover not only your original purchase price, but also your bond, transfer and legal fees, and the commission your estate agent will earn on your sale,\u201d he said.<\/p>\n
\u201cIf you bought your property for R1 million, that means adding around R50,000 to your asking price to cover the bond and transfer fees you paid, and at least another R55,000 for the commission that your real estate agent will earn. That brings your asking price to R1.105 million \u2013 over 10% more than you paid a few months before. The chances of achieving that kind of growth over such a short period of time are very slim.\u201d<\/p>\n
Thankfully, there are other options available that don\u2019t involve taking a huge financial knock.<\/p>\n
\u201cInstead of selling, I always urge home-owners in this kind of situation to consider renting their property out,\u201d said Rawson. \u201cYou can then choose to rent a property for yourself in your new city, or apply for another bond and invest in a second property to add to your portfolio.\u201d<\/p>\n
Renting a home for yourself while paying off your original bond is typically the simplest and least financially-demanding option, but a second purchase may not be as difficult as you think \u2013 and the rewards can be high.<\/p>\n
\u201cBanks are very strict about granting second bonds,\u201d Rawson stressed, \u201cand in normal situations, people seldom have the additional income to qualify for more than they are already paying on their first home. However; when people relocate for a new job or a promotion, it\u2019s often because of a fairly significant pay raise. This increased income, combined with the rental income from their first property, may well be enough to convince the bank of their ability to service another loan.\u201d<\/p>\n
As an additional incentive to encourage your bank to grant you another bond, Rawson suggested looking at any properties in possession, or distressed sales they may have on their books.<\/p>\n
\u201cBanks are often more generous with bonds on properties they already have a vested interest in,\u201d he said, \u201cand these kinds of sales also tend to be very well priced, and offer great value to buyers on tight budgets.\u201d<\/p>\n
Two ways to help your child onto the property ladder<\/strong><\/a><\/p>\n