Sunnyside Flat, Pretoria - 22% discount! - SOLD!

Sunnyside Flat, Pretoria - R357 000.00
Market Value R460 000.00
Discount to Market Value - 22%
2.5 Bed, 1.5 Bath, Lockup Garage, 84 sq meters
Rental Income: R4000.00 pm
Levy: R600.00pm

This flat is very close to cash flow positive. I am sure it will be cash flow positive soon as interest rates come down and rental income goes up next year.

Email me to make an offer: colin@prevent-repossession.co.za

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Interest Rates are going down

Interest rates are coming down soon in SA, and much sooner than anyone could have expected. About 6 month ago the word was out that interest rate might go up one more time and then come down at the end of 2009. Then 3 month ago they said it would come down middle 2009. Then last month they said in February 2009, but the last week more and more commentators over the media are say and pleading for December 2008.

WOW, how the outlook has changed over the last 2 months. Well I am happy, but why does it take so long for the Reserve Bank to wake up? Even the Bank of England took a while. They slashed interest rate by 1.5% in one go from 5.5% to 3%. That is like bringing the rates down in SA from 15.5% to 10.5%. I wish! Maybe they will decrease it over the next 12 months. Remember, they are slow.

Central banks all over the world have been caught off guard and I think SA will be no different. We might not get 5% reduction in one go, but it looks as if interest rate will go down dramatically over the next 12 months. One reason is inflation. Inflation is falling, at long last. Oil is down from $145 to $48 and still falling. Credit extensions are coming down, food inflation is coming down, the vehicle market has crashed and property is down as well.

They recon inflation will be below 6% by end 2009. So interest rates will follow. The property market will not go into an immediate bull run, but will steady after resent falls. It will pick up momentum again as more people get the confidence back to buy property. Maybe after the second rate cut. Affordability will improve as well and everyone will be able to borrow more with their current income. They say the property market is like a big ship. It takes time to turn. It took time to turn from the 2005 peak, but in the last 6 months the decline has been dramatic. Declines in the property market are all over SA.

I am sure 2009 will be the turning point for property. That is why I believe the time to buy is now, while the bargains are out there. With interest rates falling, many cash flow negative properties will turn positive. And that is great news for property investors.

Tell me what you think will happen to interest rates and the property market in the next 12 months. I would like to see your views.

What is Cash Flow Positive Property?

Cash Flow Positive property is very high on any property investor's wish list. The reason is that the investor can buy the property and does not have to pump additional funds into the property every month after date of purchase (That excludes the cost of major maintenance). The return on investment is normally higher than cash flow negative properties.

So when is a property cash flow positive? A property is cash flow positive when you have rental income left every month after paying all your expenses. Monthly expenses will be items like the mortgage (must be 100% mortgage), levy and services charge and estate agent commission. Those are normally the common monthly expenses.

Rental Income R3000.00
Minus Estate Agent R342.00 (Normally 10% +VAT)
Minus Levy R500.00
Minus Mortgage R2000.00
Surplus every month R158.00
A surplus every month will classify this property as cash flow positive.

At the moment it is very difficult to find cash flow positive property. The reason is that property prices have increased over the last 8 years and rental income did not keep up or did not increase at the same pass. The resent interest rate escalations have not help either. The increase in rates caused repayments to increase every month and had a negative effect on cash flow.

Property prices have stabilised over the last 12 months, but rental income is still playing catch up. There are reports that rental income is increasing again. The hope is that we will have a dramatic interest rate reduction in the next 12 months. This will help to get many property cash flow positive again.

There are other ways to get your property cash flow positive. One of them is to manage your property without a rental agent. You will make large savings and your return on investment will increase. This might bring your property into cash flow positive status. Personally I don't believe in managing your own properties. The most important reason is that you need the time to do it and it will need active management. You will have tenants calling you at 7am or 9pm to tell you of a blocked drain. Or at the end of the month you will hear that someone was sick and now they are short on rent. And the list goes on. You get the point. I have better things to do.

Another way to make your property cash flow positive is to pay a deposit on your mortgage. This will bring down your outstanding balance and reduce your monthly bond payment. I will never do this. The reason is that if you pay a deposit of say R20 000.00 into your mortgage just to make your bond payment R200.00 less per month it will give you a bad return on investment. The R20 000.00 you could have used to help you buy your next property. That will give you a better return on your investment.

You can make your property cash flow positive by increasing the repayment period. You can change your repayment period from 20 years to 30 years or to an interest only mortgage. You will never repay your mortgage, but your cash flow will increase. I prefer interest only mortgages, but I will give my reasons in another post.

There are more ways to help you make your property cash flow positive, but I am going to stop there. I was only going to explain what a cash flow positive property is.

A cash flow negative property is a property where you have to pay the shortfall every month. We call it bleeding. Every month you have to find the shortfall somewhere else to fill the gap, or stop the bleeding. You are bleeding cash every month to subsidise the property. This is very dangerous, but unfortunately 90%+ of properties today are cash flow negative. When interest rate increase the bleeding increases and the strain on cash flow increases. This could lead to forced selling, to increase cash flow again.

On this blog we are looking for discount properties, but I will post cash flow positive properties from time to time. Watch this space. Register on this blog by entering your email address on the right under 'Get email updates' and don't miss out on great investment property for sale.

Brackenhurst, Alberton, Jhb - 27% discount! - SOLD!

Brackenhurst house for sale - R617 000.00

Market Value R850 000.00

27% Discount!

You are buying R213 000.00 of equity

3 bedrooms, 2 bathrooms, swimming pool.

Contact me via email for more info.

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Special Investment Opportunity - Phalaborwa

We have a house valued at R1.3m selling for R800 000.00 in Phalaborwa.

That is a discount of 38% or R500 000.00 equity!

The investor that wants to buy this property must pay an deposit of R60 000.00 immediately to help current owner. That is the reason for this good deal.

This is not a cash flow positive house, but you are buying R500 000.00 equity! You decide what to do with the property after purchase. Flip, buy to let or buy and hold short term to sell later.

Please let me know if you are interested. I will give you more details. This one will go quick, so contact me as soon as possible via email at colin@prevent-repossession.co.za

SA Property Investments is a blog that brings you discount properties for sale.

To Buy or Not to Buy? There is no question, just Buy!

Over the weekend I started this new blog. The first thing I did was to tell my friends and family. One of the reactions was... 'I am not buying any property NOW!' Why? 'Because the property market is coming down'.

My first reaction was shock, but then I realised that this is the view of most people at the moment. Well, most of the non property investors think so, because over the last week I placed an add on the internet about property for sale and 25 property investors contacted me. I was pleasantly surprised to see so many investors looking fot opportunities in the property market.

It is not easy to look the other way and not follow the herd. I had my doubts, but then I read about what Warren Buffet and Donald Trump had to say about the current market and I know I am not wrong.

Warren Buffet recently said ' be fearful when others are greedy and be greedy when others are fearful'. I love that one. Yes, he is a stock investor, but you can apply that saying to any market.

Donald Trump is saying '...invest while the market is reeling...'

I don't know where his market is going, nobody does. But following the herd has never worked. Doing the contrary thing makes sense to me. If I look at the current opportunities out there, this must be the best time to buy since the last correction in 1998-99. I remember Hannes Dreyer saying in late 2004... 'I am not buying now, you must be mad!' And I thought he was mad. Well today you can buy property at 2005 prices, you just need to shop around.

The discount properties are out there. I see them everyday. I believe it is the time to buy. If you are waiting to see what the property market is going to do, you might be missing the boat...again. Many property investors have been waiting for 3 years for the market to turn. The peak was in 2005 when property prices leaped 32% that year.

This is the time that we have been waiting for. There is no question, just go and buy those bargains. If you don't find any, I will post them here and help you.

Happy property hunting!

Freeway Park, Boksburg, Jhb - 18% discount

Urgent Selling Price: R899 000.00

Discount of 18%!

Current Market Value: R1 100 000.00 was valued in 2007 at R1.2m

Equity: R201 000.00

3 bedroom, 2 bathroom, 2 garage, pool

Current Rental Income: R7311.00

Contact me for more info at colin@prevent-repossession.co.za

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New Complex - Gordons Bay, Western Cape

R484 000.00 - 23% discount!
Newly completed complex in Gordons Bay, Western Cape
First Floor 2 bed, 1 bath
Uninterrupted Mountain View plus partial see view.
Units available from Developer R629000.00 not many left.
Levy: R500pm
Rental: R2750.00






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Email colin@prevent-repossession.co.za with your offer.

Verwoerdpark, Alberton - Townhouse

Verwoerdpark, Alberton - Townhouse

Price: R610 000.00
Marketvalue: R770 000.00
21% Below Market Value!

Description: 2 Bed, 2 bathroom townhouse
Size: 126 sq meter

Click on map. You will be redirected to Ananzimaps website to navigate map.



Email colin@prevent-repossession.co.za with your offer.

Discount Properties vs. Cash Flow Positive Properties

There are many strategies to follow when buying property. Two of the well known strategies are the Treoc-way and the Hannes Dreyer-way. The Treoc investment strategy is to buy new build cluster townhouses at the bottom end of the market and the Hannes Dreyer-way is to buy cash flow positive properties. Please note that I have simplified the two strategy descriptions. It will take 2 posts to explain it in detail.

Other strategies will be to buy and flip or buy and hold. Some investors will only buy guest houses while others will only buy warehouses. You name it. Then there are the investors only buying flats or only buying freestanding houses. So you will find 10 property investors with 10 different investment strategies.

The two investment strategies that I want to discuss today are discounted property and cash flow positive property. These two investment strategies are my favourites. Discount properties will give you some of the biggest return on capital in the first year. In the following years you will get normal growth of the area. Discount property gives you the opportunity to buy and sell and make a return in the shortest space of time. I find this very handy to help my cash flow. And cash flow is very important in the property game. Most of the property investors selling in today’s market is because of cash flow problems.

To find discount properties are not always easy. The best place to look for discounted property is from motivated sellers. Motivated sellers are property owners that need to sell their properties fast and are willing to sell at a discount to make it possible.

I will buy a discounted property to sell in the next 6 months to 2 years. Discounted property is not necessary buy and hold property, because most of the profit is made in the first year, or when the property was bought. You actually bought your profit on the day you signed your OTP (offer to purchase). So you could have your property for sale the next day, if you don’t want to hold onto it.

The other great deal is cash flow positive property. This is a property that is bought with no monthly short fall after all expenses. So after paying the mortgage, levy, letting agent and other expenses you still have money left at the end of the month. These deals have become very scarce lately. This is because property values have increase significantly over the last 8 years and rental income could not keep up. Now that the property market is turning, rental income is increasing again, at long last.

You can ‘make’ a property cash flow positive by putting down a deposit when buying a property. To ‘make’ a property cash flow positive by pumping more cash into it, might not always get you the best return on investment. You could have used that cash on another property deal. So the opportunity cost could be high while your cash is turned into bricks and mortar. You are locking in your cash, because property is not a liquid investment. Watch your cash flow.

Buying a property at a discount, which is cash flow positive, must be the best deal around. This is the type of property I will buy and hold for the long term, say 10 years or forever. These properties are rare, but they do exist. So you need to find a motivated property seller with a high rental income to get that right. I will have to work harder to get more of those!

The property strategy that you chose is your choice. Even if you made the wrong decision to buy a certain property, property will always forgive you over time. In other words, you will always make your money back over time. To start on the right foot and buy discounted properties use SA Property Investments.

Investing in properties using SA Property Investments Blog

SA Property Investments blog was created to give property investors easy access to buy property below market value. As a property investor myself it makes sense to buy property low and sell high. Many property investors will tell you that you make money with investing in property when you buy the property. In other words buying at the right price is very important. It is one element you can control. Future growth expectations, rental income and maintenance you cannot.

 

I want to give fellow property investors and readers of this blog the opportunity to invest in property at a discount to market value. The market value will be the current market price of the property. Not the value 12 months ago, because property is not selling at those prices anymore.

 

So in this blog we will be specializing in properties that we can buy at a discount to market values. We are not going to specialise in new builds, town houses or anything else. We will look at all types of buildings, but discounted.

 

I have property owners contacting me everyday to buy their houses. Most of the properties I am not interested in, because I don’t see the value or the owners have 100% mortgages with negative equity (the mortgage is larger than the value or the house). I will only buy from motivated sellers that are willing to work with me to help them. Losing your house to a bank can be very dramatic. If the bank repossesses the house, the owner will probably never get a home loan again. When they sell to me, they have the opportunity to start over and rebuild their lives and try not to make the same mistake as before.

 

The properties are from all over South Africa. Some investors will only want to buy property in the areas they stay. Other will buy anywhere. I look at the figures when I decide to buy a property. Some of the property I have bought, I have not seen, but they are making me money. Investing in property should not be an emotional decision. You should be able to look at the sums, decide what you are going to do with it and make your decision. You can decide to buy and hold, buy and flip (sell), buy and fix, buy to let, etc, etc. Each property will be different. The choice is yours.

 

Properties for sale will be posted on a regular basis on this blog. Not all the transactions will be the same. I cannot commit myself to say every property posted here will be 15-30% below market value or that I will be posting a property everyday. Not all of the properties you will buy from me. Not all the properties will be to your taste. Not all the properties will fit your criteria. I believe everyone will get an opportunity to benefit financially from this blog. It is up to you to decide how you want to benefit from the opportunities and if you are going to make use of these opportunities.

 

What I normally do is buy the property and flip them immediately or as soon as possible. That is if I don’t keep it for my own portfolio. Most of the properties I will post to the blog for sale, but sometimes I will forward you the complete deal so that you buy directly from the distress owner and we save on transfer duty. Sometimes I will do a deal with you and we will split the profit 50/50.

 

I am very flexible regarding the structure of the deal as long as we all benefit from the deal, because I believe getting 5% of a deal is better than getting nothing at all. I am always going to need investors to help me. I cannot buy all of the properties myself, thanks to limited resources, NCA and cash flow.

 

Some investors will buy a property from me, others will invest cash at 5-7% per month and with others we will do a 50/50 deal together. There will be many opportunities to make money from this blog and the property market.

 

This is a new blog with new opportunities for you and me. I trust that we all will be successful in our property investments and grow wealthy together.

How to use this blog to your benefit

SA Property Investments was started to make property investment deals available to investors that don’t have the time to source great property deals from day to day. Many property investors don’t know where to source great property deals or where to begin looking.

 

This blog will give new investors the opportunity to start their property portfolio on the right foot. It will also help experienced property investors to add to their portfolios with little effort. Even experienced investors can discover new investment techniques.

 

This blog also gives me the opportunity to present property deals to the right people and sell property fast. At the same time I am helping other people get out of their depressed situation.

 

The best way to benefit from this blog is to subscribe. All you need to do is to enter your email address in the field on the right named ‘Get email updates’. By subscribing to this blog, you will receive immediate property investment opportunities to your email inbox without looking up sapropertyinvestments.blogspot.com on the Internet. This will save you time and money.

 

You will receive an email to confirm your subscription. Open the email and click on the confirmation link provided. And that is it! Easy! So enter your email and start receiving discount properties and other property investment opportunities.