You know what’s funny. People always work out the numbers for buying a house using a loan and discourage people from buying but no one ever does the numbers for renting, which is the alternative. 😂 I’ve done the numbers. Tomorrow I’ll thread why a house is an investment
I mean people are living longer. Imagine renting a two bed at R9K plus R1K of utilities plus 10% annual rental increase for 40 years then not to have anything to show or pass on as generational asset. Shem ANDIZI but ke😌
But let’s chat tomorrow 🤫
Firstly a house is an asset, I can’t even begin to argue those who call it a liability. It’s a liability cause you make it that way. People never do the numbers when buying property in general. They do legacy buys or they buy with emotions. Warren Buffet preaches EQ in investing
The timing of your asset is what determines wether it’s a good one or a shitty investment. Maybe your primary home is not an investment in ur lifetime that’s because u did ur math wrong and had no disposable strategy then yes it won’t be an investment you enjoy in ur lifetime
Property investment is beneficial through either rental income or appreciation. So if you not renting you gotta rely on appreciation. But both need a strategy. This is why they say buy an investment house first before primary residence.
Example, save for a deposit, invest in a 2bed, live in half of it and rent the other half, using the average that SAns (Who understand RE) take to pay off a house plus the additional payments from the rental income pay off in 8 years. Don’t settle the bond fully
Load the next bond for the next which can be ur primary residence, you’ll be in ur 30’s so u probably want ur space (Mistake) but whatever. Use the rental income from the other house to help pay off the PR. Pay that off in 8 years.
The PR is probably bigger than the rental which is also a mistake but people want to live in nice houses so. You now use the rental from the rental to maintain both houses, you have created an income stream to deal with that.
If you really want it to become an investment in your life time at age 50 when your kids are hopefully out the house you sell, you save on CGT cause primary house, you down scale to the first house(the rental) and you benefit from appreciation of PR.
It’s a disposal strategy that most wealthy people use. They sometimes don’t even sell they swap them around. The rental becomes the PR and the PR now is the rental.
The argument most people make is that because of the bond and the trapped equity of a PR it can never be an investment. I disagree it’s how you buy RE that will make the world of a difference. The issue is timing which goes against principles of investing.
Why are you rushing and putting a time constraint on the PR to be an investment. All assets have the potential to be investments it’s how you buy them and how you use them then lastly how you dispose.
101 of entrepreneurship is build a business as if you will one day sell it. If you want your house to be an investment you gotta use the same mentality. The first mistake people make is to buy in their names😔 Already ur pre-emoting a loss
Another is to give the house a chance to be an investment. E.g the guys at Summercom built most units at Via Pollino as 2bed 1bath but investors turn them into 2b2b by manipulating space. That changes selling price from R900K to close to R1.25milli check if u don’t believe
Yes it’s unfortunate there will always be people who will still take 20years to pay off their house. And you can say they would have paid for 2 houses. Their house might not be an investment in their lifetime but it will eventually break even provided property sector grows
But like any other investment there is no guarantee. Who saw Steinhoff coming? Property appreciation is due to inflation mainly. Are you going to stop inflation?🧐 id like to see that
Rent R9K let’s say you do this for the rest of your life. That’s R9K plus an annual increase of 10%. Let’s say you start renting at age 25 and die at 70 that’s 45 years of renting surpassing the average loan period. 9 x 12 months x 45 years = 😭😭😭😭😱 add 10% annual increase
But this is better because you don’t pay maintenance 🙄 No ways guys.
If you buy sectional title you pay rates, levies, tax and the occasional paint job or geyser bursting, interest for home loan . After 45 years you’ll thank yourself even generation after you will thank you
