Prepaid water meters unconstitutional.

By
Nats
Published: February 24, 2009Posted in: General Interest, Landlords, Property letting, Real Estate Investing, Real estate marketTags: , , , ,

Residents of the Gauteng township Soweto, have taken the matter of the constitutionality of  prepaid waters meters to the Supreme Court of Appeals today.

This is after they already won their case against Johannesburg Water and a High Court Judge ruled that not only were the meters unconstitutional but the residents were to receive 50 litres of free water per person per day. This was in 2008, yet Johannesburg Water continued to install the meters even after the court ruling.

The residents also state that prepaid water meters installed in properties in wealthier areas work on a different principal because the wealthier residents are given an opportunity to make representations and are allowed adequate notice of disconnection.

The basis of the residents’ argument is that water is a basic human right and the restriction thereof is unconstitutional. The residents not only want the meters removed but they are also campaigning for more free daily water.

The matter will probably end up being heard in the Constitutional Court if Johannesburg Water continues to fail to comply with the High Courts ruling. This will probably set precedent and will demonstrate whether or not the South African constitution is followed when it comes to the most basic matters that are important to everyday life.

What do you think? Should free water be made available to the poorer communities in South Africa?

Common complaints about neighbours.

By
Nats
Published: February 17, 2009Posted in: Buying property, General Interest, Landlords, Real Estate Investing, Real estate law, Renting propertyTags: , , ,

We buy a home with a vision of how wonderful it is going to be living there. However sometimes we end up getting a nasty surprise that for the most part we can do nothing about, bad neighbours.

The problems our neighbours can create for us are endless, ranging from annoying through to downright destructive behaviour. People take it very personally when others affect their ability to enjoy their home and privacy and this is compounded when the problem lives next door 24/7.

The most common complaints people have of their neighbours are the following:

Rubbish all over the place
Barking dogs
Noisy children
Parties all the time
Spousal fighting
Spying on you                                                                                                                                                                                                                      Parking disputes

All of these issues, if left unchecked, may put a great deal of stress on your relationship with your neighbour. I lived in a rented house a few years back that had a family with two small boys living next door. The children enjoyed throwing their toys over the wall and watching them smash on the paving I had at the back. The tenant before me had merely thrown the pieces back over the wall, I didn’t want to do this for fear of injuring one of the children as they were rather large toys.

I know children will be children but their parents never scolded them for dirtying my yard and it was only after they started throwing drill bits at people that I was forced to increase the urgency of my complaints. I had children myself that may have been injured.

Whenever dealing with their parents I was always polite but firm because they would try and excuse the behaviour by saying that it only happened a few times a week and we should just throw everything back over the wall which I refused to do. The parents needed to realise how inconvenient it was for me to keep dealing with their mess by making them come and fetch the things that were thrown over.

Eventually, after many months of complaining every time it happened, they finally stopped throwing their things over the wall.

The best way to deal with something that is basically just annoying is to be persistent but polite. Eventually your “annoying ” persistence should show results.

However in the case of more serious transgressions one should always deal with the authorities, such as vandalism of your property by a neighbour or threats of violence.

Remember that when dealing with a neighbour you are more than likely still going to be living next door to them for years to come and that it is very unpleasant having a bad relationship with your neighbours. Try and keep your dealings with them as amicable as possible.

Real Estate Investment Strategies – Part 2: Risk management

By
doublef
Published: February 16, 2009Posted in: Real Estate InvestingTags: , , ,

.Ok, I agree. Risk management isn’t really a real estate investing strategy but it is a very important part of real estate investing. If you are considering investing, you need to make risk management a top priority in your strategy.

What is risk management?

Well it is actually the term for long/short term insurance e.g. life insurance and home insurance. The problem here is that this isn’t the only risk management you should do as a property investor. Risk management, as far as I am concerned, is planning for the unforeseen, making sure you are protected when things don’t go your way.

So how do you manage your risks?

First thing you should do is identify all the possible risks that a real estate investor could face here are a few:

Crime

If your property has a stove, cupboards, light fittings etc. you need short term insurance. The last thing you want is to have to get cash somewhere to replace a stove.

Fire and water

Another good reason to have short term insurance is because your property could burn down. Another possibility is water damage. I am sure you’ll agree that these two elements can ruin a good piece of real estate.

Tenants

If you are going to be an investor you will probably have tenants that assist you in paying off the bond and maybe even provide you with a steady income. The problem is when your tenant defaults on his rent. For this reason there are some ways to manage these risks.

Firstly you could take out landlord insurance. This will assist you by paying the rental for up to 3 months if your tenant can’t pay any more. The 3 months is just about enough time to take legal action to remove the tenants from the property.

The second thing you could do is mange your cash. If you are able to put away about 8-10% of your rental each month you will build up a sufficient backup fund that could help you out when your tenant defaults or if you don’t have a tenant. It’s always a good idea to have an emergency fund available for unforeseen events.

Negative cash flow

Yeah, you will probably have negative cash flow, for a while at least. The only way you can manage this risk is by making sure you have sufficient cash in reserve to cover the shortfall until you either sell the property or have positive cash flow.

Interest rate

Yes the old interest rate. You need to plan well ahead and make sure you manage how interest rate changes affect your real estate investments.

You need to prepare for at least a 1% raise in the interest rate. This way you will be able to last in a downward market. I am not saying that the interest rate will only go up by 1% but this should at least give you a fighting chance.

On the other side, when there is an interest rate drop you should save the extra cash you have and build up that emergency fund. This way you’ll be prepared for ALL markets.

Death and taxes

Don’t mess with the tax man. Pay your taxes when you need to. If you are paying lots of tax, you are probably making lots of money. The last thing you want to do is go to jail.

Right enough of that now we come to death. If you die who will take care of all your real estate? Will they have the money to pay all the expenses etc.? If you are building a real estate empire that will empower your family you need to protect your assets.

You will need life insurance to cover the debt and expenses of your property portfolio. You will probably need to have all your assets in trust. This way you avoid the red tape where your estate is concerned. For more info read our article about trusts called: “Trusts: a description in layman’s terms (with a twist of Latin)”.

There are other risks you should also consider, it is always a good idea to make a list and plan for each risk you feel you have. Lastly you should review and asses your risks on a regular basis.

Next time we will talk about flipping.

Coastal property buying tips.

By
Nats
Published: February 13, 2009Posted in: Buying property, General Interest, Real Estate Investing, Renting propertyTags: , , , ,

If you have always had the dream of buying a property on one of South Africa’s beautiful coastlines but have no idea how to start looking read the following and it may make it easier for you.

First ask yourself what you are going to be using the property for. Is it going to be your holiday home that you utilise once or twice a year and rent out to others for the rest of time, will it be your retirement home or will it be your permanent residence for yourself and your family. Answering this will focus your search as you will then know what the home will need to have.

If you are buying the coastal property purely for investment reasons there are more things to consider. Usually a property that is close to the beach that has a sea view is a sound investment. However if the view is what makes the property so valuable do some research and find out if there are any developments planned for your area that may interfere with your view or accessibility of the beach. Some buyers have been sorely disappointed when after purchasing a great house with a great view some developer goes and builds a high-rise beach front apartment complex right in front of their house.

Other things that will either increase the value of your home or improve it’s re-sale chances are the following:

1. A low crime rate. Investigate the areas crime rate and the measures in place that are there to manage the crime rate.                                                                                                                                                                                                                                      2. Investigate the need for tourist accommodation, it doesn’t help if you buy the property to rent out in the holiday season and then afterwards discover the market is completely over saturated and there are many similar houses that stand empty all season.                                                                                                                                                                                               3. If the property is close to the beach, shopping malls, parks, schools and hospitals it will be even more valuable.

So, know what you want and investigate all prospective investments thoroughly.

Make choosing your first home easier.

By
Nats
Published: February 12, 2009Posted in: Buying property, Property improvement, Real Estate InvestingTags: , , , , ,

Nobody wants to buy their first home and realise later that it was the biggest mistake they ever made. When choosing your first home it is very easy to be swayed by emotion and end up over-extending yourself or having unrealistic expectations of the property.

A good way to keep on track is to formulate a checklist of things you feel are necessary in your home and stick to it! This will serve as a sounding board when you feel overwhelmed by the estate agents smooth talking and sales tactics.

Here is a basic checklist that you can amend to suit your needs:

1. Do you want a flat, townhouse or a house.
2. Do you want to live in the city center, suburbs or a more rural area?
3. What is the minimum amount of rooms you will need?
4. How many bedrooms do you need?
5. Will you still be happy with the property 10 years down the line once you have extended your family?
6. Is a garden important to you, if so must it be big?
7. Would you prefer a new build or something that has alot of history?
8. Are you happy to renovate or extend the property?
9. How close would you like to be to facilities such as schools, shops, public transport, parks, beaches and hospitals?
10. What is the maximum amount you can pay, if you are being realistic ?

Sit down with your partner, if you have one, and answer these questions carefully and honestly, you will probably regret not taking an objective approach to this process. Also visit any prospective property more than once at different times in the day. This will give you a good idea of your neighbours’ habits and whether it is an area you can live in.

Remember, buying a property is serious business and you need to make sure you will be satisfied with it.

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