Buying a property often comes with its own set of challenges, but women may find themselves facing a couple they may not have expected, says Lawrence Koikoi, Portfolio Manager at Momentum Investments
As most women know, being a female investor in any capacity provides a few of its own unique challenges.
For one thing, women still have a gender pay gap to contend with, which makes it harder for females to qualify for bonds and afford monthly payments. It has also been found that many home sellers don’t take single women buyers seriously, so many women find it difficult to even put in an offer to purchase.
It was Momentum Metropolitan’s Deputy CEO, Jeanette Marais who said, “Many women buy an apartment or small house when they are young and then when they get married, they move into either their house or that of their partner. This is logical. It often makes sense to sell your house to pay off the house that you are living in. In this instance, think carefully. You might lose your biggest asset.”
That’s the point, when you are buying a property, you need to think like an investor. Is it a good return on investment? How can you tell? Below are some things to consider when buying a property - whether it’s a buy-to-let investment property or your forever home.
Know your financial limits
Obviously, if you can’t afford it, you shouldn’t even consider buying it. That goes for anything and everything in your life. Don’t overextend yourself and dig a hole that you cannot claw your way out of. There are plenty of home loan calculators you can use, but if you want the right advice specific to your unique situation, it would be a good idea to get in touch with a qualified financial adviser who will help you get a sense of what you can realistically afford.
Your financial fitness counts
Even though banks may be keen to lend to most home buyers, they do this with as little risk as possible. So, get ready for your financial skeletons to be dug out of the closet as banks are obliged in terms of the National Credit Act to ensure that all borrowers can actually afford the repayments on a home loan.
The first thing they will look at is your income and expenditure, and then they will pull out your credit record. It’s up to you to ensure your credit record is spotless and fix any issues you may have with bad debt. The best thing you can do is pay off as much current debt as you can before you even start looking for a property to purchase.
It is also important to save as much money as you can manage for a down payment, which will, in turn, save you thousands of Rands in interest down the line.
The selling price does not reflect the true cost
So, you think that home for R1.2m is a steal, but have you considered that buying a home comes with some additional (and pricey) once-off costs. There’s the deposit (which you should make as big as possible), transfer duties, conveyancing fees, realtor fees, deeds registration fees, levies for complexes, and that’s not even counting the extra cost of maintaining this new household.
All of this seriously adds up and can add an additional 10% onto the cost of your new home. When it comes to purchasing a sectional title, beware of the special levy.
Although you will want to pay traditional levies in order to pay for complex-run maintenance, when purchasing into a sectional title property, you are well within your rights to request the complexes financial statement to see for yourself if the complex is well managed.
If you see a special levy, that means there is an additional cost on top of the usual levy which usually covers the cost of large complex upgrades like security, painting, and infrastructural repairs. Although a special levy usually has a limited period, be prepared to absorb that cost if you want to buy into that complex.
Know what you’re buying into
These are desperate times, so you have to take into account that sellers are going to apply desperate measures. This means it’s up to you to make sure that everything you are getting sold on is above board and nothing is being swept under the carpet (so to speak).
In terms of the structure of the property. This what you need to look out for:
- Structural damage
- Water seepage and damp
- Faulty electrical, plumbing and gas installations
- Rotten timber
- Hazardous materials (such as asbestos, lead-based paint and toxic moulds)
But then, outside of the property itself, you need to consider the neighbourhood; we cannot and should not forget that we live in a country with high-levels of crime. Ask around, find the online neighbourhood forums and be vigilant. Once you purchase a property it is hard to reverse the act. A safer neighbourhood and a smaller house is always a better bet when your family’s safety and the value of your investment is on the line.
Take your time and enjoy the process
When you’re buying a new property, perhaps the most important piece of advice is to take your time. This is likely going to be your forever home, or alternatively, an investment you would like to attract plenty of tenants. Buying a property is something you should be proud of, not worried about. Go house hunting, shop around, and while you do this, keep saving for your deposit.
This article is an extension of a money show hosted by Deputy CEO at financial services company Momentum, Jeanette Marais.