• The South African Housing Market Bottomed Out During The 2019 Summer

    It looks like rising unemployment and weak household balance sheets stopped to act as a drag on the housing market in South Africa since this summer when the latest figures had started to show a bottoming out. Mainly supported by a relaxation in lending criteria, first-time buyers had been the biggest beneficiaries.

    South Africa real estate

    Should the improvements continue?

    Based on the information provided by BetterBond, a well-known mortgage originator, home loans applications submitted to the banks started to improve in July, when they rose by 76%. As compared to a year ago, when the figures were between 68%-70%, an improvement is obvious and way above the record low of 26% reached in 2010.

    The pick up in real estate activity is mainly attributed to banks requiring smaller deposits from buyers. Ooba, another important mortgage originator in SA, mentioned that the average deposit paid by first-time buyers dropped by 25% during the second quarter of 2019, as compared to a year ago.

    Although repeat buyers do not have the same benefits, the average drop in deposits is around 14%. This good news for people who want to get a house and for real estate figures like Ofir Eyal Bar, who may have access to a larger clientele.

    Mortgage lending activity looks good

    The latest data provided by Re/Max, a real estate group from South Africa, is showing that the number of new mortgages had risen by 18.5% year on year, during Q2 of 2019. More specifically, there were 45,109 mortgages signed, as compared to 38,055 a year ago. The numbers are better on a quarter by quarter basis, as well, with a 13.2% improvement revealed by the numbers.

    Mortgage lending had also been supported by the South Africa Reserve Bank, which announced a 25-basis point interest cut, a move that had further contributed to a drop in mortgage rates. If the central bank will continue on the same easing path, the positive sentiment in the housing market should continue.

    However, the overall economy should also start to pick up momentum, while the pressure on household finances should not persist. Unfortunately, this is not just a domestic issue, since the global economy is now in a synchronized economic slowdown. Despite that, internal factors should be able to keep the SA housing market on an optimistic path and new homeowners will continue to benefit.

  • The BRRRR Strategy And Why Real Estate Investors Should Employ It

    If you’re getting into the world of real estate investing, chances are that you’ve heard the term “BRRRR Strategy” or “BRRRR Method.” For many, this strategy has proven to be the key to finding incredible success in the real estate investing space. So what is the BRRRR strategy and how do you employ it?

    What Is The BRRRR Strategy

    BRRRR is an acronym whose letters mean Buy, Rehab, Rent, Refinance, Repeat. From there, it’s pretty self-explanatory. However, there are subtle tips to each step in this process that will help you to become a success in real estate investing.

    Buying Tips

    When it comes to buying, most real estate investors can give you tips until they’re blue in the face. However, through my experience, I’ve found that the most important things to think about are:

    • Price – Getting a good price sets the stage for a strong potential to profit. So, when buying, make sure that the price is right.
    • Location – Often times, we overlook location. However, if you’re buying a rental property, commercial property, or even a home, location is going to be important. Think about it… isn’t it going to be easier to rent a house that’s central to grocery stores and entertainment?
    • Repairs – Buying a fixer upper can be a great move. However, make sure that you look at the cost of the repairs that will need to be done and compare the total that you will be paying in the price of the property and the necessary repairs before making your financial decision as some repairs can become quite costly. 

    Rehab Tips

    Once you’ve purchased your real estate, it’s time to rehab. This is the process of increasing property value through making changes. Little things like new flooring and painting walls can greatly enhance the appeal of a property. Here are some factors to consider when it’s time to rehab:

    • Risk v. Reward – Every time you change something on your investment property, it’s going to cost money. Consider the amount of money it will cost compared to the improvement that will be made to the overall value of the property when making cosmetic changes.
    • High End v. Low End – Making high end changes using high end materials can be quite expensive. However, in some areas with high end audiences, it’s a must. Consider the community preferences when making changes to an investment property.
    • Don’t Paint The Pig – If something is wrong, fix it right the first time. It’s never a good idea to paint over mold or install shingles over rotted plywood. Save money in the long run by spending what it takes to do it right the first time. 

    Refinancing Tips

    Once you’ve put the property through rehab, it will likely be worth quite a bit more money. This gives you the opportunity to refinance the home, often times, getting a better interest rate. Some investors use equity built in the home through the remodel as a down payment to expand their portfolios. Here are some tips to consider:

    • Don’t Jump At The First Deal – As with just about anything, it’s always a good idea to shop around when refinancing an investment property.
    • Read The Fine Print – We’re talking about lenders here. At the end of the day, they are in the game for profit and that profit comes from you. Always make sure to read the fine print and know exactly what you’ll be paying before signing on the dotted line.
    • Read Reviews – We live in the age of the internet. Any reputable lender will have plenty of reviews for you to comb through. Get an idea of how the lender has treated other customers by reading reviews online.

    Repeat Tips

    The repeat step is the easiest, yet the hardest one. When you’ve made a few bucks in the market, chances are that you’re going to want to spend it. My tip here is simple, don’t let your real estate investing life die here. Take the profits that you’ve earned and put them into a new property, allowing your money to grow even more!

    Final Thoughts

    If you’re considering investing in real estate or are just getting started, I urge you, don’t look past the BRRRR strategy. This strategy has helped countless investors expand their portfolios, and therefore their earnings. It will likely do the same for you!

  • Tips For Choosing An Investment Property

    The stock market isn’t the only place that people invest their money. Real estate is one of the most common investments around the world, and for good reason. Real estate investments are secured by the property that is being purchased. Even if property values fall, the investment will never fall to zero.

    Moreover, real estate costs tend to rise. In fact, the values of existing homes have risen by approximately 5.4% per year historically. With extensive experience in helping investors find great real estate opportunities, I’ve learned the ins and outs of the industry. With that said, here are a few tips that will help make your real estate investment venture a success.

    Tip #1: Get Your Budget Together First

    Buying an investment property is a bit different from buying a home. My experience is that clients will generally finance the majority of the cost. But financing an investment property is different than financing a home. There is no mortgage insurance available. Therefore, lenders will usually require a minimum down payment of 20%. It’s important to consider this when coming up with the budget for your investment property.

    Tip #2: Consider The Investment Vehicle

    As with stock market investments, there are several different vehicles to consider when investing in real estate. Rental properties, agricultural land, raw land in residential areas, apartment buildings and strip malls are just a few options.

    Each investment vehicle will come with a risk and reward profile that is unique to that type of investment. Take the time to do your research and get an understanding of these risk and reward profiles before making a real estate investment. 

    Tip #3: Consider The Tenants That Your Property Will Attract

    If you invest in rental homes, apartments, or strip malls, your reputation can make all the difference in your success. Considering this, it’s important to take the time to consider the types of tenants that the properties you invest in will attract.

    For example, a $60,000 home in a bad neighborhood may attract needy tenants that are consistently late on rent. A $200,000 home in a nice neighborhood is likely to attract a more professional renter with a stronger payment history. The same goes for apartments, strip malls, hotels, and other tenant-based investments.

    Tip #4: Work With The Right Agent

    Real estate investing is a specialty area. If you’re not experienced, you may pay more than you should for a property, making the investment dollars that you sink into it hard to recuperate. Working with a real estate agent that has a history in the investment space can help to ensure that you get the right investment property for the right price.  

    Tip #5: Share The Risk

    If you find good deals with a strong potential return, you won’t have to take the risk on by yourself. There are tons of investors out there that are looking for joint ventures in the real estate space. In fact, a simple search on Google will yield several sites that are dedicated to helping investors mint these relationships. If you don’t want to take on all of the risk involved in a real estate investment, consider sharing the risk with the right partner.

    Final Thoughts

    Real estate investment can be a highly lucrative play. I’ve assisted several investors in making good decisions in the space and have had success of my own as a real estate investor. Through this experience, I’ve found that those who follow the tips above tend to achieve the highest levels of success.