FAQs

FAQs


How to identify an investment property?

Any property can be an investment property. It all depends on your personal needs and what your long term goal is. The norm is to start with entry level properties under R500,000.00.

How diverse should my property portfolio be?

For the entry level investor, the norm will commonly be that you at least obtain 8 – 10 sectional title properties under R500,000.00. This will allow you to gain knowledge on the market and to invest safely.

How to I determine the nett and gross yield of my investment?

Gross Yield Formula:

Monthly Rent x 12 = ANSWER 1
ANSWER 1 ÷ property value = ANSWER 2
ANSWER 2 x 100
Yield = ANSWER 3

EX: Rental based on R 3,600 p/m rental income

R3,600 x 12 = R43,200 – Annual Rental Income
R43,200 ÷ R420,000 (property Value)
0,102 x 100
Yield = 10.28%

Nett Yield Formula:

Monthly Rent x 12 = ANSWER 1
ANSWER 1 – annual expenses = ANSWER 2
ANSWER 2 / property value
Yield = ANSWER 3

R3,600 x 12 = R43,200 – Annual Rental Income
R43,200 – R15,000 = R28,200
R28,200 / R420,000 (property value)
0,067 x 100
Yield = 6,71%

NB: This expense is tax deductible.

How do I determine my nett rental income?

Rental Income – Expenses = Nett Rental Income
*Levies, Rates & Taxes, Agency Fee and other once off expenses

Example:
Rental Income = R5,500
Levies = R1,300
Rates & Taxes = R250
Agency Fee = R550

R5,500 – (R1,300 + R250 + R550) = R3,400.00

Nett rental = R3,400

How does my rental income affect my personal tax?

Your rental income should be declared to SARS and you will be taxed based upon the income for rent received as well as other income received during the financial year.

What can I deduct from my rental income for tax purposes?

The following expenses will be deductable from your income in relation to your personal tax:

  • Levies for the year
  • Rates and taxes on the property
  • Rental agency fees
  • Insurance on the property
  • Maintenance and repair costs
  • Administration fees on the bond
  • Interest on the bond
Who does the body corporate consist of?

When buying into a sectional title scheme, you as owner will automatically form part of the body corporate.

What is the roll of the trustees?

The trustees are appointed by the body corporate at the Annual General Meeting and the trustees are responsible for the day-to-day management of the sectional title property.

How do I determine my rental price?

The market price can be determined by comparing similar properties in the same vicinity.

Should I employ a rental agency and what are the advantages thereof?

It is one of the most important decisions that you will make as a property investor. Remember good rental agents keep themselves informed with what to do and what not to do with regards to rental properties.

Advantages:

  • Managing your tenant
  • Rental collection
  • Maintenance assistance
  • Keeping up with the law and new trends in the market
  • Providing you with the correct paperwork for tax purposes
  • Efficient assistance when needed
What are forms of high and low risk property?

The bigger the property, the bigger the risk. It is advisable to split your risk into smaller properties under R500,000.00 as an entry-level investor. By having the right game plan, you can reduce your risk as well as identify the possible risks involved.

Should I purchase property outside of my area code?

Yes, you can purchase property outside of your area code, as long as you are familiar with the properties and property trends in the area that you choose.

What happens to my deposit?

Your deposit is held in an EAAB registered agencies trust account. This will serve as insurance by the EAAB that your money is safe.

How to terminate my lease agreement?

When signing the lease agreement, always make sure that there is an acceptable termination clause signed by both parties. Follow the instructions as set out in the termination clause to terminate your lease agreement.

What happens if my rental property is placed on the market?

The owner has the right to sell the property at any given time, however, the prospected buyers should have reasonable appointments to view the property. This does not affect your lease agreement.

What is my rights if the rental property is sold?

The lease agreement by law will remain valid until the expiry date on the lease agreement, regardless of whether the property is sold or not. The new owner will remain responsible to respect the lease agreement unless another mutual agreement was made between yourself and the new landlord.

Can I still rent a property if I am on debt review or blacklisted?

It all depends on the rental agent and or landlord, but it will be highly unlikely that they will approve you as this can be a potential risk.

Who is responsible for the Rates and Tax’s for the property?

The owner is responsible for the rates and taxes of the property unless otherwise agreed upon.

What is my recourse if the owner refuses to do essential / general maintenance?

If the owner was given written notice of the fault and that you will proceed with the repairs if he fails to comply within 7 days. You are entitled by law to rectify the problem in order to return the property to the condition you received it in and recuperate your costs, if reasonable, against your monthly rental.

What’s my right when the owner wants to make alterations to the property?

When you signed the lease agreement, the property was/is rented as presented to you. You cannot stop the owner from doing general maintenance but when the owner wants to do structural alterations, he should do so with your consent.

What is my right in case of emergency maintenance (Example for a geyser failing) and I cannot reach the owner or agent?

In extreme emergencies where you were unable to get a hold of the landlord, you can ask the owner for a refund as long as the costs are reasonable and that you have an invoice for the landlord.

How do I handle an owner that refuses to return my deposit?

The best advice is to open a case at the Rental Tribunal. All Provinces have a rental tribunal and handle cases where disputes arise between owners/agents and tenants. These cases are handled free of charge and are settled much quicker than normal court proceedings.

How much does the law say the deposit should be?

The law does not specify the deposit amount. It only states it should be a reasonable amount. Therefore, the agency policy or the particular owner will determine the amount. The credit worthiness of the applicant may also influence the deposit amount.

Can I still rent a property if I have pets?

Yes, but there are special considerations to keep in mind. I f the advert does not specify the property as pet friendly you must ask and get permission from the owner. Where the rental unit is in a sectional title scheme you must ask your agent to confirm the possibility of keeping pets. Most buildings will have a process by which you can apply to keep pets, but they may have certain specifications such as total, type and size of pets allowed.

I paid my rent, but the landlord claims he did not receive it. What do I do?

When you pay the rent you must always keep proof of such payment. If you pay electronically the proof will be available online through your bank. If you pay via cash deposit keep the deposit slip. A further requirement is to always use the correct reference as agreed in advance.

Can the landlord enter the property without my permission?

The landlord and/or his representative is entitled to access the property for inspections and/or maintenance. However, he must arrange with you for such access at a time convenient for you.