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  • Profile photo of sparnarsparnar
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    @sparnar
    Join Date: 2013
    Post Count: 8

    Hi Jamie

    My bad. Should have stated that I am living (and investing) in South Africa.

    Busy reading Steve M's book, and thought I would come here.

    Unbelievably, I haven't found a single South African forum about property investing. So I had to come and check this site out.

    And while some of the legalities regarding contracts and financing might differ between SA (not South Australia…) and AUS, I think the motivation, and the methods for investing in real estate should be pretty much the same.

    Thanks for your comments!

    Profile photo of sparnarsparnar
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    @sparnar
    Join Date: 2013
    Post Count: 8

    Thanks, Jamie.

    I will have to speak with someone who knows who all of this applies in South Africa.

    But I understand your concept.

    So you would recommend going for 100% financing, and paying the shortfall for the first year or two, instead of paying deposit to make this property cash flow positive?

    Profile photo of sparnarsparnar
    Member
    @sparnar
    Join Date: 2013
    Post Count: 8

    Hi Jamie

    Thanks for replying.

    I am actually from South Africa. Although I worked with a bunch of Aussies in the Walkabout bars in the UK, but that is something for another day.

    I bought my primary residence, and this is still under bond (mortgage).

    My aim (for now) is to invest in real estate for income. In the next few years, I might also try a deal or two to make a lump sum gain, but I have to get my feet wet first.

    Profile photo of sparnarsparnar
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    @sparnar
    Join Date: 2013
    Post Count: 8

    Thanks, Ros.

    So instead of looking at a second deal, rather focus on paying this one off? Even if not to the point of fully paid up, just to make myself look like a more trustworthy lender?

    Profile photo of sparnarsparnar
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    @sparnar
    Join Date: 2013
    Post Count: 8

    Some background on my decision to go for an apartment (and please feel free to jump in with some advice).

    This is my first investment property. I do have a bond on my primary residence, and have a little bit of quity built up that I can access if I need to.

    For my first property, I think a flatapartment would work best, as there are no maintenance to be done on the outside of the property. I am afraid of tenants neglecting a garden during their lease, leaving me with a property that doesn't look enticing to potential new tenants.

    Also, cost is a huge factor. Flatsapartments are bit cheaper compared to housestownhouses. This makes the risk a bit smaller in case something does go wrong.

    I am specifically targeting 2 bed, 2 bath flats with the view that these are viable options for roommates sharing, or young families.

    Over here in SA, we had some new legislation passed a few years back, and this is making it incredibly hard for potential buyers to enter the market. Large deposits are being asked, and very few buyers can afford it.

    This means that potential buyers need to let for longer while they save up for these deposits. And with this in mind, the 2 bed, 2 bath apartment seems to be a great option in my inexperienced view.

    Profile photo of sparnarsparnar
    Member
    @sparnar
    Join Date: 2013
    Post Count: 8

    Thanks for your reply, Ros.

    After having read your answer, I realised I probably should have given some more context to this deal specifically.

    If the deal goes through, I will be able to get a 100% bond, since this is classed as a 'distressed' bank sale. The previous owner can't pay his bond anymore.

    Under normal circumstances, I would only be able to qualify for 90% bond on a second (or third) property.

    So to expand on my initial question, do I put down a deposit on this unit and make the property cash positive almost from day one?

    Or do I rather buy this unit with 100% financing, and use the would-be-deposit on a second deal where I might not be as lucky to get 100% financing?

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