Living in your home versus buying to let

2012-05-19 20:10

Buying a property to live in is very different to buying property as an investment

If you are looking for somewhere to live, you will consider factors such as where your work is and a community that provides schools or easy access to shops.

It is largely a lifestyle decision and also an emotional one.

It not only makes financial sense to pay off your asset rather than someone else’s through rent, but there is also an emotional need to know the place belongs to you.

However, you should still apply sound financial decisions and not overpay for the property just because you like it.

Make sure you can afford the repayments as well as all running costs, including electricity, levies and rates and taxes.

Also factor in any potential interest rate hikes. Although the banks prefer you to have at least a 10% deposit, the more deposit you have the better.

You should also buy only if you have a fair idea that you will be living there for at least five to seven years.

When you buy and sell property there are other costs incurred, such as transfer fees and estate agent fees, and it takes time to recoup these through the price increase in the property.

When investing in property your decisions will be very different.

You will need to find an area where there is a high demand for rental property which may be an area you are not living in.

Do your homework in terms of the rental you will receive – never leave that to the silver tongue of the estate agent!

The rule of thumb is that the annual rental should be at least 10% of your purchase price – so if you purchase a property for R500 000, then the annual rental should be R50 000, or about R4 100 a month.

Also factor in other costs such as levies and rates and taxes.

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions. publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.