Conditions ideal for buying
One of the oldest maxims in property dealing sell when others are buying, buy when others are selling is widely acknowledged to be right and widely ignored, says Jason Lee, Rawson Auctions legal expert and strategist (who is also the published author of two books on property investment (see www.jasonlee.co.za) which together have sold over 40 000 copies).
Right now, said Lee, there could be no better time to increase your property portfolio. The prices are down, many sellers are desperate, the banks rates are low and rentals are good. What is more, the banks are now looking positively at first time homebuyers and, more frequently than most people realise, are prepared once again to give 100% bonds provided the applicant has a clean credit record.
Those decrying the potential of the current market, said Lee, are often speculators who bought in the rising market of 2006/2007, are overextended and now find themselves unable to sell at a reasonable price or to service their multiple bonds.
By contrast, those who do buy now, said Lee, will often find that from the outset they can achieve double-digit or near double-digit rental returns. With so many former home owners now forced to rent and with only limited new stock coming off the production line, rents can only rise further in the next year or two.
The current opportunities in commercial property, said Lee, are particularly good, especially for end users or investors with turnkey clients as vacant commercial properties can now be picked up for well below their replacement value.
Investors are understandably nervous of commercial property because replacing tenants here can be more difficult than in the residential sector. However, it is also true that evicting a poor payer is quicker and easier in commercial property. The secret of success, therefore, is to do a thorough due diligence on the tenant before signing him on.
Whether buying in residential or commercial property, the wise investor, says Lee, looks to hold his property for five to seven years or longer.
Any analysis of price fluctuations will show that those who held on for over five years were almost invariably amply rewarded regardless of market conditions. Bill Rawson has in fact advised investors to buy one property per annum and never to sell. There is room on a rising market for speculators but mature property investors take the long view.
Rawson Auctions, said Lee, had been founded at exactly the right time to catch the rising tide in favour of going the auction route and they have had 32 sales since March this year possibly a record for a new company. The recession has, however, hit top end properties hard and some 80% of Rawson Auctions sales are in the sub-R2 million bracket.
One of the reasons for our success in what is in fact a flat market is that we are selective about what we take on and we ensure that the potential seller is prepared to accept a market-related price.
Another factor contributing to Rawson Auctions success, said Lee, is the fact that the CEO, Tanya Jovanovski, is a woman (one of the very few in the business), is confident and an excellent closer of deals.
Rawsons now plan to franchise their auctions division countrywide. Rob Whiteley, in Johannesburg, is spearheading the expansion in that area and is looking at establishing new auction franchises in both KZN and the Free State
Article by: www.rawson.co.za