Could Co-Living Be The Solution To Save On Rentals Post-COVID-19?

Could Co-Living Be The Solution To Save On Rentals Post-COVID-19?

Could Co-Living Be The Solution To Save On Rentals Post-COVID-19?

 

Co-living, a new-ish take on accommodation, is gaining momentum across the world as an innovative model to embrace – or elbow nudge – that could very well support the new normal way of living we now find ourselves in, in terms of affordability, accessibility, and functionality. Although one might conjure up visions of hippie-type seedy communes of the 1970s, modern co-living brings a smart and appealing solution to a new-found, progressive property market, be it for investors or residents, and particularly now for tenants who find themselves unable to honour their rentals during the COVID crisis.

Sebastian van Greunen, Development Manager at Flyt Property Investments says that we should see this upgrade of communal living enjoy a re-surge of popularity in South Africa that will provide a post-COVID living option which will also bridge the gap for urban residents looking for homes that provide secure micro-spaces, shared living areas and common spaces at affordable prices while providing slightly larger private areas for independent living too.

READ MORE: Going About Joint Bonds 

Ironically, whilst we live in a connected world, there is a feeling of isolation – social distancing, if you will, and as such young professionals, millennials, digital nomads, creative entrepreneurs, and students are moving towards accommodation that embraces a sense of community and a shared economy, but in a safe haven. This concept also works well for remote workers looking for temporary, short-term accommodation or a few nights a week when in town on business. These ‘global citizens’ are looking for a place that feels like home, which is private and cultivates a sense of security, that creates continuity in terms of community, whilst also being inclusive.

 

 

Van Greunen states that there has definitely been an increase in rentals in the co-living space, with millennials representing the largest share of the market: “Their particular, flexible lifestyles of living, working and playing are shaping the industry as a whole.” He adds that the concept includes the aging population whose rising healthcare costs are also nudging them to consider the co-living model.

You’ll find these urban rental apartment communities popping up in key suburbs throughout South Africa, providing excellent investment and rental opportunities that are affordable and flexible. These well-designed models, like Eaton Square in Diep River, for instance, deliver innovative common spaces, fully equipped co-working areas, restaurants and coffee shops, and compact, efficiently designed apartments that have their own kitchen and living areas.

Additionally, flexible rental options allow residents the freedom to choose how long they wish to stay, whether it’s a few days, a few months, or longer; and the fully-serviced aspect allows for ramped-up hygiene and sanitation standards, along with more frequent and improved housekeeping and cleaning practices.

Across all age groups, this co-living concept is proving to be a popular option that, along with affordability and the latest technology, will soon become the real estate investment preference in alternative living. In a fast-paced world with a constantly changing landscape, co-living provides the perfect “plug & amp; play” model so that you can afford to pay your rent and get on with living

READ MORE: Opportunity Knock for Low-Income Buyers 

 

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Before You Buy Into An Estate

Before You Buy Into An Estate

Before You Buy Into An Estate

 If you buy a freehold home in an estate or any other gated development, the future value of your property will depend very heavily on how well that development is managed by the Home-Owners’ Association (HOA) and its directors.

“And on the one hand that is one of the major advantages of buying in an estate rather than an ordinary suburb where one is dependent on the local authority for services and there is no real control over the appearance or maintenance of individual properties,” says Gerhard Kotzé, MD of the RealNet estate agency group.

“On the other, however, it means that you need to make sure the HOA is functioning well and can continue to protect and enhance the value of all the homes in the estate by providing excellent security, maintaining all communal spaces and facilities and making sure residents stick to the original architectural guidelines.

READ MORE: Gated Community vs Free Standing Homs 

He says it is particularly important for those who are buying new homes during SA’s Covid-19 lockdown not to forget all the normal precautions, and that those who are considering purchases in established estate should thus first do the following:

  • Establish the percentage of owner-occupants in the community versus the number of tenants. “There is a good reason that banks are often more reluctant to grant loans to prospective buyers in developments where more than a third of residents are tenants. They know from experience that resident owners are more likely to take care of their properties, and the communal areas and facilities, than tenants or landlords who don’t live in the community.

“And the market value of property is directly related to the availability of financing. No loans will mean falling values.”

  • Ask to see the current assessment/ levy collection record and find out what percentage of owners are 90 days or more in arrears with these payments. Kotzé says that if the percentage of delinquent owners is high, it means the HOA does not have an effective collections policy or procedure and, quite simply, that things are set to get worse as defaulters get away with non-payment.

“Levy funding is the only money the HOA has to pay for maintenance and security and if this is not available, the value of all homes in the estate will be threatened as it becomes increasingly run-down.

  • Find out if the HOA has a stated reserve fund requirement and how much it has in this account. Such a fund is vital to cover “planned maintenance”, that is the predictable costs of repairing or replacing certain communal assets without having to raise special levies, and contributions should be included in the monthly levies paid by owners, he says.

“A well-run community will have more than 75% of the reserves it needs in the bank, and lower levels generally spell trouble because necessary repairs and replacements are likely to be deferred, once again to the detriment of property values in the estate.”

 READ MORE: 5 Defects to Look Out for When Buying a Home

 

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Going About Joint Bonds

Going About Joint Bonds

Going About Joint Bonds

 

Not many of us can afford the home or investment property of our dreams on one income, which is why more and more people are choosing to apply for joint bonds. Whether you’re one-half of a couple or part of a group of financially-savvy friends, joint bonds can be the key to some great investment opportunities.

Of course, just because there are more of you doesn’t mean you can slack off when it comes to bond application time. According to Ria Venter, Regional Manager for Rawson Finance, polishing your financial profile is just as important for joint bond applicants as it is for individuals.
Here are her tips on improving your chances of approval by making yourself (and your co-applicants) look as good as you possibly can.

Ditch the debt

Debt is one of the first things banks look at when it comes to assessing bond affordability. It doesn’t matter how many applicants there are – any bad debt will count against you. To qualify for the largest bond at the best interest rate, Venter highly recommends getting rid of any unnecessary store cards, credit cards, and loan accounts. If you can tighten your belts to pay off things like car loans, even better!

“Ideally, you need as few expenses coming off your bank accounts each month as possible,” says Venter. “This shows the bank that you have sufficient disposable income and that each of you are serious about your financial health.”

READ MORE : 3 ways to get the most out of your Home Loan 

Build a strong financial history

Clearing bad debt is important, but Venter says a record of good debt is an equally powerful tool for looking good on your joint bond application.

“Banks like to be able to see that you have a history of paying what you owe timeously and responsibly,” she explains. “A good financial track record really does count in your favour.”

If none of your co-applicants has ever had a loan, store account or credit card before, you may want to consider opening a credit account purely to build a positive history. Of course, it’s important not to fall into the trap of using credit unwisely – keep your eyes on the prize of your home loan and treat any credit facility responsibly.

Put your best foot forward

Chances are, one person’s financial profile will be stronger than the other(s) on a joint home loan application. Whether that’s because of a higher income, better credit record or more stable employment, it makes sense to play up those strengths.

“It’s smart to make the most attractive applicant the primary applicant on your joint home loan,” says Venter. “Think of it as putting your best foot forward to give the banks a good first impression. It’s not going to make up for any serious black marks on other applicants’ records, but can help boost your overall profile enough to encourage lenders to come to the table with their best offer.”

READ MORE: Environmental Duty of Care

 

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Opportunity Knocks for Low-Income Buyers

Opportunity Knocks for Low-Income Buyers

Opportunity Knocks for Low-Income Buyers

 

As interest rates tumble and property prices come under pressure in the months following the immediate Covid-19 health crisis, lower-income families could be presented with their best opportunity in almost a decade to become homeowners.

That’s the word from Gerhard Kotzé, MD of the RealNet estate agency group, who says that while the economic fallout from the pandemic will sadly see many people lose their jobs, those in the type of occupations that have been identified as “essential” during SA’s lockdown, such as nurses, paramedics, teachers, police officers, and drivers will most likely remain employed.

READ MORE: 6 Thing You Need To Do After You Bought Your First Home 

“This should help them to qualify for a home loan, especially since interest rates are already at their lowest levels in decades, and expected to fall further before the end of the year. As it is, rates have fallen by 2,25% since January, which means that the household income required to qualify for a R500 000 home loan, for example, has already declined from a maximum of about R19 300 to a maximum of around R16 400.”

At the same time, he says, the monthly repayments on home loans have become more affordable, falling from R4825 a month on a 20-year home loan of R500 000 to R4100 a month at the new prime rate of 7,75%.

READ MORE: Learn More About Flisp Here 

“In addition, there is no transfer duty on pre-owned homes priced at less than R1m – and we foresee that prices will be extremely negotiable for the next 12 to 18 months. The primary reason for this will be that there is more stock coming on to the market at the lower price levels from distressed sellers and buy-to-let investors who have lost their tenants.”

Kotzé says the banks are obviously going to be cautious about approving new home loans in the coming months and will be looking for those with good credit records as well as steady incomes.

“However, they will be lending, and what is happening in the market now is similar to what happened after the 2008/ 09 financial crash, which proved to be an exceptional opportunity for low-income buyers to enter the formal property market and start building up personal wealth. Apart from providing security of tenure, a home is a fantastic asset that you can also use, as you pay it off, as collateral to provide an education for your children, cover a medical emergency or make further investments. It also provides financial security for your retirement.

READ MORE: For Information on Mortgage-bond Payments and Advances

 

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Gated Community vs Free Standing Homes

Gated Community vs Free Standing Homes

Gated Community vs Free Standing Homes

 

If you buy a freehold home in an estate or any other gated development, the future value of your property will depend very heavily on how well that development is managed by the Home-Owners’ Association (HOA) and its directors.

“And on the one hand that is one of the major advantages of buying in an estate rather than an ordinary suburb where one is dependent on the local authority for services and there is no real control over the appearance or maintenance of individual properties,” says Gerhard Kotzé, MD of the RealNet estate agency group.

“On the other, however, it means that you need to make sure the HOA is functioning well and can continue to protect and enhance the value of all the homes in the estate by providing excellent security, maintaining all communal spaces and facilities, and making sure residents stick to the original architectural guidelines.

READ MORE: Before you Buy Into An Estate 

He says it is particularly important for those who are buying new homes during SA’s Covid-19 lockdown not to forget all the normal precautions, and that those who are considering purchases in the established estate should thus first do the following:

  • Establish the percentage of owner-occupants in the community versus the number of tenants. “There is a good reason that banks are often more reluctant to grant loans to prospective buyers in developments where more than a third of residents are tenants. They know from experience that resident owners are more likely to take care of their properties and the communal areas and facilities than tenants or landlords who don’t live in the community.

“And the market value of the property is directly related to the availability of financing. No loans will mean falling values.”

  • Ask to see the current assessment/ levy collection record and find out what percentage of owners are 90 days or more in arrears with these payments. Kotzé says that if the percentage of delinquent owners is high, it means the HOA does not have an effective collections policy or procedure and, quite simply, that things are set to get worse as defaulters get away with non-payment.

READ MORE: How to conquer first-time buyer fears after signing the OTP                    

“Levy funding is the only money the HOA has to pay for maintenance and security and if this is not available, the value of all homes in the estate will be threatened as it becomes increasingly run-down.

  • Find out if the HOA has a stated reserve fund requirement and how much it has in this account. Such a fund is vital to cover “planned maintenance”, that is the predictable costs of repairing or replacing certain communal assets without having to raise special levies, and contributions should be included in the monthly levies paid by owners, says.

“A well-run community will have more than 75% of the reserves it needs in the bank, and lower levels generally spell trouble because necessary repairs and replacements are likely to be deferred, once again to the detriment of property values in the estate.”

 

SUBSCRIBE: to our content here
5 Defects to Look Out for When Buying a Home

5 Defects to Look Out for When Buying a Home

5 Defects to Look Out for When Buying a Home

 

Purchasing a property is a major investment that should be considered carefully. On the surface, a home could be stunning, but there might be underlying issues that, if overlooked, could cost you a lot to repair.

According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, although sellers are required to provide you with a list of defects of which they are aware, it is best to cover all bases and make sure to ask the right questions before going ahead with any purchase.

“The voetstoots clause largely protects the seller by stating that the buyer needs to prove that information about the defect was deliberately withheld from them,” he explains. To protect themselves, he recommends that buyers ask as many questions as possible. This includes things such as whether there have been any disputes or boundary issues with neighbours and whether any sort of pest problem exists, with snakes, mice, bats, bedbugs, cockroaches and ants being the most common issues.

Apart from this, Goslett also warns buyers to look out for structural and other damages or defects that could end up costing a substantial amount to fix. RE/MAX of Southern Africa provides the following list of defects buyers should look out for when viewing a home:

Defect 1: Rotting wood

If not maintained properly, wood that is exposed to moisture, such as in kitchens and bathrooms, will rot over time – so be sure to open all cabinets before signing an OTP. The wood should be painted or treated with a finish that is specifically designed for this purpose. Wooden exterior features such as decks or trims should also be checked as these will be exposed to the elements.

Defect 2: Ventilation issues

Adequate ventilation is required to ensure that any moisture in the home can evaporate. When water or moisture sits in an area for an extended time frame it can cause dampness and mold issues, which pose serious health risks and are often expensive to fix. The space between the roof and the ceiling is an aspect that should be paid special attention, as the ventilation in this area ensures the longevity of the roof. Weep holes and ventilation ducts will allow the intense heat in that space to escape, which will promote evaporation of the moisture and ensure that interior walls and structural elements stay dry.

Look out for any old, broken, or missing tiles on the roof that need to be replaced, or rust patches on metal roofs. A damaged or leaky roof will cause issues inside the home, which could be costly to fix – not to mention cost of fixing or replacing the roof.

READ MORE: How to Spot a Neighbourhood on The Rise 

Poor drainage systems around the exterior of the home can lead to water and damp problems in low-lying areas around the property. Waterlogged areas could cause penetrating damp as well as compromise the foundation of the structure if it persists. Water intrusion can be one of the most destructive and expensive problems. Ensure that all drainage areas are properly graded and direct water away from the house. Also, check that water control elements such as gutters and downspouts are well-maintained.

Not always an easy thing to spot, but often homeowners who have lived in a home for an extended period will have attempted to make some repairs themselves. Check the plumbing and electrical setup as these are the areas where dodgy DIY repairs are most common.

If you are not sure of anything that seems suspicious, Goslett recommends getting the opinion of a professional home inspector. “If the homeowner refuses to resolve the issues that are revealed in the home inspection, then it is advisable to move on and start the search for property again rather than take on the costly repair work that will be required,” Goslett concludes.

READ MORE: Expert Tips to Get Your Rental Deposit Back

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