Building or Buying a New Home: Pros and Cons

Property buyers are often confronted with the big question: Should I buy or should I build a home? Financially it is often cheaper to buy a new home than to built. There are however many pros and cons when building or buying a new property.

When buying a new home you can physically investigate and ascertain the quality and style of the property. Previously owned homes usually have an established garden and you can often trust that what you see is what you get. There are also no delays and moving in can happen as soon as the paperwork has been finalised.

Buying a home also has its downside: You are forced to buy what you sometimes don’t want, there could be unforeseen problems and you might have to spend money to upgrade the house.

When building, you don’t have to live with other people’s style; you have the freedom to plan and design what you want. This offers you a lot of control and you can make sure that all is new and in good conditions. When building you can also adjust your costs when you see that you budget is shrinking too fast. By the end of the project you will have the satisfaction of knowing that you have achieved your goal, along with the feeling that you are the first owner of the house.

But building a new house is not without its problems. You can never be a 100% certain of quality and workmanship and finding the right area to buy land could be time-consuming and costly. You have to keep in mind that you will need to make more decisions and that you will have to establish a new garden. It is also important to remember that it is sometimes hard to visualize the final product and you could be in for a huge disappointment.

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Tips on Buying Repossessed Property on Auction

Repossessed property is making up around 20% of all properties for sale in the UK and things are not much different in South Africa. Banks and lenders are often more interested selling than getting a good price for the property, which means you can walk away with a huge bargain.

If you are planning on buying a property at auction be well prepared and make sure you know exactly what is involved. Here are a few tips on buying property at auctions:

Do Proper Research
Make sure to be clear on why you are buying the property. If you are buying to rent, you have to research the rental market in the area. Don’t be tempted to buy in an area you don’t know, or do thorough research if you don’t know the area well.

Do a Test Run
Attend a couple of auctions and familiarize yourself with the process. Get some catalogues to see how different bidders go about bidding. This will give you some confidence when you bid on your first auction.

View the Property
Checking out the brochure/catalogue is not enough; visit the property and make sure to take a builder or someone with knowledge with you. Also make sure you know exactly how much the property is worth.

Sort Out a Survey
Even though you will lose you survey fees if your bid is not successful, it is still important to make sure you know exactly what you are buying into. Don’t cut corners here; it might be a costly mistake!

Decide on a Maximum Bid and Stick to It
Know your budget and make sure that you don’t get influence by bidders pushing the price higher – this might leave you financially overstretched.

Arrange Your Finances Before the Auction
If your bid is successful, you are legally bound to purchase the property. Therefore you have to make sure that you will have you finances ready within 20 days after the auction.

Have Your Deposit Ready
You will need to put down a deposit for 10% of the property’s price, should your bid be successful. Remember to take you check book and at least two forms of identification with your to the auction.

Be Prepared for Other Costs
Remember that you will need to pay legal – , renovation -, running - and insurance costs. There may also be a buyer’s fee to pay at the auction house. You can check this on the day at the auction.

Find Out About Tax
Remember to factor in tax on your rental income if you are buying to let. There might also be other taxes involved so make sure to check it out before you bid on the property.

Make Sure the Auction is On
One the morning of the auction, phone to make sure that the property you are interested in are still up for auction and has not been sold privately. Also read the terms and conditions that are handed out at the auction.

Choosing a Good Tenant

Choosing the right tenant is probably one of the most important things that a landlord must do. This is mainly because it is very hard to get rid of a bad tenant and it is often quite costly. See the process of selecting a tenant as a business decision and always make sure that your tenant meets certain standards.

Firstly, lets look at some characteristics of a good tenant:

§ A good tenant pays the rent on time. This means that your tenant must have a regular source of income and a history of prompt and complete rental payments.
§ A good tenant has good references from former landlords.
§ A good tenant does not engage in illegal activities and abide by the terms of the tendency.

It is important to make sure that you tenant has these characteristics and don’t settle for anything less. If your friends suggest a tenant be sure to check out all references and don’t take anyone’s word for it. Do all enquiries yourself.

Here are some tips for choosing the right tenant:
§ Make sure your ad reaches a large audience. This way you will have a wide choice of potential tenants.
§ Make sure to draw up a complete application form with space for present and former landlords’ names and phone numbers and a complete history of previous addresses.
§ Make sure to check all references and ask what the reason was for the termination of the contract.
§ Look for gaps in the applicant’s rental history or for a pattern of many tenancies of short duration
§ Always run a credit check on your top two applicants.
§ When you have selected a tenant make sure that all paperwork is in order and that you both sign the lease. Take time to explain all clauses to your tenant to make sure that there is no misunderstanding.
§ If you are using a property manager make sure it is someone who will use proper care and procedures during the selection process.


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