For over 12 years in the residential sectional title space, the 1 bedroom apartment has been the best investment property performer. Jonathan Kohler, CEO of Landsdowne Investment Properties believes apartments, especially one bedroom, one bathrooms are great buy-to-let property investments in South Africa.
Here’s three reasons why:
- Apartments deliver a price point that makes it affordable, and delivers great value. “The price point for both the studio and 1 bed 1 bath apartments start from around R550 000 and go up to around the R1 000 000 mark which is the sweet spot in the property market,” says Kohler. “The transfer duty rates are the lowest in this market, where properties purchased for R900 000 and less are transfer duty free and properties purchased between R900001-R1 250 000 are charged at 3% of the value above R900 000. And, the rental return percentage is greatest on a studio or a 1 bedroom apartment compared to 2 & 3 bedroom apartments, which is based on the rental amount. The rental achievable for studio & 1 bedroom apartment range from R5 000-8 500/month – dependant on location and positioning within the complex. This rental price point constitutes the largest amount of quality tenants in South Africa. These are people who can afford to pay between R5 500-R8 500/month in rental”
- Security – Security is a major concern in South Africa and one of the primary attractions of apartment living is the secure gated environment. A well-run complex with good security guards is a real asset to investors.
- The Body Corporate and Estate Management Team. Your personal investment management team – An Estate Management service, such as services offered by Landsdowne, provides assistance with the financial management of the complex, by providing budgetary guidance, cost control and competitive quotations for service provision. Good estate management in place means that your property investment is well taken care of. From organising a secure access control system, checking on guards, to the re-painting of buildings, the issues are copious. If not handled timeously, they can prove disastrous. “Good estate managers ensure the highest level of service from service providers, contractors and or vendors. Promotion of a harmonious, healthy and happy communal spirit.”
“There is so much upside to investment in the buy-to-let market, especially in the second-hand market with a lower cost per square meter price.”
However, Kohler warns that investors must take time to find the right tenant to protect their investment. “Having a good tenant in your rental property that pay on time every month and never default on their payments is critical and the key to high returns on a rental property. By screening tenants before they take occupation of the property will help an investor choose the best tenant with a good track record, credit history and can afford. With the help of a reputable managing agent, like Landsdowne Investment Properties, good suitable tenants can be screened beforehand and all legal paper work completed before the tenants can take occupancy of the property.”