Buying property solo – advice when investing on a single income

Business woman

Purchasing real estate on a single income may be perceived as impossible. However, Lightstone Property reports that single females make up the largest portion of real estate buyers in South Africa, out purchasing both their married and single male counterparts.

The process of buying a home as a single owner may seem daunting. However, Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa says that this is an extremely good financial move if it is done correctly.

Real estate purchases are one of the safest and highest yielding long-term investments a person can make. In order to make a safe real estate investment that will yield good returns, it is vital to work out an affordable budget and stay within those limits. When deciding what is affordable, consider all recurring monthly expenses such as home maintenance and repairs. Especially when purchasing on a single income, it is incredibly important to leave room in the budget to contribute towards a contingency fund in the case of an emergency. Considering there will only be one person responsible for the bond repayment, there needs to be enough money put away to counter any unexpected circumstances or loss of income,” Goslett advises.

As a solo buyer, you may have a smaller budget than that of a couple who can join their income and savings to purchase property. Solo buyers will need to be smart with their money and Goslett advises that you need to have at least a 10% deposit saved up, along with enough money to cover the costs associated with purchasing a home. These include transfer duty costs, attorney fees, home insurance and bond costs.

By avoiding taking out a 100% loan, not only will the monthly repayments be lower, but the buyer will also often secure a lower interest rate on the home loan and save a substantial amount on interest charges over the span of their loan term,” says Goslett.  

Next, you will need to consider that real estate is a long-term investment. To ensure that the buyer will eventually make a profit on the sale of the home, you will need to purchase a property in which you can imagine living in for at least five to ten years.

The buyer’s plans will largely determine the type of home that will suit them best. They might be single now, but do they foresee having a partner within the next ten years? Single income buyers might want to consider homes with the potential to add-on. Alternatively, they could find a small starter home that can be rented out in the future if the property no longer suits his/her needs,” Goslett advises.

The reality is that a buyer purchasing a property on their own may need to compromise on certain aspects and features owing to budget limitations. From an investment point of view, Goslett recommends looking for the location before the property itself.

A property can be renovated or changed, but where it is situated cannot. It is important to research the areas that are within the budget and then work from there. Buying in a better area might mean purchasing a smaller home. However, it will be a wiser investment that will see greater returns over the long term,” he says.

While the whole idea of investing in property solo may be overwhelming at times, it does not mean that every decision must be made alone. Family and friends who have purchased a property can act as a soundboard by providing honest and objective feedback.

A real estate practitioner can also guide buyers through the process and be by their side to help them make the tough decisions. A reputable, experienced real estate professional can be a valuable asset, providing guidance and advice through the home buying process,” Goslett concludes.