If you’re going to take the property investment journey seriously, you’re going to submit many offers to purchase (OTP). Once you have submitted an OTP, you have signed a contract, and this is where property investment becomes real.
So, before you submit your next OTP here are 12 guidelines to remember:
- The OTP should be in the name of the entity in which you are planning to purchase the property. Remember, as a property investor, you don’t want to buy property in your name.
- Always state that you will obtain 100% financing from the bank. Remember, the less of your money you use, the better the investment. Rather place your spare cash in the access bond afterwards making these funds accessible for future ventures. If the bank does not give you 100% financing, you can still put a deposit down, but you are not forced to continue with the transaction. Not putting a deposit down, also gives you the leverage.
- The finance clause, made famous by Dolf de Roos in his book Real Estate Riches, protects you regarding obtaining financing. It states: “This offer to purchase is subject to and conditional upon the purchaser arranging financing suitable to itself.”
- Use a property inspection company to assist you if you cannot physically view a property or are concerned with structural or other features. You can also use this as a negotiation tool to fix things. Remember to insert the inspection clause: “This offer to purchase is subject to and conditional upon an inspection approved by the purchaser within 5 days from the offer to purchase being signed.”
- Insist on using your conveyancing attorney. In this way, you will get better service and significantly lower fees, saving you thousands of Rands that would have come out of your pocket.
- Check that the property description on the OTP is correct and that it is the property you intend to purchase.The property you purchase will either be a freehold or sectional title property. Fill in the relevant details and erase the other part.
- If the OTP makes provision for it, ensure that the levies and rates that were communicated to you are correct and that you are satisfied with them.
- Cross out the sale of a second property if it is not applicable.
- Ensure the occupational rent is market-related. It could either be in your or the seller’s favour.
- Stipulate which fixtures and fittings must stay in the OTP.
- Give the seller a reasonable time until the offer is irrevocable. I usually give the seller three working days.
- An information sheet is often requested where you can enter your details and see which supporting documentation the agent requires.
Keep these guidelines handy, and you’ll be an OTP-completing machine in no time!