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Invest

Ready, Set, Negotiate!

By November 30, 2017 No Comments

NOT EVERYTHING IS NEGOTIABLE, BUT PROPERTY PRICES ARE.

Have you ever called your broker to buy shares and asked for a discount? Or have you ever gone into Zara or Mr Price and tried to negotiate a lower price? Of course not… Because the price is not negotiable.

But in property everything is negotiable. Sellers don’t always act rationally, and there are many reasons why sellers would sell a property for less than its market value including:

Divorce
Death
Immigration
Financial Distress
Downsizing / Upsizing
Presentation
Uninformed Selling Agents and
Difficult Tenants

SOMETHING TO REMEMBER: IN PROPERTY, YOU MAKE YOUR MONEY WHEN YOU BUY. NOT WHEN YOU SELL.

Here’s an example:

Imagine you can buy a property with a market value of R900 000 for R760 000. You finance the property 100% and only pay the transfer and bond registration fees of about R36 000. And even though you finance the property for R760 000, you register the bond for R900 000 (the market value).

Six months to one year later, you refinance the property for R900 000, which means that you get R140 000 in your pocket. With this you can cover the initial transfer and bond registration fees and the new costs to refinance and still have R100 000 in your bank account. Of course, your monthly bond will go up with about R1 200 to R1 400, but as your rental income increases every year, your shortfall becomes less until it eventually becomes a surplus.

WANT TO KNOW HOW TO BUY A PROPERTY THAT WILL NOT COST YOU A CENT AND PAY BACK EVERYTHING YOU INVESTED WITHIN ONE YEAR?

You park the R100 000 in an access or flexi-bond and withdraw your shortfall from that amount monthly. Your shortfall will become a surplus long before your R100 000 runs out.

Chester L Karrass said, “In business as in life, you don’t get what you deserve, you get what you negotiate.” So, get ready, set, and negotiate!

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