Buy to Live versus Buy to Rent... What you Need to Know

Buy to Live versus Buy to Rent... What you Need to Know

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When you are looking to invest in property you should always consider the use of that property. If you are looking to purchase a home to live in, the requirements for that property will be substantially different compared to when your aim is to rent it out and secure a steady stream of rental income.

When you purchase a home for your own use, you will look to see how it fits with your needs, but also how it will satisfy your lifestyle and whether it is perhaps suited to raising a family.

Seeff recommends four factors to consider when you buy for your own use:

1. Is the property size right for your needs? Consider how many bedrooms you need and whether you want a flat or a house. You should always buy with the future in mind and think about whether the property offers the opportunity to upgrade or expand if your circumstances change.
2. Is it in a convenient location and neighbourhood? Where you buy must be convenient for your family requirements. Factors such as day care facilities and schools will be important. Access to transport and main roads and highways will be another factor.
3. Does the property and neighbourhood suit your lifestyle needs? Your property's primary function should also suit your lifestyle. If you enjoy outdoor entertainment, look for a flat with a balcony or a house with a braai patio and perhaps a swimming pool. If you have dogs, you may need some yard space.
4. Is the house secure? Consider whether you want to live in a security complex or estate and if not, whether your house can be secured. Garages might also be important, but you could consider adding those at a later stage.

When buying a property, always remember that your circumstances may change and it is opportune to give this some thought when investing. Look at properties that allow the alternative to rent if the need arises.

If, however, you want to invest in a property with the view to securing a steady stream of rental income, you should consider these four factors, says Seeff:

1. Will there be tenants for my rental? Choose an area that offers strong rental demand and check that the market is not already overstocked. Don't assume that a more expensive house will earn higher rental income but look for what actually rents out and for how much.
2. What type of properties are popular with tenants? Generally, three bedroomed houses and one and two bedroomed flats are the most popular to rent out, but it depends on the area. Rental demand is often the highest in the middle-to-high-income areas.
3. Should I renovate the property with expensive fittings and finishes? In most instances it is not necessary to carry out renovations but do ensure that the property is in an excellent condition. Make use of durable finishes and keep it as minimal as possible.
4. Which areas are most popular for rentals? Middle-to-high-income areas are most popular but ensure that your rental is close to transport and access roads and amenities such as schools, places of worship and shops and banks.

In all instances, it is crucial to try and set-up and maintain a healthy landlord-tenant relationship. A happy tenant is a great tenant. Although, as a landlord, you will not need to cater to every whim of your tenant.

Before you embark on this journey, talk to one of Seeff's registered and experienced agents about the rental trends in the market and even seek their expertise on finding you a great tenant for your investment.

Author: Kim Bekker