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Stellenbosch still have a high demand for second properties among homeowners
ANYONE with a monthly income of R30 000 and R1,3 million to invest can start looking at R2 million buy-to-let properties in Stellenbosch. With the JSE All Share index down 20% from recent highs and the potential for another couple of years of extreme market volatility, many investors are looking for bricks-and-mortar certainty in prime areas. And demand is rising for rental accommodation in Stellenbosch. Dawn Harvey, rental agent at RE/MAX Oaktree in Dorp Street, says the number of people looking for rental accommodation has increased quite drastically. "A modest sized family home close to schools can fetch a monthly rental income in the order of R10 000 per month," says Dawn. "Comfortable family homes are coming onto the market at more realistic prices," says Dot Foster, broker/owner of RE/MAX Oaktree. "Homes with an asking price in the region of R2 million only come onto the market from time to time." Dot explains that well priced properties have in the past sparked bidding wars among buy-to-let investors. Buy-to-let seems to be recovering its investment appeal in prime rental areas in the face of an otherwise uncertain investment outlook. As any tax adviser can quickly calculate, the income from a partially bonded rental property, together with its potential capital growth, could attract substantially less tax than interest on a fixed deposit. Along with being a hedge against rocketing inflation, this is an added benefit to the buy-to-let market. This combination of factors means that an individual investor can satisfy the requirements of the National Credit Act, please the bank, potentially save on tax, and enjoy the peace of mind that few other investments can provide. Of course, family syndicates and groups of friends or neighbours can form a business to purchase a property, dispense with NCA conditions and focus on total investment returns. Historically, prime Stellenbosch properties have provided modest, but very reliable rental incomes and impressively stable capital growth. Together they ?have delivered an excellent total return, which is common knowledge among active property investors and speculators with local knowledge. Dot says most of her agents are satisfied property owners and investors themselves, and are able to confidently share this information with aspirant property investments. The demand for student accommodation has always been high in Stellenbosch, but high fuel prices, together with increased student numbers in 2009, have driven demand still higher, says Dawn Harvey. She also says that demand for well positioned family homes at rentals of between R8 000 and R12 000 per month far exceeds the current supply. This is clearly music to the ears of investors who are considering a change of investment scene. According to Dot, buy-to-let investors account for a steady flow of sales in Stellenbosch. They include many novice property investors. Sellers need to be aware of this and engage knowledgeable agents who can maximize exposure to this important market.
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