Life Happens... is it time to invest or time to sell?
Life happens... and It seldom goes as planned. COVID-19 sums up most of 2020 and the first weeks of 2021.
On the bright side, I woke up this morning. I am still kicking. I am healthy. I have learned the value of every life-giving breath, and I am thankful.
Here is a story about Abundance:
An organization in Montana, USA, offered a bounty of $5000 for every wolf captured alive. Two hunters named Sam and Jed decided to head for the hills and make some money capturing wolves. Day and night, they scoured the mountains and forests searching for their valuable prey. Exhausted after three days of hunting without any success, they both fell asleep.
During the night, Sam suddenly woke up to find that he and Jed were surrounded by a pack of 50 wolves, with flaming red eyes and bared teeth, snarling at the two hunters and preparing to pounce.
Sam nudged Jed and said, "Hey, wake up! We're rich!"
Depending on who you talk to, there are many different views of the 2021 Property Market. For many the glass is half empty and for others the glass is half full (as long as it's wine...).
The uncertainty of work and income security are currently creating a lot of understandable stress and uncertainty. On the other side of the dark cloud, the record low interest rates are offering some beautiful silver linings, especially if you have a secure job and good credit record.
3 Silver Linings currently, depending on your specific circumstances, are:
- This can be a golden opportunity to get your foot into the property market. After multiple interest rate cuts in 2020 to a historical record low Prime rate, many first-time buyers can now qualify for a mortgage bonds to move from renting to owning their own property.
- If you already own a property and have some extra money available, this is the time to consider buying that investment property that can supplement your retirement income and make you money while relaxing on, the after-lockdown, beach. Just keep in mind that not all property is always an good investment. I believe that your profit is made when you buy, not when you sell. It is important to do your homework before you buy. Good advice from a real estate agent that you trust, with expert knowledge of the area, is priceless.
- With the Prime lending rate dropping from 10% (January 2020) to the current Prime rate of 7%, YOU can save hundreds of thousands of rand, by simply not reducing your monthly home loan instalment when then interest rate drops. This will also automatically bring down your loan term with many years!
See below table with interesting information supplied by our preferred bond originator, Sunette Kriel from MortgageMax- CMC Finance. You are welcome to contact Sunette anytime for her expert advice free of charge on 084 679 6774.
If you find yourself in tough economic times however, my advice is to try everything possible to keep your home and make your bond payments every month a top priority. Put your budget on a diet and rather cut out the pizza and other luxuries for the time being, if that means you can keep your property.
In the unfortunate event that the pawpaw hits the fan, you may have lost your job and know there is no way that you can keep up with your bond payments, the worst thing to do is to just ignore the problem and hope it will go away. Rather contact your bank and see if there is an arrangement you can work out and keep the bank in the loop. If you give the bank a cold shoulder and ignore them, they may turn greener than the last time when you ignored your swimming pool under the pretty blue water-saver-bubble-cover thingy. It can create an enormous stink... (Please note that I am not a banker or financial advisor, so this is just my personal opinion 😊)
Another option might be to consider selling your property and opt for renting, while you have a good credit record. The rental market is currently under pressure and you might just find a good rental deal until you are ready to buy again. If you are thinking of selling, the first step is to contact your agent and get an honest, market-related valuation. A good agent will be able to provide you with market trends in your area and can also give advice on how to stage your property to get the best price. Some small and pocket friendly tips like painting a specific wall or re-arranging some furniture to make the space seem more open and spacious can go a long way in getting the highest price possible in the shortest time.
Whatever situation you find yourself in, remember that nothing is permanent. What goes up, will come down and what goes down, will eventually go up.
You are not what you own, and you are not what you owe.
Every day that we wake up healthy and loved, is a wonderful day filled with hope and opportunity.
About the Author: Erna Sciocatti is the Owner/Principal of RED Properties in the northern suburbs of Cape Town. You are welcome to pop in for a cup of coffee or to contact the RED Team for expert property advice.
