More first-time buyers are entering the market by investing in property to let in the suburbs, while living elsewhere as tenants.
Urban centres throughout SA are seeing the emergence of a new kind of property investor — the “rentvestor”. Rentvestors are people who may not be able to afford to buy in the areas where they live and work, but are so determined to become property owners that they are seeking out less expensive areas with a promising future, and buying homes that they can let to others, says Realnet MD Gerhard Kotze. “In other words, they are becoming landlords themselves while remaining tenants, which is a new take on the buy-to-let model,” says Kotze. “One generally finds that the investors own their primary residences!”
The ‘rentvestor’ trend, also happening in other parts of the world, is facilitated by technology that gives property buyers much easier access to quality information and statistics, and allows them to communicate and collaborate much more easily. It is also fuelled by an awareness of first-time buyers that property is becoming an increasingly elusive market, but potentially lucrative, once they’ve invested wisely in it. Gauteng In Johannesburg, Kotze says ‘rentvestors’ are looking for property in areas such as Lonehill, Rivonia, Morningside, Bryanston and Northcliff. Apartments are available for between R900,000 and about R1.4m, with rentals from about R9,000 to R13,000 a month, which should cover bond repayments. “Over time the bond gets paid off, the owner’s equity in their property grows along with capital appreciation, so you end up with a valuable asset that can be sold at a profit or retained as an income-producing unit,” says Kotze.
Amdec Property Development MD Nicholas Stopforth says there is a healthy appetite for residential property in Johannesburg. “One on Whiteley apartments in our Melrose Arch mixed-use precinct sell from just above R2m, as first-time buyers opt to invest in a smart city where you can live, work and play!” Buyers are looking for convenience, the latest technology, connectivity and security. “Increasingly, mixed-use precincts are offering all of these,” says Stopforth. “Each apartment offers urban living that is ideal for working professionals and corporate long-stay tenants, affording investors excellent rental yields and capital growth.”
Sandton CBD is also attracting ‘rentvestors’ with access to larger bonds. Bargains have cropped up due to an oversupply of apartment units, which drove down returns last year, says Lew Geffen Sotheby’s International Realty rental specialist Shaun Groves. “One of our buyers recently purchased an apartment in Sandown for R1.7m and we let it for R17,000 a month. That’s a 12% gross yield” Shaun Groves, rental specialist, Lew Geffen Sotheby’s International Realty. “One of our buyers recently purchased an apartment in Sandown for R1.7m and we let it for R17,000 a month. That is a 12% gross yield.” Kotze says the ‘rentvestor’ trend is noticeable in Tshwane. “We are seeing families rent homes in prestigious estates such as Silver Lakes and Cornwall Hill, and buy houses and townhouses to let in popular central suburbs such as Villieria, Moregloed and Rietfontein, or flats in areas such as Hatfield and Arcadia, or Die Hoewes in Centurion. “These are in high demand because of their proximity to the Gautrain station,” says Kotze.
Home prices start at about R2.7m in Silver Lakes golf estate and at about R3.5m in Cornwall Hill, while monthly rentals for quality three and four-bedroom homes in these estates start at about R20,000, making it far more costeffective to rent there. Conversely, a three-bedroom house in Villieria starts at about R900,000 and can fetch a rental of about R8,500 to R12,000 a month.
