Everyone is aware that South Africa has been suffering from the economic downturn that has been affecting most of the civilized world over the last few years. What many people are not aware of is that such a situation presents a wonderful opportunity for setting the base for financial freedom.
How can that be?
One of the by-products of the recession is the greatly increased number of bank repossessed homes, a direct result of individuals who just cannot make ends meet.
This opens up a wonderful opportunity for individuals who are looking for property to invest in, since the selling price of bank repo homes can be as much as 60% below their real market value.
It is a fact that financial institutions prefer to have money in their vaults rather than the deeds of a house.
They are not specifically interested in making a profit from a particular bank repossessed home; they are mainly interested in is clearing their books, which is why such homes can, more often than not, be acquired for far less than their true value.
There are also sellers, sometimes with a second holiday home or who are experiencing financial difficulties that feel threatened by possible foreclosure, and would like to sell their property before the financial institution gets their hands on it.
These homes are known as distressed property, and can also be got hold of at bargain prices. Check out the Work Your Wealth FREE weekly newsletter for more information about bank repossessed homes.
Because they can often be acquired so cheaply, many bank repossessed homes lend themselves to being the ideal property for a buy to rent situation, and more often than not the rent charged by the new owner can be far more than any mortgage repayments.
When you consider this along with:
The annual increase in rent charges
The fact that the property should increase in value annually
It is easy to understand why such property is an excellent investment, since not only does the capital increase in value year by year, but also the residual or passive income also increases on an annual basis.
When contemplating the purchase of any bank repossessed home, you would be wise to arrange to view the property beforehand. You will need to know if you need to carry out any repairs or maintenance before renting it out, reselling it or indeed just moving in yourself. You should also check out the local area for schools, shopping centres and other amenities, and enquire about development plans for the area. All of this information is ammunition when either making an offer or bidding at auction. In South Africa bank repossessed homes are usually sold verstoed or ‘as is’, and the seller is under no obligation to carry out repairs.
All of these aspects are important, especially when purchasing bank repossessed homes. They are widely covered in our FREE weekly newsletters and in some of the Work Your Wealth workshops and seminars.
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