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Forms of Property Investments

Forms of Property Investments

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Contrary to belief, there are various options in which to keep property. The extent and type of property investment, you wishes to have is largely determined by the level of personal involvement through life span of the investment, as well as the reason for the investment. Purchasing property for the purposes of renting to third social gatherings may require substantial personal involvement as apposed to purchasing a holiday home. For the average person in South Africa, asset investment means obtaining a physical shelter for their families. Numerous investors may be interested in property due to its capital growth piece as well as its ability to generate attractive yields and rewards over time. For others it may be to pursue non personal objectives, such as being able to control a tangible asset. Therefore before one decides to invest in property one needs to appears define the reasons behind the investment. Furthermore, from the investment perspective considerations of ownership tax and managing issues are of vital importance. This decision should also be considered carefully as shifting from one type of ownership to another may be very costly. The property conveyancing process is a lengthy technique which one would not like to encounter more frequent than important. In this newsletter we discuss the most prominent ways in which buyers can hold property in South Africa

Freehold Ownership:
It is by far the most common form of ownership in South Africa. The software implies the owner holds direct title over the property. Title would be registered in the deeds office in the name from the owner. Freehold property may be owned by both providers and individuals alike. The advantage of this type of ownership is the owner has maximum control over his/her investment and could dispose of the property as they wish. Ownership in this form does mean the property may be used as security to obtain loans and money situation.
Leasehold:
Leasehold, also referred to as renting property does not give possession to the tenant, however throughout the duration of the lease or perhaps rental agreement, the lessee (person who pays hire for the property) will enjoy virtually the same benefit as in possible of freehold above. It allows them to use plus occupy the property for the duration of the agreement. The tenant sends over a monthly agreed rental to the landlord (Lessor) which will entitles them to stay in the property. There are various types of lease negotiating which include short term rentals, long term rentals or even rentals prepared with the option to buy the property. Often the Landlord will have a key right called a "tacit hypothec" included in the rental understanding, which entitles him to take possession of movable things in the rented premises should the tenant or lessee not even be able to pay their rent timelessly. Rental agreements will be good options to consider for individuals who may not qualify for mortgage provides as well as those who do not wish to settle permanently at a special residence. Money paid out is money lost, thus it's not always a long term profitable investment vehicle.
Sectional Title
Within Sectional Title, there are several owners owning different sections of property or home. An example would be owners of townhouses and clusters most of built on the same portion of land, albeit in various sections. Each one owner has exclusive ownership of his own section plus shared ownership in the communal property such as the swimming pool, club and staircases. Sectional Title in South Africa is certainly regulated through the Sectional Titles Acts No 95 regarding 1986. The Act requires that a Body Corporate often be created to govern the interest of the various owners. The Body Collaborative collect levies, pays rates and taxes, insurance as well as maintenance expenses.
Syndication
This refers to the grouping together with each other of individuals to pool finances in order to invest in property. Syndication provides the small investor with an opportunity to invest in a specific house which would otherwise not have been possible considering the size of your total capital outlay.
Property Companies:
Property companies are similar to the above however more formalized in the form of a company specifically recognized for the purpose of owning property. Under this type of ownership, a company is made in terms of the Company Act 61 of 1973. These are essentially institutions and individuals who form these companies and use them because intermediary vehicles to invest in property. For the investor, a property firm offers the advantage of it being a separate legal entity which includes distinct liability from its shareholders. Property companies will be large entities that are mostly listed on the Stock Exchange.
Reveal block Companies
A share block company is similar to the aforementioned, however it is governed by the Share block Control Respond 59 of 1980. These are specifically formed companies through shareholders each owning a share in the company. Income is without a doubt taxed in the hands of each individual shareholder, thus rendering it a convenient vehicle for investors who wish to invest in premises, allowing each to have their own tax profile. Owning a show in the property entitles to use and occupy the present of property they own. The rights are predetermined in the memorandum and articles of the share block enterprise. A variant of this form of ownership would be Fractional Heading, normally associated with owning a fraction of a holiday home. The form of ownership is also governed by the Share block Conduct yourself alongside the Sectional Title Act. The difference will be that Fractional Title has a management company setting up a detailed roster for the scheduled periods of usage throughout the year, even when usage is informally discussed with shareholders of a reveal block company.
Timesharing
Unlike the above discussed forms of title, owning timeshare is much like Fractional ownership, however it only entitles the owner to usage for a week or more of a precise unit. This is applied primarily to holiday accommodation. Timeshare in South Africa is governed by the Timesharing Written agreement Act, Act 75 of 1983. Beware of falling for those "Timeshare trap". Owning timeshare does not equate to holding home, it merely entitles the holder to usage liberties for a specific week/s during the year. Furthermore Timeshare through South Africa does not have a good reputation and thus sales agents will most likely use aggressive selling tactics to lock people within buying timeshares. This is particularly evident along the Durban seaside beaches and holiday resorts such as Sun City. Timeshare is often associated with accommodation establishments which are of lower superior quality. Exchanging weeks across resorts is also often difficult the way it is subject to availability at the particular resort. It will also possibly be very difficult to get rid of the purchased timeshare depending on the weeks within year purchased, in the meantime levies will still have to be maintained.
Listed Property Investments
There are various ways in which one can invest in residence indirectly without having to physically hold the property. This includes Property Appliance Trusts, Property Loan Trusts, Investment Trusts and Group Investment Schemes. Listed property investments are listed within the Johannesburg Stock Exchange and traded similar to equity stocks. Because this topic is voluminous, it will be discussed further on future newsletters. It is however important to note that one can commit to property stocks listed on the stock exchange thus capitalizing on exchanging movements.
From the above it is thus essential that the real estate investor pays careful attention to the type of property ownership construct y wish to use before investing in property. This need to be regarded thoroughly since shifting from one property investment vehicle to a different one may be costly. It is vital to do all the necessary investment researching, with focus on the macro economy, property sector efficiency as well as specific property funds, trusts or companies one particular wishes to invest in. Holding exclusive freehold title to building is not the only form of investment. As listed below there are various place investment types that can be considered which may also produce favorable yields. The secret to building a healthy property portfolio on the other hand exists in firstly ensuring ownership to your primary place is secured and you have the necessary Title deeds to point out to. Thereafter the playing field is diverse and keen for new investors to participate.