Homeowner 101

When I was at varsity I read a few of the books from the Rich Dad and Rich Women series by husband and wife duo - Robert and Kim Kiyosaki. The two most inspiring books were "Rich Dad, Poor Dad" by Robert and "Rich Woman" by Kim. To learn more about their books and products, you can click here to go to their website. Since then, the idea of buying up property to create cashflow has been ingrained on my mind and I decided that I would buy my own property as soon as it was feasible. 

A while ago, the opportunity came up for me to buy the flat that I have been renting for the past year or so. I hadn't been planning on buying property so soon after starting work so I thought long and hard about the decision, crunched my numbers and decided it would make a good investment. Even though things will be tight for a while, I've taken the plunge and I'm really excited about my decision. I've bought the flat with the idea that I will be renting it out in years to come, when I move out. There was lots that I have learnt through this whole property buying process. You can find some of the key points below, along with the costs that you don't really think to take into account:

1. You decide at some point that you want to buy property. I was lucky and the opportunity presented itself to me. For other properties I will probably need to search a bit harder. Shop around before deciding on the property - you need to be sure it's the right one for you.
2. You crunch your numbers and if you can afford it, make an offer on the house. If the seller likes your offer, they'll accept. Otherwise they'll decline and you can make a higher offer or find something else.
3. You then go to the bank to see if they will loan you the amount you need. For first time buyers you will usually be awarded the full amount of the loan you request. For more experienced buyers they will probably award you less than the full amount and you will have to come up with a portion of the money yourself. You can approach banks yourself about the loan. Or you can get someone called a "bond originator" to do it for you. I got my loan through a bond originator. You don't pay fees to them as (I think) they are paid by the bank. Your estate agent should be able to recommend someone to you.
4. Your bond (hopefully) gets approved. Then you start getting lawyers involved to help you file paperwork etc etc. This part is quite hazy to me. Usually the seller nominates a lawyer to help with the transfer. Luckily for me my dad is a lawyer and the sellers, at my request, agreed to use him to do the transfer (and thus I was able to save on some lawyer fees there, but apparently they would have been about R10 000).
5. As this was my first property, I needed to get life insurance organised. Banks do offer up their own life insurance, however, I found my own life insurance privately for about half the monthly amount that the bank was offering me, R140 per month as opposed to R300 per month.
6. I also dealt with another set of lawyers - I stand to be corrected, but I think they represent the bank - who facilitated the signing of the contract for the loan from bank to me. I had to pay them about R10 000 for the work that they did. I also had to make up front payments for 3 months worth of my rates and levies which came to about R 2000.
7. After that, there was quite a wait for the papers to be transferred into my name, but finally they all came through. My dad got help from a lawyer in Joburg for this and he also waived his fees, which would have been about R 1700. The bank then contacted me to confirm the date of my first loan repayment, which is near the end of this month. 

All in all, not including my monthly life insurance payment, my fees should have come to R23 700, I was lucky to get away with paying only half of this. However, when you're thinking of buying your first property, I would say try to find out what you'll need to pay in lawyers fees as well. And if you can't find out, use the number above as a guideline (and maybe add a few extra grand, just to be safe).

Now, I'm sure I've left out a whole bunch of details that are important, but it's a long process and these are the things that jumped out at me as being important milestones in the process. The best way to learn is to do. Even though it's scary and huge amounts of money, I think of it as "forced savings" - once I've paid off my flat I'll have effectively "saved" money up to the value of my flat. And if I don't sell my flat, once I've paid it off, any rental income that I get from it, will be mine to use as I like (probably to go out and buy another rental property!).

It snowed last year around about this time!
The door to my flat is at the top, right in the middle.

Playing with my camera and a wine glass on the walkway/ledge
outside my flat.