Deposit Assistance is system first used by Shachat Cullem Homes during the 1980's. It is intended to be a bridging loan that assist some buyers to meet bank equity requirements for a short period to encourage the bank to grant the bond. Like now, during the mid-eighties when bank loans required large deposits, the buyer would put a 10% deposit and the developer would loan the buyer 10% for two years. At the end of the two year period the property was revalued and the bank granted a higher loan.
Owing to the limitation imposed by the Consumer Protection Act we have to be careful to ensure the loans are enforceable in the event of default. The fact that the Act allows perfectly able borrowers to renege on loans if the borrower pretends he or she was overextended at the time of the loan we have to be careful. We are in discussions with our bank to find a way to secure ourselves, the buyer and the bank. If and when that is done, these are our intended terms of loan. Kindly drop us a line to indicate whether you'd be interested in this system if it's brought to market. Yes I'm Interested.
Matching investments - up to 20% of property value.
Period of assisted loan - two years
Raising fee of 10% of loan value
Interest payable during the period of the loan Prime plus 9%
Monthly repayment of 0.5% of the loan value
Repayment of the balance of the loan
This interest rate may appear excessively high, but we'll be paying similar rated from the market using our company as guarantors to provide the funding. The market requires a return of 20% pa. We require 4% as an administration fee.
The intention of this loan system is to assist more people to buy through our company and get more youngsters into the property market. While Assisted Loans are expensive, they will repay you more than putting money into high risk investments like the stock market and do better than saving through an insurance policy.
WHAT DOES WAITING COST ME?
WHAT DOES MATCHING FINANCE COST?
HOW YOUR MONEY MAKES MONEY
Property Owners make more money than those investing in insurance annuities or stock markets.
Have you ever considered the reasons wondered the world's riches families are all invested in property? Isn't it rude they seem to ride through every economic crisis without a care in the world? Have you noticed when the stock markets crash, pension funds lose value and those with property get richer? The reason is buy-to-let property pays rent - when markets fail, interest rates and rents rise. Higher interest slows property growth and those with cash or equity in their bonds are ready to buy more property cheap. Isn't that annoying?
Trade Economics (ABSA Stats) on the left show residential property values maintained values from 2008 to 2012, then surged from 2012 to 2016. During 2008, the JSE fell 40% causing permanent losses - to this date un-recovered.By the time the JSE makes this up, the Rand will be half its value in RSA and even less abroad. With all their clever people to place their investments, Residential Property kicked their butts both in terms of stability and far superior profits
Old Mutual reports average equities growth was 8.1% since 1966. Forbes Magazine reports that after brokerage fees the industry paid policy holders 6.45%; while ABSA report an average of 10.5% growth per year, plus an average rent of 7%. With the effect of compound effect over twenty-five years any residential property beat the JSE by 30 times and insurers by 60 times. Even this dreary, over-pessimistic Global Property report admits that residential property prices haven't fallen in Rand terms in this recent 2014-2017 financial crisis. Like it did from 2008-2011, we believe residential property is marking time for its next surge, which will take value to 30% higher than today's prices by 2021, leaving the JSE standing (again).
WHAT DOES THE FINANCIAL CRISIS OFFER YOU? - For those fortunate enough to have capacity to buy now, property is the cheapest its going to be ever. Building costs are lower now than they were in 2008, so there is more value in new build. Property is likely to rise 30% buy 2021/2022.
TO CREATE WEALTH - Our advice to property investors is live small and invest big. That means spend less on the home you live in and buy big in the buy-to-let market; only buy property products from those with a proven track record in corporate markets amid a strong customer base. In SA tenancy laws favor tenants even if they don't pay, unless, they are companies. In the case of companies, the laws that slow eviction of late paying tenants are not applicable. Choose properties that are in good areas that will improve in value. Don't listen to agents patter! Ask for audited data that proves the value model and the forecast rent offered.