A combination of low prices and strong demand for rental premises has, says Rawson Properties Muizenberg agent Derek Evans, made Muizenberg a popular target for buy-to-let investors.
“These,” he said, “are no longer the casual investors that we saw in the boom era of 2005 to 2007 when people with spare cash poured it into property and especially new developments, without much thought about how good or bad the return might be.”
“Today, with capital growth still likely to be below 10%, the return has to be good and a run through of most of the major rental agencies serving the Southern Suburbs will show that it is always the lower priced houses which give the best returns.”
In Muizenberg, said Evans, some 80% of the homes sold are priced below R1,2 million and this suits buy-to-let investors very well indeed because investing, particularly in the R600 000 to R900 000 bracket, is usually capable of giving the investor a 7% to 8% return from day one. The expenses common to all landlords might knock 20% off these returns but they are still very satisfactory.
“Such returns are higher than it is possible to achieve in the more traditional suburbs in the Cape Peninsula - and that is why buy-to-let investors are coming to Muizenberg these days,” said Evans.
The whole key to success in this field, he added, is to have a truly ‘clued-up’ agent who is capable of, and willing to carry out, credit, employer and previous landlord checks; and is prepared to visit the premises regularly to ensure that they are being properly maintained. Agents must, too, be able to act immediately when rent payments are even two or three days late.”
Agencies like Rawson Properties Muizenberg, which work in the right way, said Evans, have been able to continually expand their portfolios and are usually operating with less than 5% of their tenants running behind on rental payments.
