Definitely an asset. There is a different between an asset and investment although an investment can be an asset. An asset is something that will generate future economic benefit. so when the house is sold, an economic future benefit is generated. Just because money gets out every month does dont disqualify the house from being an asset. Its narrow minded to say every month money comes out, you still have to pay rent which is money out.
@gabriellewhalley1328 thanks for sharing. Normal buy to let property yes. It has average returns. But when you focus on the right strategies like multi lets, you can get great returns.
Thanks for sharing your thoughts. I think you might be missing the point of the video. Im sure you understand the time value of money. Also when you compare your returns from your house over a 20 year period you will realize that you paid all the interest on tbat property. If you calculate inflation with the time value of money, you might better understand that it's not an asset simply because it goes up in value( in fact, it is more like an inflation hedge) the video simply explains that if you want to buy a house and you think its a assets theres the 3 tips that you can consider first that can help improve your overall return. Hope it makes sense. Thanks for watching.
Depends if your house is bringing you money in per month or costing you money. Say, for example, you bought a house for 3 mil, but it also has three flats that can be rented out for about 7.5k p/m each. This covers your bond and lets you live "rent-free" in said house. Especially if you took a 30-year bond. On top of that, the apartments will generate an additional 5% increase year on year, where your property is linked to the 11.75% (Or whatever rate you got), the repayment should remain relatively the same. If you gotta live somewhere, might as well live for 25% of what you would have paid elsewhere and own it. Id call that an asset, yes.
I read rich dad poor dad. I resigned from a good job to start a company. First 6 months I went from R40 000 a month to R2000. I stuck with my decision and did not reapply for a job. I did a presentation for a Engineer on a mine and he put my company on a trail to do the services I offered. I worked myself for 6 months on the mine. Then hurt my back at home and could not continue working. So after I recovered from my back injury I employeed 3 guys. They rendered the services and I could focus more on the business side of things. Today my company has 18 employees and growing. Moral of the story. Invest in cash flow. Like a monthly service. And don't quit. Pray and believe. You can do it!
I own a large 5 bedroom house with a granny flat which my wife and I bought in a very good neighbourhood. Its almost paid. Our bond payment equates to the rent of a small flat (mostly 1 bedroom). The best investment we ever made and best of all is that we will not be spending our pension on rent. Should we decide to sell, we can make a couple of times what we initially paid. If you use your house as your business address and deduct it from tax, you are liable for commercial rate on your property tax and that is far more expensive than a residential rate. It cancels out the saving on taxes. I am beyond the risk of loosing my house should I loose my job, but in the beginning we decided that should it happen, we would rent the property at 3 times the bond payment (which is market related in our area). Its a win win that took huge initial effort and is now a real asset.
Wow thanks for sharing your story. This is quite interesting. I think over the long term it can be a great way to build your net worth. Luckily you were able to afford the payments and stick to your plan. Well done for that. Thanks for your comment. All the best.
If you rent a house you are paying off someone else's house for them. Rent increases by 10% a year where as buying a house, the repayment will remain more or less the same for the following 20 years..
This is a narrow minded way of looking at it. If you have disposable income to pay the bond of a R4million rand house. you are looking at paying roughly R46k per month, R400k in transfer costs, and 1-3% per year on repair and maintenance on the house value. In western Cape (At this stage) You can rent a R4million rand house for R22k. This leaves you with roughly R24k Extra per month which you can invest in the stock market, TFSA Or use this money to purchase investment properties. Remember that these investment properties get paid (Mostly) by people renting them. Which in a few years should produce income. This income you can then put towards renting your primary residence. If you had decided to buy your R4million house you would have no extra money to save for rainy days, emergency funds. You might have capital growth on home but remember your house is only worth that amount when you want to sell it.
Do you want to know the exact steps to set it up ( you simply use a company to do this for you) or the reasons why you have to use a trust ? If you want to know the steps, I will make it my next video 📹
An assessment of the best company to use for this service as a comparison measure. Some offer tax and accountant services with trust management @louisreynhardt
I bought a house for R1.8mil in 2021 on a mortgage and rented it out and now I'm selling it for R2.8mil without making any changes to it. I've also got a couple of other rental properties on mortgages that I'm very happy about. Buying properties in South Africa is definitely worth it.
Geez, well done. That's some impressive returns. I completely agree. If you stick to your plan you can make money in many different ways. Thanks for contributing to the channel 💪🏻 🙏🏻
"Without making any changes to it" does that mean you haven't paid any money towards the property? That's hard to believe. Transfer and registration costs alone demand almost 10% of R1.8m already before you can even get that property. Let's not mention other forgettable maintenance costs.
@@Mastah0909 There's been no maintenance costs so far. I haven't made any changes to the property. The transfer and registration costs were around R100k which I took a personal loan for and I took out a R1.8mil home loan to buy it. And then I'm renting it out for R16500 per month and the tenants are also paying for water and electricity. And now selling it for R2.8mil.
The profit on a primary house is not really the value of the house - mostly, it doesn't appreciate that much. The profit is actually when you fetch the title deed of the property and you no longer pay anything except rates and taxes to live in the house you wanted in the first place. This takes quite some time, but when it happens it justifies the whole experience.
Purchasing my home three years ago has proven to be the wisest decision I've ever made. Renting from others often leads to numerous challenges and uncertainties. Dealing with landlords who exploit tenants and restrict any personalization of the living space can be frustrating and costly. Having rented for most of my life, I understand the constant feeling of transience and instability that comes with it. However, since investing in my own property, I've experienced a newfound sense of security and pride of ownership. Not only have I enjoyed the stability of staying in one place, but I've also seen a substantial increase in the value of my property. In just three years, I've witnessed a significant appreciation, with the potential to walk away with a substantial profit should I choose to sell.
Well done for taking the steps and pulling the trigger. There is no doubt that theres many ways yo make money with property. Thanks so much for adding value in the comments, and I hope that your comment gets a lot of reach. All the best 🏆 👍
I have been in property investment for 25 years, today i have all my property in the market due to high costs and the way tendants are protected by our laws... At this moment in SA i would not invest in any property , i will rather rent a house and use my cash to fund my bussiness and get more return than leasing property.
Thanks for sharing Jacques, investing in your bussiness is a lucrative way to build your net worth. Houses overall dont perform to great but people have different opinions. I would say specific and strategic property investments can and will do well, but it's definitely not easy. Thanks for supporting the channel and sharing your insights
Do not over capitalise. Do not speculate on property municipal property valuations. Remember, the property valuation depends largely on the municipal services to that property. Availability, means services not utilised but have been brought to the property by the Municipality. The next component would be the subjective location of the property. A 12ha property, unserviced, undeveloped (vacant) property,15 minutes from town has a R0 valuation. The market value of the property is what the buyer was prepared to pay for the land. So, for 5 years the rates must be calculated on R0, at the next valuation if there have been no change, the valuation should reflect the market value. Speculating on property valuations means that your appetite to make a quick buck by tacitly or proactively accepting a much higher property valuation regardless of how the Municipality (not the valuer) arrived at the figure, impacts on the affordability of neighbouring properties. Peoples are either compelled to sell or they no longer invest in their properties. Ultimately, it means that Municipalities (and agents) can manipulate the demographics of an area. Don't pander to the system. Gentrification is not a good thing. Imho, property should not be an investment class, as controvercial as that might sound.
A house is still an asset even in current SA. Buy a house in a decent area and it should still hold or increase it's value after 15-20 years. Don't buy on credit!!!
Buying on credit is fine. If the interest repayment is less than the cost of your rent, it's worth it. In 10 years time the payment will be much more affordable than the rent at that time.
@@ThisRandomUsername partly true, most banks only offer a guaranteed interest rate for around 5 years. Bonds are much longer than that. But yes, renting in general is never a good thing.
@@memeguyTM That's true. I bought my house in 2022 and they would only offer me a flat interest rate for 2 years, so I didn't bother. That did really bite me now that the interest rate has almost doubled. The thing is, on average it makes no difference unless you buy in the dip like I did.
Its not always an either/or situation when buying a house (either an asset or a liability), even if bought in your own name. If you for instance have a granny flat that can be rented out to two students/working persons, that income can be paid directly into the bond. In the latter case the biggest challenge in my view is to minimize the long term losses suffered via the system of compound interest calculations. In simple terms: instead of paying the minimum of R10 000 pm towards the bond, the additional R5000 money from rent being paid towards the bond, will over 20 years save you hundreds of thousands of rands. Most people have no idea how this works.
Thanks for sharing. You make some good points. Using your house as a multi let can be a great way to reduce your risk or create extra income. Thanks for sharing 💪🏻 all the best
"I beg to differ. Buying a house is an investment. If you don't buy a house, it means you have to rent, i.e., paying another person's bond. What is important is to buy a property that you can afford."
I agree. The thing is what's more interesting to me is. The book The millionaire Fastlane by MJ de Marco talks about Robert, questioning his true business model, did he really made money from following the rich dad poor dad book principles? or did he make money of selling the book, then only practiced what he preached? But you are spot on in this video. Unfortunately the only way to become wealthy is self employment, where you have the scale of income on your side, making millions by selling to millions, then u save up, buy house cash. Compound interest don't work.. u want to live when u 30 not when u in a wheelchair 60. so only way is, impact millions and buy house cash.
Thanks for sharing. I agree with you. I think Robert speaks about how writing a book is also an asset. Generating passive cash flow without having to work for it. So, in a sense, he does practice what he preaches. Do yourself a favor if you ever have time. Read his book cash flow quadrant. Really good book. Also, self-employment or bussiness owners have many challenges that 9 to 5 workers dont have, but they also have many more advantages and so much more opportunities and time on their hands. Thanks for your comment 😁👏🏻
Build a seof sustaining house that's what i plan to do in Kenya,n coz I've always worked from home n my land feeds me my land n house are an asset,investing in solar or micro hydro or wind power is no longer an option but a necessity,alongside methane micro plant,together with fruit trees n a garden,SELF SUSTAINABILITY is more than essential expecially with these inflation rates among other things
Didn't do the trust thing but in my late 20's I bought a cheap flat in a crappy area with a flexi bond. I paid any extra money I had into the bond. Which is now mostly paid off but I keep it open to use later. I now have enough to buy a house cash if I sell. But will be digging into my flexi bond and buying a decent house and renting out the flat till interest rates start coming down and house prices increase at which stage I will sell the flat and pay off the balance of the flexi bond. It's been hard not to spend money on silly things but I've been disciplined. And now at 41 will soon have my own property and stop making the banks profits. Giving me more money to spend on my family.
Louis but I want a house in town because of the peace of mind. Rural life is awful. I need peace 😊. I'm in the process of leaving rural/township living for a quiet suburb in town.
I love this advice, as a landlord, i encourage you all to rent, my house and 4 rental properties are paid for bringing about 60k per month. Ive minimised my personal rental expenses and maximizing the money you give me which i really appreciate 😂
Any land,building/ property is an Asset on the balance sheet. Thats where you log it. If you took out a loan to repay the asset then that is the liability. Your primary residence isn't a productive Asset to return dividends. If interest rates are low and cash is dirt cheap ,then its not a bad idea to buy a house as an asset because its kinda inflation proof. Not everyone has the capacity and the stress levels to open a business. Some people just want to live a normal standard life. Why pay someone else's bond when you can just live in the comfort of your own home and be stable.
It's not only the financial side if things.i work from my house which I could never do from a rented house, flat or town house. The type of work I do requires me owning the house. You can't only look at it purely from a financial point of view.
We reside in Cape Town and I agree with everything you say, we own our primary house and have rental properties too, cash flow not best in CT but capital growth is best in Africa !!!
Thanks for Sharing Jason. Appreciate your input. You are 100% right. CT has the best performance based on appreciation. Cash flow on the other hand, is quite difficult to find.
I have never regretted buying. I have paid my bond finished. It its now worth soooooo much more than ever before. If I was renting I would still pay out the same kind of money. Yet now I have this asset which I am planning on selling and upgrading to a nicer house. My daughter has been renting for 10 years, moving every two years or so. It is terrible. Because rent keeps going up. She is buying this year. 🎉
Short term rent makes sense, but if you know where you want to live, owning long term is a no-brainer. Thanks for commenting and sharing your perspective. All the best.
The way I see it is that rent is a fixed expense every month and is the max you'll pay - making it easy to budget and prioritize putting money into savings. With a bond it is the minimum you'll pay and becomes a variable expense each month making cashflow and budgeting difficult. I rent now (cheap rent) after owning a flat and a house. My living cost halved and I am able to follow a budget much better. Once I am happy with where my investment and retirement balances are, then I will look into buying a property again. There are many perks to owning, I just think majority of folks don't end up living in a purchased property long enough to gain from it financially. Purchasing property should be a 5+ year commitment to balance out the interest, lawyers and realtor fees...
What an absolutely great way to put it. I agree with you 100%. Thanks for taking the time to share your thoughts and adding value in the comment section💪🏻💪🏻
Being 34, and top 1% earners based on stats. I can in all honesty say buying a house ONLY makes sense if you plan to stay there for 5+ years. Selling earlier knocks you on fees (Transfers costs, vat, Lawyers etc). Secondly, owning a property has no tax deductions, where renting has. This is only applicable if you have an office at home. Last, overhead of maintenance is a major expense owning, as well as additional insurances. Owning, should be seen as a convenience to do what you want (if free standing). You own nothing untill 100% is paid. If you want to own, buy cheaper apartments, and rent them out.
Thanks for sharing. I like the idea of ; the best property id a paid of property. It also depends on a couple of factors but generally, Most people tend to buy their house and struggle to make payments, making it a huge financial burden. Thanks for supporting the channel and adding value in the comments. All the best.
What gets me here its a bit of a clickbait! It would have been better to say something like ‘be educated before buying a house’ or ‘want to buy a house? Hear tihis first’ but no you want to entice viewers contemplating purchasing a home to the negative first. Other than that, nice synopsis of ‘rich dad poor dad’. Its a great book. I would advise all South Africans to read it. I think its a great enabler for upcoming Entrepreneurs…something we need of more here. God bless.
I'm sorry to hear that the title bothers you, but remember, it's just a marketing strategy to increase views and to get a wider reach. Which is very important to me. I always say that as long as the content is more valuable, you shouldn't care about the other mistakes. Because theres alot of them. As long as I can help or motivate, im happy.
Yes, However, if you keep in renting and paying someone else for the roof over your head, expensively, you lose that money. You will never have a house if your own. Houses can be rented out later on...
Absolutely, thanks for sharing. If you stick to your renting budget and dont overextend yourself, it can help you in the long run. Thanks for your comment.
Hi Louis, do you mind commenting on this please? Trust is taxed at 43% flat rate and CGT is 80% of the gain is taxed at same rate . You totally lose out on the R2mil exemption of primary residence.
Thanks for your comment. So just to simplify things. Tax is a very complicated topic. Most of the time in a trust, you won't get taxed at those rstes because there is smart ways to reduce taxes. Unfortunately yes you lose your primary residence exemption but thats also just one time in your personal name. I also think of never selling property. Why would you kill the goose that lays the golden eggs. Hope that helps. All the best
The best thing is to buy at a good surbub but don't live there, rent it out, then build in a rural area, then the house at a surbub generates income especially when it is paid up
Nice video. Please consider doing a video comparing rent vs bond, apples with apples, same standard of living (bond option will cost more). I believe that renting and investing the savings allows you to build equity faster than someone paying a bond. With amortization, you pay mostly interest for the first half of the bond term, whereas the renter has earned a lot of interest on the money hes been investing in the same period.
Thank you for watching. It almost seems like you answered your own question. You definitely have a good understanding of it already. I have made two simmiiliar videos in the past. You can have a look at them if you want to. Otherwise, let me know, and I'll look into making an updated version ruclips.net/video/Bhafyf49qoE/видео.htmlsi=GOkKKLSr0ZSceOgB
Let’s talk about trust. I have a property in mind to buy cash and am conflicted on buying it in my name, setting up a business and buy it under the business or start up a trust. I’m going to transition to working from home and what you just mentioned is a bit short of details. Please share tax implications and all.
Thanks for watching and for commenting. You can start with this video Like you might know , its difficult to share all the details in short videos but check this one out ; ruclips.net/video/zBnt5J-DJEY/видео.html
I see my house as an asset because, to have a roof over my head, I have to pay (Rental or Bond). So Id rather pay my accommodation costs towards owning my own house than paying off a landlord's property. So, if you see a house you live in as a liability, where do you stay? If you rent, you are throwing money in the water and get no future benefit from the money you spend each month.
Thanks for sharing. You are 100% right. You need to live somewhere. I hope that the 3 tips I shared are something of value to you. Although I dont see my house as an asset, I still own it. Because like you mentiomed, you need to live somewhere. When done correctly and with discipline, your house can create wealth over the long term. Thanks for watching. All th best
This is exactly what I did. I have two properties under my name. I don’t live in them plus they are self paid. I live abroad so this works out perfectly for me.
Thanks for sharing your insight. As long as it works for you its great. Eveyrone has their own journey, and you need to figure out what works best for you. Thanks again.
Well you can also be smarter and buy vacant land and build your own house for way much cheaper, at the end of the day you do not want to live in someone else's house. But I agree with you, you buy/build your own house with the income you generate with your assets (cash flow). Safe haven comes first, doesn't have to be fancy, just has to be a place where no one can kick you out.
Hi louis, something that i am struggling to understand. I recently bought my first property, i am looking to rent it out but the average rent in the area is lower than the mortgage loan payments, how do i go about making a profit or atleast be able to make minimum payments on the mortgage loan through the renter without digging into my salary to pay levies, W&E and the mortgage?
Dankie vir jou comment. Ek dink die maklikste sal wees as jy hierdie video kyk. ruclips.net/video/54A6Ii_Xf94/видео.htmlsi=B-rdiUj5s37YdsvA Kyk ook na die ander videos waar ek deals analyse dan sal jy ook beter verstaan dat nie alle eiendom goeie investment is of great werk vir rentals nie. Mens kan of die huur probeer vermeerder deur renovations of om jou uitgawes te verminder
First things first. Location, location, location. I built 6 years ago, so no transfer fees. Since then the value has increased annually 4.5% on average. Not a lot in terms of investments (never mind inflation), but okay versus most of South Africa's property values. However, a neighbour who rents would have paid R1.8m during the same 6 years in rent. Simple maths, I would rather be in my position.
I do not agree with the trust strategy. With the new beneficial owner compliance in place its very easy for SARS to see when you are deducting expenses from the property in you own name. Meaning if the Trust is the lessor and you the beneficiary/trustee act as the leesee SARS is able to reverse all the deductions claimed and penalise you for claiming them. It is usually seen as evasion rather than tax avoidance. That's if I understood the strategy in this way.
Thanks for your comment. . It won't be seen as evasion if you actually use the space for work in this example. SARS will penalise you if you deduct expenses unlawfully. SARS’ aim is to record all beneficial owners of registered Trusts in order to comply. But I dont see anything illegal in this matter. You are able to rent back a property from a trust that you are a beneficary to. However, the rent must be market rent (not a discounted rent) as you must show that it is a legitimate lease and not just a tax evasion scheme.
@@louisreynhardt then I apologise for understanding the use of the property incorrectly. I was just worried that someone might think the example used is understood the same way I interpreted it. As it could cause a lot of hardship. We have received clients that have already fallen for this and entrapped themselves unknowingly. Thank you for clarifying
@cyclingbarista8842 No need to apologize. I appreciate you taking the time to ask questions and to confirm certain things. We should never stop learning. Thanks for watching. All the best
Really enjoy these videos! There is so many people with so many openions, but I enjoy the SA take on things. I’m in the financial industry and also have a property porfolio and sometimes its also nice to hear of things I have not thought of or went through. Keep it up💪
Pleasure my friend You simply own the property in the trust and set up a rental agreement as the landlord and you as the individual rents the property from the trust.
It can work, your calculations will have to be more detailed and your upfront cost will be more. So your invested capital is more. Make sure your return will be worth the effort and the money.
There are many regulations around permission to erect a secondary structure and the maximum floor space permitted for the property. Also, consider restrictions on the amount of people that may occupy the property, depending on your zoning, you might not be allowed to house your family and the addition rental occupants.
What about taxes on the trust's income? What sort of trust is it and are the beneficiaries? Also, how material is the tax deduction from what you pay to the trust given that rent paid for a home office is tax-deductible only in proportion to the floor area?
Theres many ways to reeuce your taxes. The home office exoense is just one way your can reduce taxes with the floor space used. You can check out my latest video about the trust. That should answer most of your questions 💪🏻🏆
Good system! You will miss out on the primary residence capital gains exclusion when you sell however. That’s the drawback of owing in a trust and claiming home office expenses.
Unfortunately, yes, but it's also just with your first property. That's probably the only benefit combined with easy-to-use that buying in your name has. Thanks for sharing.
Where would you live ? Would you rather live in a place that you are paying for or would you pay rent to someone else who owns the property ? If you pay for your own place you are in the long run not going to have to pay rent . You will always have that expense of living. Would you rather pay it to someone else and have nothing to show for it ? ( It will be a expense for as long as you live because you need a house. ) or would you buy your own place ?
I love renting. I’m not tied down to a particular place should say a 🤡 like Malema move into the house next door. All my assets are liquid and I’ve no debt. I like the feeling of being light and free and mobile. Just my take.
The bank will usually sell a bond protection insurance against job loss etc, so you should not lose your house if you lose your job. There are downsides to opening a trust.
Buy a house. There is a lot of people that cant afford to buy through bank. Then rent it out. They pay it for you. Then you rent a smaller place for yourself and get approval for a another bond. Even if you sell your place. No investment or bank will give you that money in interest.
im confused, so u save on taxes because u claiming for rent due to workfromhome/business owner, but on the Trust side, don't u need to then declare the rental as an income and then that income get taxed? if so, would this not be the same tax expenses?
Yes and no, within the trust there are many deduction ou can use to reduce taxes, like maintenance, depreciation, rates and taxes, levies, insurance, management cost, accounting fees, banking fees, i terest etc. Pair this with a good accountant, and you won't have any tax issues 😀
Thanks for sharing Dylan. It's definitely the better option to have the holdings trust. Although it's a bit expensive in the beginning, it's definitely worth the money as your portfolio grows. All the best
Turn that house into an asset. reduce your lifestyle if you have to. You can even go live with your parents just for a short period of time so that allow your assets to build up. Don’t be ashamed to go live with your parents, you are still welcomed. While your friends are laughing at you , you will be there making passive income.😊
Could you please elaborate on the process of convincing the bank to transact with the trust instead of you. Do you need to sign as surety? Do you have to put down a deposit (mandatory)? Just trying to understand how banks react to this strategy 😊
Lekker boet, I like the idea - didn't ever think about renting to myself. Next video you need to make is how you set up a trust and the operating costs associated with running a trust.
Well, I purchased a property (prime residence) ... after paying it in full, saved to purchase an investment property (bought it cash). Best decision ever. If you do it RIGHT, investing in 'bricks and mortar' is still the best (and safest) way to invest your money.
Absolutely, thanks for sharing. If you follow the right steps, it's a great investment. There's no doubt that property can be a great way to build wealth.
I own property that is generating passive income for me each month. Yes there are fees involved such as maintenance, property tax and insurance. But it is a much safer investment than forex.
So what are you saying? Rent and never own a house so if you lose your job you get kicked out on the street? Usually there are insurance that you take out to help if you can't make payments. When your bond is complete there's no more worries about paying the bond whereas when renting you pay forever what you saying doesn't make sense especially when you retire where are you going to stay
No, not at all. Just remember, even if you own a house that is paid off. There is still cost involved. I simply share what to focus on if you want to buy a house to live in. Look at it as a rule of thumb. 💪🏻😁
Hi Louis, Thank you for this video. I have been asking around for someone to help me make sense of the equity a property creates when it has appreciated. But no one can really tell me about it. I want to know how can I practically access the equity in my property and what is the processes, because according to my banker it is not possible. Please explain it to me like you would to a Grade 5 learner.
Thanks for watching my friend. To make things simple you van watch these two videos. You should have a much better understanding after watching this m if noy just comment again ruclips.net/video/P64KVoWqkC4/видео.htmlsi=COkURAg6z79EAzjo ruclips.net/video/kyCRtQQaiTA/видео.htmlsi=25AJGePFRbEgBkLZ
As a professional, it would be a liability to own a house in the event of litigation. Not saying that its a bad thing, but as a young person, that is worth considering and a trust is definitely a good thing if one were in the market to obtain a bond. Yes, I said a bond, not a house. After 20 years its your house, but for now, keep paying the bills till you're 50+. I have reservations about bonds and the risks involved. Repossession is scary especially nowadays with ever increasing retrenchments etc. There are lots of people advocating for renting rather than buying and that is complicated topic on its own. But Less risk, compared to a bond. food for thought.
Definitely a asset if you do it RIGHT....In todays economic climate one is screwed either way, whether you renting , buying to live in or Buying to let ( each has it's PRO'S and CON's.....Here is some FREE ADVISE to any young individual or young couple...1stly if you just started working, DONT buy a flashy car... PUT YOUR PRIDE in your pocket and move in with your parents or inlaws if you can.. This will FREE up the funds you would have used to pay a bond or the rent you would have paid. BUY A PROPERTY. Rent it our for a year or two..... SELL THE PROPERTY, make a few rands ( hopefully a few thousand). You can either repeat the process again OR if you GATVOL with living with your parent , use the PROFIT you made as a deposit on your next purchase which should allow you pay a few bucks less on your bond than what you would have paid should you have bought a property the 1st time with living with your parents.........
Thank you for taking the time to share your insight. It's great advice, especially for young adults. I like that you mentioned that a house can be a asset when done right. Some people are juost not willing to learn or adjust there visions. When yoarere stuck in your own w, y it ends up biting you in the butt. Thanks for sharing 💪🏻
Thanks my friend appreciate it. Received a similar comment just now. Do you want to know the exact steps to set it up ( you simply use a company to do this for you) or the reasons why you have to use a trust ? If you want to know the steps, I will make it my next video 📹
One way to think of an asset is that it is something you can liquidate if necessary. You can't very well liquidate your primary residence unless you already own a second one.
Hi Louis. Is it possible to transfer ones house to a Trust if one has a bond in their name with the bank? And will there be a tax implication cost in doing so as far SARS is concerned? Thank you for the great content as always on your channel.
Yes you can. But it will have to be a actuall sale of the property. Meaning your trust will technically have to buy it. There will be transfer and registration cost again. There might be other ways, but Im not currently aware of it. Another option might be a shares swop to a company. It's best to consult with a professional when it comes to the smaller details.
Nah this isnt generic, you cant say your renting should be equal to what you will pay for your house. Renting in SA varies significantly, and ts not comparable to paying for a house in a way. Im currently paying R2000 for my rent montly, decent outside room with showe,small kitchen and built in cupboard. The house I want to by will roughly costs R7000-R8000, so see the difference. Secondly, where will you get a bonf house for R2000 montly?
18 YEAR OLD kids today have access to all human knowledge and should learn from day 1 how to survive the adult world and finance. we did not have that in 2000 at 18 so clearly wish i knew then how to set up for quicker financial success. and go for it
Very true. Thanks for sharing. I think in todays time you get analysis paralysis so easily because you have so much information available and people end up not taking action.
Awesome video. Can you do a video on trusts. What happens to the trust eventually? If the house is paid up or you borrow against the trust. Will that not count towards tax. What is the benefit then. Thx
Took some really crap advice as a young adult. Listened to an old fart on the radio. "Don't buy property, invest in well managed SA companies". Young me does exactly that.. Looked at what great companies there were to invest in. Wow Steinhoff is looks amazing. Put a big portion of my hard earned money in it instead of putting it down on a deposit for a flat I could rent out. You all know the story from there. First scandal of our "un-corrupt" private sector. Rest of my portfolio was just meh. Did I take all that money and invested it in a small property in Cape Town at the same time and rented it out, like some of my friends and my mom did, I would have been way better off. Guess what my mom sold her flat there for a R1.2 million rand more than she bought it for in a matter of 3 years. Same happened up from Cape Town to George. Prices flew up all across most of the Garden route. Yes don't go buy property on a turd farm or in some shitty neighborhood in Gauteng as an investment. But don't listen to old farts on the radio either. Do your own research, and buy smart. How did the JSE compare to the Nasdaq etc over the past 5 years? SA businesses are the shittest places you can invest your money in compared to other avenues. I'm made a killing in crypto over the years. Can't even begin to compare the returns. Obviously be careful and don't throw money at it you are not prepared to lose, and know when to get out.
Thank you for taking the time to share your story. I'm sorry to hear that you got caught up in the Steinhoff blunder, but I completely agree. Never listen to just one person and also always take any information with a grain of salt. I like to think of it spreading your risk with different asset types. A well diversified portfolio can exist of stocks, local and international, combined with Etfs, bonds, and standard savings as well as rental property investment. It's always important to do your research before jumping into something. Thanks for your comment.
Its not possible to deduct all your rent as a business expense even when working from home, but only the space that will be used to conduct business. Great info otherwise
You are 100% correct. You work out the square meters of your working environment. But it sure does help. Thanks for pointing that out and thanks for watching 💪🏻💪🏻
If you can afford to buy a house, buy a house. Unless you like moving every year, which can happen when renting since owners can decide to sell or hike rent so high you rather move. Listening to Rich/Poor Dad dude is not wise since I doubt he has South African market in mind. But, to each their own.
![I.N "HALLUCINATION" | [Stray Kids : SKZ-PLAYER]](http://i.ytimg.com/vi/n5B5q1Hwt_U/mqdefault.jpg)
What do you think? Is your house a asset or a liability?
Definitely an asset. There is a different between an asset and investment although an investment can be an asset. An asset is something that will generate future economic benefit. so when the house is sold, an economic future benefit is generated. Just because money gets out every month does dont disqualify the house from being an asset. Its narrow minded to say every month money comes out, you still have to pay rent which is money out.
Renting out is the highest risk with lowest return!
@gabriellewhalley1328 thanks for sharing. Normal buy to let property yes. It has average returns. But when you focus on the right strategies like multi lets, you can get great returns.
Thanks for sharing your thoughts. I think you might be missing the point of the video. Im sure you understand the time value of money. Also when you compare your returns from your house over a 20 year period you will realize that you paid all the interest on tbat property. If you calculate inflation with the time value of money, you might better understand that it's not an asset simply because it goes up in value( in fact, it is more like an inflation hedge) the video simply explains that if you want to buy a house and you think its a assets theres the 3 tips that you can consider first that can help improve your overall return. Hope it makes sense. Thanks for watching.
Depends if your house is bringing you money in per month or costing you money. Say, for example, you bought a house for 3 mil, but it also has three flats that can be rented out for about 7.5k p/m each. This covers your bond and lets you live "rent-free" in said house. Especially if you took a 30-year bond. On top of that, the apartments will generate an additional 5% increase year on year, where your property is linked to the 11.75% (Or whatever rate you got), the repayment should remain relatively the same. If you gotta live somewhere, might as well live for 25% of what you would have paid elsewhere and own it. Id call that an asset, yes.
I read rich dad poor dad. I resigned from a good job to start a company.
First 6 months I went from R40 000 a month to R2000.
I stuck with my decision and did not reapply for a job.
I did a presentation for a Engineer on a mine and he put my company on a trail to do the services I offered.
I worked myself for 6 months on the mine. Then hurt my back at home and could not continue working.
So after I recovered from my back injury I employeed 3 guys.
They rendered the services and I could focus more on the business side of things.
Today my company has 18 employees and growing.
Moral of the story. Invest in cash flow. Like a monthly service. And don't quit. Pray and believe. You can do it!
Thanks for sharing and supporting the channel. I agree that cash flow is very important. 💪🏻
What services does your company provide
@@7thNoteOfficial Engineering consultants. Reliability centered maintenance
I own a large 5 bedroom house with a granny flat which my wife and I bought in a very good neighbourhood. Its almost paid. Our bond payment equates to the rent of a small flat (mostly 1 bedroom). The best investment we ever made and best of all is that we will not be spending our pension on rent. Should we decide to sell, we can make a couple of times what we initially paid. If you use your house as your business address and deduct it from tax, you are liable for commercial rate on your property tax and that is far more expensive than a residential rate. It cancels out the saving on taxes. I am beyond the risk of loosing my house should I loose my job, but in the beginning we decided that should it happen, we would rent the property at 3 times the bond payment (which is market related in our area). Its a win win that took huge initial effort and is now a real asset.
Wow thanks for sharing your story. This is quite interesting. I think over the long term it can be a great way to build your net worth. Luckily you were able to afford the payments and stick to your plan. Well done for that. Thanks for your comment. All the best.
You probably bought it 30 years ago
Inspiring
If you rent a house you are paying off someone else's house for them. Rent increases by 10% a year where as buying a house, the repayment will remain more or less the same for the following 20 years..
Great way to look at it. Thanks for sharing 💪🏻
But you still pay for all costs from your pocket
And when you get extra monies, throw it into the bond repayment to reduce the term of the loan plus the monthly installment.
This is a narrow minded way of looking at it. If you have disposable income to pay the bond of a R4million rand house. you are looking at paying roughly R46k per month, R400k in transfer costs, and 1-3% per year on repair and maintenance on the house value.
In western Cape (At this stage) You can rent a R4million rand house for R22k. This leaves you with roughly R24k Extra per month which you can invest in the stock market, TFSA Or use this money to purchase investment properties. Remember that these investment properties get paid (Mostly) by people renting them. Which in a few years should produce income. This income you can then put towards renting your primary residence.
If you had decided to buy your R4million house you would have no extra money to save for rainy days, emergency funds. You might have capital growth on home but remember your house is only worth that amount when you want to sell it.
Excellent way of putting it. I completely agree. Thanks for sharing 💪🏻
A video on how to set up a trust must be on the way.
Do you want to know the exact steps to set it up ( you simply use a company to do this for you) or the reasons why you have to use a trust ? If you want to know the steps, I will make it my next video 📹
@@louisreynhardt the exact steps would be much appreciated. Thank you.
I’m also interested in that content. A video would be much appreciated. ❤
An assessment of the best company to use for this service as a comparison measure. Some offer tax and accountant services with trust management @louisreynhardt
I “trust” you will make it 😅
I bought a house for R1.8mil in 2021 on a mortgage and rented it out and now I'm selling it for R2.8mil without making any changes to it. I've also got a couple of other rental properties on mortgages that I'm very happy about. Buying properties in South Africa is definitely worth it.
Geez, well done. That's some impressive returns. I completely agree. If you stick to your plan you can make money in many different ways. Thanks for contributing to the channel 💪🏻 🙏🏻
Which area has such good returns?
"Without making any changes to it" does that mean you haven't paid any money towards the property? That's hard to believe. Transfer and registration costs alone demand almost 10% of R1.8m already before you can even get that property. Let's not mention other forgettable maintenance costs.
@@Mastah0909 There's been no maintenance costs so far. I haven't made any changes to the property. The transfer and registration costs were around R100k which I took a personal loan for and I took out a R1.8mil home loan to buy it. And then I'm renting it out for R16500 per month and the tenants are also paying for water and electricity. And now selling it for R2.8mil.
Would you get the same returns on a townhouse?
The profit on a primary house is not really the value of the house - mostly, it doesn't appreciate that much. The profit is actually when you fetch the title deed of the property and you no longer pay anything except rates and taxes to live in the house you wanted in the first place. This takes quite some time, but when it happens it justifies the whole experience.
Absolutely , great point. Thanks for sharing 👊🏻 💪🏻nothing beats a paid property
Purchasing my home three years ago has proven to be the wisest decision I've ever made. Renting from others often leads to numerous challenges and uncertainties. Dealing with landlords who exploit tenants and restrict any personalization of the living space can be frustrating and costly. Having rented for most of my life, I understand the constant feeling of transience and instability that comes with it. However, since investing in my own property, I've experienced a newfound sense of security and pride of ownership. Not only have I enjoyed the stability of staying in one place, but I've also seen a substantial increase in the value of my property. In just three years, I've witnessed a significant appreciation, with the potential to walk away with a substantial profit should I choose to sell.
Well done for taking the steps and pulling the trigger. There is no doubt that theres many ways yo make money with property. Thanks so much for adding value in the comments, and I hope that your comment gets a lot of reach. All the best 🏆 👍
Does this same appreciation growth occur with townhouses?
I have been in property investment for 25 years, today i have all my property in the market due to high costs and the way tendants are protected by our laws...
At this moment in SA i would not invest in any property , i will rather rent a house and use my cash to fund my bussiness and get more return than leasing property.
Thanks for sharing Jacques, investing in your bussiness is a lucrative way to build your net worth. Houses overall dont perform to great but people have different opinions. I would say specific and strategic property investments can and will do well, but it's definitely not easy. Thanks for supporting the channel and sharing your insights
Do not over capitalise.
Do not speculate on property municipal property valuations. Remember, the property valuation depends largely on the municipal services to that property. Availability, means services not utilised but have been brought to the property by the Municipality. The next component would be the subjective location of the property. A 12ha property, unserviced, undeveloped (vacant) property,15 minutes from town has a R0 valuation. The market value of the property is what the buyer was prepared to pay for the land. So, for 5 years the rates must be calculated on R0, at the next valuation if there have been no change, the valuation should reflect the market value.
Speculating on property valuations means that your appetite to make a quick buck by tacitly or proactively accepting a much higher property valuation regardless of how the Municipality (not the valuer) arrived at the figure, impacts on the affordability of neighbouring properties. Peoples are either compelled to sell or they no longer invest in their properties. Ultimately, it means that Municipalities (and agents) can manipulate the demographics of an area.
Don't pander to the system. Gentrification is not a good thing. Imho, property should not be an investment class, as controvercial as that might sound.
Thanks for adding this and sharing your insight. You make some valuable points. 💪🏻💪🏻
A house is still an asset even in current SA. Buy a house in a decent area and it should still hold or increase it's value after 15-20 years. Don't buy on credit!!!
Thanks for watching and sharing your thoughts 💪🏻💪🏻
What do you mean don’t buy on credit? You saying people should buy their house cash?
Buying on credit is fine. If the interest repayment is less than the cost of your rent, it's worth it. In 10 years time the payment will be much more affordable than the rent at that time.
@@ThisRandomUsername partly true, most banks only offer a guaranteed interest rate for around 5 years. Bonds are much longer than that.
But yes, renting in general is never a good thing.
@@memeguyTM That's true. I bought my house in 2022 and they would only offer me a flat interest rate for 2 years, so I didn't bother. That did really bite me now that the interest rate has almost doubled. The thing is, on average it makes no difference unless you buy in the dip like I did.
Its not always an either/or situation when buying a house (either an asset or a liability), even if bought in your own name. If you for instance have a granny flat that can be rented out to two students/working persons, that income can be paid directly into the bond. In the latter case the biggest challenge in my view is to minimize the long term losses suffered via the system of compound interest calculations. In simple terms: instead of paying the minimum of R10 000 pm towards the bond, the additional R5000 money from rent being paid towards the bond, will over 20 years save you hundreds of thousands of rands. Most people have no idea how this works.
Thanks for sharing. You make some good points. Using your house as a multi let can be a great way to reduce your risk or create extra income. Thanks for sharing 💪🏻 all the best
"I beg to differ. Buying a house is an investment. If you don't buy a house, it means you have to rent, i.e., paying another person's bond. What is important is to buy a property that you can afford."
Great input. It's very important to make sure you dont make your house a financial burden and make sure you can ctually afford it.
I agree. The thing is what's more interesting to me is. The book The millionaire Fastlane by MJ de Marco talks about Robert, questioning his true business model, did he really made money from following the rich dad poor dad book principles? or did he make money of selling the book, then only practiced what he preached? But you are spot on in this video. Unfortunately the only way to become wealthy is self employment, where you have the scale of income on your side, making millions by selling to millions, then u save up, buy house cash. Compound interest don't work.. u want to live when u 30 not when u in a wheelchair 60. so only way is, impact millions and buy house cash.
Thanks for sharing. I agree with you. I think Robert speaks about how writing a book is also an asset. Generating passive cash flow without having to work for it. So, in a sense, he does practice what he preaches. Do yourself a favor if you ever have time. Read his book cash flow quadrant. Really good book.
Also, self-employment or bussiness owners have many challenges that 9 to 5 workers dont have, but they also have many more advantages and so much more opportunities and time on their hands. Thanks for your comment 😁👏🏻
@@louisreynhardt thank you so much for the book recommendation ill defs go search the book🙏
Build a seof sustaining house that's what i plan to do in Kenya,n coz I've always worked from home n my land feeds me my land n house are an asset,investing in solar or micro hydro or wind power is no longer an option but a necessity,alongside methane micro plant,together with fruit trees n a garden,SELF SUSTAINABILITY is more than essential expecially with these inflation rates among other things
Great tips. Thanks for adding your thoughts. You make some interesting points. All the best 🏆
Didn't do the trust thing but in my late 20's I bought a cheap flat in a crappy area with a flexi bond. I paid any extra money I had into the bond. Which is now mostly paid off but I keep it open to use later. I now have enough to buy a house cash if I sell. But will be digging into my flexi bond and buying a decent house and renting out the flat till interest rates start coming down and house prices increase at which stage I will sell the flat and pay off the balance of the flexi bond. It's been hard not to spend money on silly things but I've been disciplined. And now at 41 will soon have my own property and stop making the banks profits. Giving me more money to spend on my family.
Can you please tell me more about this flexi bond?
Thanks for taking the time to share. You make some really good points. Using your access bond is a great tool. All the best 💪🏻
Louis but I want a house in town because of the peace of mind. Rural life is awful. I need peace 😊. I'm in the process of leaving rural/township living for a quiet suburb in town.
That makes sense. Just stick to the tips I mentioned and dont over extend yourself financially. All the best
I love this advice, as a landlord, i encourage you all to rent, my house and 4 rental properties are paid for bringing about 60k per month. Ive minimised my personal rental expenses and maximizing the money you give me which i really appreciate 😂
🤣🤣🤣
Agreed.
@yellowdayz1800 thanks for your comment 👍 🙏🏻
How much do you pay on home owner insurance?
Any land,building/ property is an Asset on the balance sheet. Thats where you log it. If you took out a loan to repay the asset then that is the liability. Your primary residence isn't a productive Asset to return dividends. If interest rates are low and cash is dirt cheap ,then its not a bad idea to buy a house as an asset because its kinda inflation proof. Not everyone has the capacity and the stress levels to open a business. Some people just want to live a normal standard life. Why pay someone else's bond when you can just live in the comfort of your own home and be stable.
Thanks for sharing, its a great way to put it 💪🏻💪🏻
It's not only the financial side if things.i work from my house which I could never do from a rented house, flat or town house. The type of work I do requires me owning the house. You can't only look at it purely from a financial point of view.
Absolutely, but from a financial and investment/ numbers perspective, it's a different story. Thanks for sharing.
We reside in Cape Town and I agree with everything you say, we own our primary house and have rental properties too, cash flow not best in CT but capital growth is best in Africa !!!
Thanks for Sharing Jason. Appreciate your input. You are 100% right. CT has the best performance based on appreciation. Cash flow on the other hand, is quite difficult to find.
Been trying to explain this to my 65 year old mother who keeps imagining I am planning on buying a house soon.
Unfortunately not everyone understands it. Well done for learning this early on.
Also…kind of lose the primary residence CGT benefit when you go through a trust for primary residence.
it would depend on whether you live in that house long term or not / a forever home
I have never regretted buying. I have paid my bond finished. It its now worth soooooo much more than ever before. If I was renting I would still pay out the same kind of money. Yet now I have this asset which I am planning on selling and upgrading to a nicer house. My daughter has been renting for 10 years, moving every two years or so. It is terrible. Because rent keeps going up. She is buying this year. 🎉
Short term rent makes sense, but if you know where you want to live, owning long term is a no-brainer. Thanks for commenting and sharing your perspective. All the best.
The way I see it is that rent is a fixed expense every month and is the max you'll pay - making it easy to budget and prioritize putting money into savings. With a bond it is the minimum you'll pay and becomes a variable expense each month making cashflow and budgeting difficult. I rent now (cheap rent) after owning a flat and a house. My living cost halved and I am able to follow a budget much better. Once I am happy with where my investment and retirement balances are, then I will look into buying a property again. There are many perks to owning, I just think majority of folks don't end up living in a purchased property long enough to gain from it financially.
Purchasing property should be a 5+ year commitment to balance out the interest, lawyers and realtor fees...
What an absolutely great way to put it.
I agree with you 100%. Thanks for taking the time to share your thoughts and adding value in the comment section💪🏻💪🏻
Being 34, and top 1% earners based on stats. I can in all honesty say buying a house ONLY makes sense if you plan to stay there for 5+ years. Selling earlier knocks you on fees (Transfers costs, vat, Lawyers etc).
Secondly, owning a property has no tax deductions, where renting has. This is only applicable if you have an office at home.
Last, overhead of maintenance is a major expense owning, as well as additional insurances.
Owning, should be seen as a convenience to do what you want (if free standing).
You own nothing untill 100% is paid.
If you want to own, buy cheaper apartments, and rent them out.
Thanks for sharing. I like the idea of ; the best property id a paid of property. It also depends on a couple of factors but generally, Most people tend to buy their house and struggle to make payments, making it a huge financial burden. Thanks for supporting the channel and adding value in the comments. All the best.
The rental income is taxed in the hands of the Trust though. So, buying a rental property under a Trust does not entirely avoid paying taxed.
Absolutely, but there are many smart ways to reduce these taxes within these entities. Thanks for sharing 💪🏻
Plus the tax man is looking at further measures to reduce the ability to deduct expenses when it comes to trusts ….
What gets me here its a bit of a clickbait! It would have been better to say something like ‘be educated before buying a house’ or ‘want to buy a house? Hear tihis first’ but no you want to entice viewers contemplating purchasing a home to the negative first.
Other than that, nice synopsis of ‘rich dad poor dad’. Its a great book. I would advise all South Africans to read it. I think its a great enabler for upcoming Entrepreneurs…something we need of more here. God bless.
I'm sorry to hear that the title bothers you, but remember, it's just a marketing strategy to increase views and to get a wider reach. Which is very important to me. I always say that as long as the content is more valuable, you shouldn't care about the other mistakes. Because theres alot of them. As long as I can help or motivate, im happy.
NB a retired person cannot afford to pay own trust a rental. This scenario can only benefit those people who earn good monthly salaries
Thanks for adding and sharing in the comments 💪🏻💪🏻
Yes, However, if you keep in renting and paying someone else for the roof over your head, expensively, you lose that money. You will never have a house if your own. Houses can be rented out later on...
Absolutely, thanks for sharing. If you stick to your renting budget and dont overextend yourself, it can help you in the long run. Thanks for your comment.
Hi Louis, do you mind commenting on this please? Trust is taxed at 43% flat rate and CGT is 80% of the gain is taxed at same rate . You totally lose out on the R2mil exemption of primary residence.
Thanks for your comment. So just to simplify things. Tax is a very complicated topic. Most of the time in a trust, you won't get taxed at those rstes because there is smart ways to reduce taxes. Unfortunately yes you lose your primary residence exemption but thats also just one time in your personal name. I also think of never selling property. Why would you kill the goose that lays the golden eggs. Hope that helps. All the best
@@louisreynhardt okay fair point, thanks so much for commenting. I appreciate the content you’re putting out. Keep it up 😊
Love your work Louis. I'm here to learn. So, keep them rolling.
Appreciate it my friend. All the best 🥇🏆
The best thing is to buy at a good surbub but don't live there, rent it out, then build in a rural area, then the house at a surbub generates income especially when it is paid up
Thanks for sharing. I like the way you think. 💪🏻💪🏻
Nice video. Please consider doing a video comparing rent vs bond, apples with apples, same standard of living (bond option will cost more). I believe that renting and investing the savings allows you to build equity faster than someone paying a bond. With amortization, you pay mostly interest for the first half of the bond term, whereas the renter has earned a lot of interest on the money hes been investing in the same period.
Thank you for watching. It almost seems like you answered your own question. You definitely have a good understanding of it already. I have made two simmiiliar videos in the past. You can have a look at them if you want to. Otherwise, let me know, and I'll look into making an updated version
ruclips.net/video/Bhafyf49qoE/видео.htmlsi=GOkKKLSr0ZSceOgB
Let’s talk about trust. I have a property in mind to buy cash and am conflicted on buying it in my name, setting up a business and buy it under the business or start up a trust. I’m going to transition to working from home and what you just mentioned is a bit short of details. Please share tax implications and all.
Thanks for watching and for commenting.
You can start with this video
Like you might know , its difficult to share all the details in short videos but check this one out ; ruclips.net/video/zBnt5J-DJEY/видео.html
I see my house as an asset because, to have a roof over my head, I have to pay (Rental or Bond). So Id rather pay my accommodation costs towards owning my own house than paying off a landlord's property. So, if you see a house you live in as a liability, where do you stay? If you rent, you are throwing money in the water and get no future benefit from the money you spend each month.
Thanks for sharing. You are 100% right. You need to live somewhere. I hope that the 3 tips I shared are something of value to you. Although I dont see my house as an asset, I still own it. Because like you mentiomed, you need to live somewhere. When done correctly and with discipline, your house can create wealth over the long term. Thanks for watching. All th best
This is exactly what I did. I have two properties under my name. I don’t live in them plus they are self paid. I live abroad so this works out perfectly for me.
Thanks for sharing your insight. As long as it works for you its great. Eveyrone has their own journey, and you need to figure out what works best for you. Thanks again.
How is this going for you.
I needed this video.. because we actually planning on purchasing
Glad it could help my friend 🏆🙏🏻
Well you can also be smarter and buy vacant land and build your own house for way much cheaper, at the end of the day you do not want to live in someone else's house. But I agree with you, you buy/build your own house with the income you generate with your assets (cash flow). Safe haven comes first, doesn't have to be fancy, just has to be a place where no one can kick you out.
Absolutely, you make some great points. I think you will enjoy this video : ruclips.net/video/GjnojnFoHR8/видео.htmlsi=SSoU_ExyCcsfOpfV
Hi louis, something that i am struggling to understand. I recently bought my first property, i am looking to rent it out but the average rent in the area is lower than the mortgage loan payments, how do i go about making a profit or atleast be able to make minimum payments on the mortgage loan through the renter without digging into my salary to pay levies, W&E and the mortgage?
Dankie vir jou comment. Ek dink die maklikste sal wees as jy hierdie video kyk. ruclips.net/video/54A6Ii_Xf94/видео.htmlsi=B-rdiUj5s37YdsvA
Kyk ook na die ander videos waar ek deals analyse dan sal jy ook beter verstaan dat nie alle eiendom goeie investment is of great werk vir rentals nie. Mens kan of die huur probeer vermeerder deur renovations of om jou uitgawes te verminder
First things first. Location, location, location. I built 6 years ago, so no transfer fees. Since then the value has increased annually 4.5% on average. Not a lot in terms of investments (never mind inflation), but okay versus most of South Africa's property values. However, a neighbour who rents would have paid R1.8m during the same 6 years in rent. Simple maths, I would rather be in my position.
Thanks for sharing. That makes a lot of sense. I agree that a great location will go a long way. Thanks for commenting 👊🏻
I do not agree with the trust strategy. With the new beneficial owner compliance in place its very easy for SARS to see when you are deducting expenses from the property in you own name. Meaning if the Trust is the lessor and you the beneficiary/trustee act as the leesee SARS is able to reverse all the deductions claimed and penalise you for claiming them. It is usually seen as evasion rather than tax avoidance. That's if I understood the strategy in this way.
Thanks for your comment. . It won't be seen as evasion if you actually use the space for work in this example. SARS will penalise you if you deduct expenses unlawfully. SARS’ aim is to record all beneficial owners of registered Trusts in order to comply. But I dont see anything illegal in this matter. You are able to rent back a property from a trust that you are a beneficary to. However, the rent must be market rent (not a discounted rent) as you must show that it is a legitimate lease and not just a tax evasion scheme.
@@louisreynhardt then I apologise for understanding the use of the property incorrectly. I was just worried that someone might think the example used is understood the same way I interpreted it. As it could cause a lot of hardship. We have received clients that have already fallen for this and entrapped themselves unknowingly. Thank you for clarifying
@@louisreynhardt still love the content thank you
@cyclingbarista8842 No need to apologize. I appreciate you taking the time to ask questions and to confirm certain things. We should never stop learning. Thanks for watching. All the best
Really enjoy these videos! There is so many people with so many openions, but I enjoy the SA take on things.
I’m in the financial industry and also have a property porfolio and sometimes its also nice to hear of things I have not thought of or went through. Keep it up💪
Thanks for watching. Im glad that it can give you some perspective. Also, thank you for being open to learning. All the best 🏆
Thank you for the video. Could you please explain renting from the trust? What is this process?
Pleasure my friend
You simply own the property in the trust and set up a rental agreement as the landlord and you as the individual rents the property from the trust.
Offloaded my house 3 years ago, best thing ever. They can't take what you don't have
Thanks for Sharing Andre . Quite a interesting way to put it.
@louis would be good to build units/flatlets in one's backyard and rent it out
It can work, your calculations will have to be more detailed and your upfront cost will be more. So your invested capital is more. Make sure your return will be worth the effort and the money.
There are many regulations around permission to erect a secondary structure and the maximum floor space permitted for the property. Also, consider restrictions on the amount of people that may occupy the property, depending on your zoning, you might not be allowed to house your family and the addition rental occupants.
What about taxes on the trust's income? What sort of trust is it and are the beneficiaries? Also, how material is the tax deduction from what you pay to the trust given that rent paid for a home office is tax-deductible only in proportion to the floor area?
Theres many ways to reeuce your taxes. The home office exoense is just one way your can reduce taxes with the floor space used. You can check out my latest video about the trust. That should answer most of your questions 💪🏻🏆
Is a trust the only way to go about it or does a pty ltd has the same property as a trust?
No you can also use a company but it has different advantages and disadvantages 💪🏻
Good system! You will miss out on the primary residence capital gains exclusion when you sell however. That’s the drawback of owing in a trust and claiming home office expenses.
Unfortunately, yes, but it's also just with your first property. That's probably the only benefit combined with easy-to-use that buying in your name has. Thanks for sharing.
Where would you live ?
Would you rather live in a place that you are paying for or would you pay rent to someone else who owns the property ?
If you pay for your own place you are in the long run not going to have to pay rent .
You will always have that expense of living.
Would you rather pay it to someone else and have nothing to show for it ? ( It will be a expense for as long as you live because you need a house. )
or would you buy your own place ?
Renting can make a lot of sens in the short term. Long term is a different story. Thanks for watching 💪🏻
Awesome channel , thanks for your good content!
@guyems4490 Thanks for the support my friend 💪🏻
Hi Louis, any pointers to where I can get some guidelines on setting up a trust and buying property in South Africa with foreign income? TIA
You can pop me an email and ill share some recommendations of people that might be able to help
Louisreynhardt@gmail.com
I love renting. I’m not tied down to a particular place should say a 🤡 like Malema move into the house next door. All my assets are liquid and I’ve no debt. I like the feeling of being light and free and mobile.
Just my take.
Absolutely, you make a great point. That's one of the huge advantages of renting. Thanks for adding value to the comments 🙏🏻🙏🏻
The bank will usually sell a bond protection insurance against job loss etc, so you should not lose your house if you lose your job. There are downsides to opening a trust.
You dont have to buy in a trust. If you want to own multiple properties in your own name, Goodluck you will probably get stuck at 4
@@louisreynhardt ha ha. I'm a retired financial professional (widow) and can hardly afford to keep my paid-for primary residence going, let alone 4!
Buy a house. There is a lot of people that cant afford to buy through bank. Then rent it out. They pay it for you. Then you rent a smaller place for yourself and get approval for a another bond. Even if you sell your place. No investment or bank will give you that money in interest.
Thanks for sharing your thoughts. Appreciate your comment. All the best 🏆 👍
And then you also might have issues where the tenants stop paying rent and mess up the property, you might wait 6 months to evict them
im confused, so u save on taxes because u claiming for rent due to workfromhome/business owner, but on the Trust side, don't u need to then declare the rental as an income and then that income get taxed? if so, would this not be the same tax expenses?
Yes and no, within the trust there are many deduction ou can use to reduce taxes, like maintenance, depreciation, rates and taxes, levies, insurance, management cost, accounting fees, banking fees, i terest etc. Pair this with a good accountant, and you won't have any tax issues 😀
I do enjoy the experience you give us,thank you
Thanks my friend. Really appreciate the support 🙏🏻
I did the same, but in my business. Trust owns my business though
Thanks for sharing Dylan. It's definitely the better option to have the holdings trust. Although it's a bit expensive in the beginning, it's definitely worth the money as your portfolio grows. All the best
Please make me understand this so what if I buy the house cash with money I saved?
Theres nothing wrong with buying cash. It all depends on your situation and goals at the end of the day.
I just bought a house and I fall on the middle class.... I do not have any asset
Thanks for sharing. Theres still ways you can make smart moves with your properry. Just don't overextend yourself.
Turn that house into an asset. reduce your lifestyle if you have to. You can even go live with your parents just for a short period of time so that allow your assets to build up. Don’t be ashamed to go live with your parents, you are still welcomed. While your friends are laughing at you , you will be there making passive income.😊
Could you please elaborate on the process of convincing the bank to transact with the trust instead of you. Do you need to sign as surety? Do you have to put down a deposit (mandatory)? Just trying to understand how banks react to this strategy 😊
A Deposit is not mandatory but you will have to sign surety in your own name to prove that the new trust or CC Can afford the loan.
Lekker boet, I like the idea - didn't ever think about renting to myself. Next video you need to make is how you set up a trust and the operating costs associated with running a trust.
Will be making it the next video 💪🏻💪🏻
Well, I purchased a property (prime residence) ... after paying it in full, saved to purchase an investment property (bought it cash). Best decision ever. If you do it RIGHT, investing in 'bricks and mortar' is still the best (and safest) way to invest your money.
Absolutely, thanks for sharing. If you follow the right steps, it's a great investment. There's no doubt that property can be a great way to build wealth.
Especially in this country
I own property that is generating passive income for me each month. Yes there are fees involved such as maintenance, property tax and insurance. But it is a much safer investment than forex.
Thanks for sharing. I agree, especially in the longer term. Once your properties are running on their own its a great way to make money.
So what are you saying? Rent and never own a house so if you lose your job you get kicked out on the street? Usually there are insurance that you take out to help if you can't make payments. When your bond is complete there's no more worries about paying the bond whereas when renting you pay forever what you saying doesn't make sense especially when you retire where are you going to stay
No, not at all. Just remember, even if you own a house that is paid off. There is still cost involved. I simply share what to focus on if you want to buy a house to live in. Look at it as a rule of thumb. 💪🏻😁
Can one move their property into a trust after purchasing the house?
Yes you can, but it will be an actual sale process with transfer and registration cost.
Hi Louis,
Thank you for this video.
I have been asking around for someone to help me make sense of the equity a property creates when it has appreciated. But no one can really tell me about it.
I want to know how can I practically access the equity in my property and what is the processes, because according to my banker it is not possible.
Please explain it to me like you would to a Grade 5 learner.
Thanks for watching my friend.
To make things simple you van watch these two videos. You should have a much better understanding after watching this m if noy just comment again
ruclips.net/video/P64KVoWqkC4/видео.htmlsi=COkURAg6z79EAzjo
ruclips.net/video/kyCRtQQaiTA/видео.htmlsi=25AJGePFRbEgBkLZ
As a professional, it would be a liability to own a house in the event of litigation. Not saying that its a bad thing, but as a young person, that is worth considering and a trust is definitely a good thing if one were in the market to obtain a bond. Yes, I said a bond, not a house. After 20 years its your house, but for now, keep paying the bills till you're 50+. I have reservations about bonds and the risks involved. Repossession is scary especially nowadays with ever increasing retrenchments etc. There are lots of people advocating for renting rather than buying and that is complicated topic on its own. But Less risk, compared to a bond. food for thought.
Thank you so much for adding value in the comments. I hope that many people can read your response and learn together. Appreciate your input
Why rent and pay someone’s else’s bond?
Exactly 💯
Can I set up a Trust and apply/qualify for a mortgage bond?
Yes, but you will have to sign surety in your own name.
Thanks for the information
Thanks for watching💪🏻💪🏻
What are the costs involved in setting up a trust like this?
Depends, usually around R4500 per trust and around R450 monthly fees.
Definitely a asset if you do it RIGHT....In todays economic climate one is screwed either way, whether you renting , buying to live in or Buying to let ( each has it's PRO'S and CON's.....Here is some FREE ADVISE to any young individual or young couple...1stly if you just started working, DONT buy a flashy car... PUT YOUR PRIDE in your pocket and move in with your parents or inlaws if you can.. This will FREE up the funds you would have used to pay a bond or the rent you would have paid. BUY A PROPERTY. Rent it our for a year or two..... SELL THE PROPERTY, make a few rands ( hopefully a few thousand). You can either repeat the process again OR if you GATVOL with living with your parent , use the PROFIT you made as a deposit on your next purchase which should allow you pay a few bucks less on your bond than what you would have paid should you have bought a property the 1st time with living with your parents.........
Thank you for taking the time to share your insight. It's great advice, especially for young adults. I like that you mentioned that a house can be a asset when done right. Some people are juost not willing to learn or adjust there visions. When yoarere stuck in your own w, y it ends up biting you in the butt. Thanks for sharing 💪🏻
Thank u eye opening content can u plz show us how to set up a trust
Thanks my friend appreciate it. Received a similar comment just now. Do you want to know the exact steps to set it up ( you simply use a company to do this for you) or the reasons why you have to use a trust ? If you want to know the steps, I will make it my next video 📹
@louisreynhardt yes please
@@landofthesheep im interested in the steps to set it up and costs associated with it
@@louisreynhardtplease make a video on both: trust for yourself and company
Never heard anyone say one's primary residence is an asset. 🤔
Interesting, many people believe it is
One way to think of an asset is that it is something you can liquidate if necessary. You can't very well liquidate your primary residence unless you already own a second one.
@Stadsjaap absolutely great way to put it. 💪🏻
I believe you speak with facts brother, this is based on a true story
Thanks my friend 👊🏻 💪🏻
What a great channel
Thanks a lot my friend 💪🏻💪🏻👊🏻👊🏻
Where can one go to do a credit check?
You can use transuniom or clear score or TpN. Some banks even have a free credit check like Standard Bank
Thanks for the video,could you please break-down the numbers too in owning a residential home in a trust.
Thanks for watching. Sure, I'll look into it. Feel free to have a look at some of the other videos in my real estate playlist 💪🏻
@louisreynhardt I've watched all of your videos I'm always on the lookout for a new one
Thanks my friend. Appreciate the support. 💪🏻
Great content as usual.
Do you provide any sort of mentorship or consultancy services?
Thanks my friend. Yes I do. You can pop me an email at louisreynhardt@gmail.com 👊🏻
Hi Louis. Is it possible to transfer ones house to a Trust if one has a bond in their name with the bank? And will there be a tax implication cost in doing so as far SARS is concerned? Thank you for the great content as always on your channel.
Yes you can. But it will have to be a actuall sale of the property. Meaning your trust will technically have to buy it. There will be transfer and registration cost again. There might be other ways, but Im not currently aware of it. Another option might be a shares swop to a company. It's best to consult with a professional when it comes to the smaller details.
My (old) house is costing me on maintenance.
I can just imagine, generally freehold properties has long-term maintenance issues. But the upkeep is very important .
Nah this isnt generic, you cant say your renting should be equal to what you will pay for your house. Renting in SA varies significantly, and ts not comparable to paying for a house in a way. Im currently paying R2000 for my rent montly, decent outside room with showe,small kitchen and built in cupboard. The house I want to by will roughly costs R7000-R8000, so see the difference. Secondly, where will you get a bonf house for R2000 montly?
My bra, this is why buying that house does not make financial sense. You will 4X your cost of living. You missed the point of the video.
How much does it cost to manage a trust per year?
It really depends on the complexity of the trust but usually around R350-R550 per month. It can vary from company to company
Hi louise, thank you for your videos, very educational. how do I contact you?
Huge pleasure 🙏🏻 you can pop me an email at louisreynhardt@gmail.com 👊🏻 💪🏻
18 YEAR OLD kids today have access to all human knowledge and should learn from day 1 how to survive the adult world and finance. we did not have that in 2000 at 18 so clearly
wish i knew then how to set up for quicker financial success. and go for it
Very true. Thanks for sharing. I think in todays time you get analysis paralysis so easily because you have so much information available and people end up not taking action.
Practical steps on how to set up that trust please!
Thanks, will be making it soon
Great insight ... can you take us through the process of starting up trust in South Africa??
This will absolutely be my next video 📹 💪🏻
Awesome video. Can you do a video on trusts. What happens to the trust eventually? If the house is paid up or you borrow against the trust. Will that not count towards tax. What is the benefit then.
Thx
Thanks for watching. This will be my next video after I've received many similar requests 💪🏻
Agree with you 100%
😁💪🏻💪🏻
Subbed, instant one
Welcome my friend 🙏🏻
Took some really crap advice as a young adult. Listened to an old fart on the radio. "Don't buy property, invest in well managed SA companies". Young me does exactly that.. Looked at what great companies there were to invest in.
Wow Steinhoff is looks amazing. Put a big portion of my hard earned money in it instead of putting it down on a deposit for a flat I could rent out. You all know the story from there. First scandal of our "un-corrupt" private sector. Rest of my portfolio was just meh.
Did I take all that money and invested it in a small property in Cape Town at the same time and rented it out, like some of my friends and my mom did, I would have been way better off. Guess what my mom sold her flat there for a R1.2 million rand more than she bought it for in a matter of 3 years.
Same happened up from Cape Town to George. Prices flew up all across most of the Garden route.
Yes don't go buy property on a turd farm or in some shitty neighborhood in Gauteng as an investment.
But don't listen to old farts on the radio either. Do your own research, and buy smart. How did the JSE compare to the Nasdaq etc over the past 5 years? SA businesses are the shittest places you can invest your money in compared to other avenues. I'm made a killing in crypto over the years. Can't even begin to compare the returns. Obviously be careful and don't throw money at it you are not prepared to lose, and know when to get out.
Thank you for taking the time to share your story. I'm sorry to hear that you got caught up in the Steinhoff blunder, but I completely agree. Never listen to just one person and also always take any information with a grain of salt. I like to think of it spreading your risk with different asset types. A well diversified portfolio can exist of stocks, local and international, combined with Etfs, bonds, and standard savings as well as rental property investment. It's always important to do your research before jumping into something. Thanks for your comment.
Can a PTY ltd buy a property?
Absolutely 💪🏻
Im about to register a PTY ltd. And i need more info on how to run my business correctly. You possibly cannot point me in the right direction.
Its not possible to deduct all your rent as a business expense even when working from home, but only the space that will be used to conduct business. Great info otherwise
You are 100% correct. You work out the square meters of your working environment. But it sure does help.
Thanks for pointing that out and thanks for watching 💪🏻💪🏻
If you can afford to buy a house, buy a house. Unless you like moving every year, which can happen when renting since owners can decide to sell or hike rent so high you rather move. Listening to Rich/Poor Dad dude is not wise since I doubt he has South African market in mind. But, to each their own.
Thanks for sharing and your input 💪🏻💪🏻
Great content, keep it up
Thanks my friend, appreciate it 🙌🏻💪🏻
Being in South Africa is a liability, for all your assets, life and health included.
And that is why you use debt and the correct structures to protect yourself
Do you know how expensive is a trust?😭 but yet again this is just content
Its quite expensive but its absolutely worth the money considering all the benefits 💪🏻💪🏻
get a house if u can. guess what if you retire and your money dries out you always will have the house to fall on.
Thanks for sharing your thoughts 💪🏻💪🏻
Why rent if you can own your own property why pay someone's bond it make no sence
Absolutely, rent only makes sense in the short term 💪🏻