What about the new "National Credit Act" and its effect on banks - it looks to me that the banks are going to be much more strict in supplying bonds to people like us (you and your students) who want to buy more than just the property that they're living in?
What about their rule about not spending more than 30% (I think that's their figure) of household income on bond repayment?
In the past this wasn't strictly applied, but this new act forces the banks to be more strict and rigid!
Jacques Fourie
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2 comments:
Investing in property has nothing to do with the NCA or the 30% maximum on bond repayments. All you need to do is to evaluate a property (that includes your residence) to see if it is an investment or not.
The ONLY way to evaluate the risk and growth (especially on your primary residence) is to use the Property Pro Program.
Build into the Property Pro Program is the Formula For Riches™ By applying the Formula For Riches you can become extremely rich without breaking any “rules” or NCA or any investment principles.
The trick is to lower the risk and increase the growth.
Let me demonstrate something.
Lets say A has bought a property (any kind of property) as an investment His income is R30 000.00 per month. He buys a property with a bond of R 711 775. His monthly repayments are R9000 (= 30% of income).
Lets assume you do the calculations and find the IRR on this R9000 investment to be 21% (Growth on his investment and not on the property - I am not looking at the risk)
Now if A continues to invest R9000 over 20 years at a IRR (Growth) of 21% he will have an equity of R32 558 041 in 20 years.
B invests only R3000 per month.
The IRR on his investment is 40% over the 20 years. His equity will be more than R235 000 000.00
BIG DIFFERENCE.
Jacques you know that my students are getting a lot more than 40% IRR on their investment properties.
So what is the problem?.
It has nothing to do with the NCA.
It simply comes down to plain ignorance. People do not know how to calculate the growth on their investments and therefore do not know if a specific property is a good or bad investment.
I have built a substantial property portfolio and have NEVER EVER exceed more than 25% of my income on my property repayments.
To Summarize:
Stop reading the newspapers.
Do not listen to others (especially the experts – you know at least 95% more than what they do if you apply the Property Pro Principles and I bet you – you are getting a far superior growth (IRR) on your investments than what they do – at least you know what and how to do it)
Do the calculations.
Stay within your risk limits.
Use the Roll In and Mercedes Principle and
Apply the Formula For Riches™
hannes
i do not understand what you mean by the following
"I have built a substantial property portfolio and have NEVER EVER exceed more than 25% of my income on my property repayments."
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