IF you are a young professional who has been employed for a few years what should your strategy be to attain property? Do you rent while at the same time saving the change to eventually afford a descent flat or do you just buy immediately and “bite the bond bullet” as early as possible?
No single answer for most young professionals who are most likely to be earning under R15000. The bottom line is this: Property is expensive either way, rental or even trying to buy. The young professional in question is assumed to be living in the city not that far away from work and a descent flat or house 2 bedroom, living room, kitchen and parking.
Now the dilemma begins, price. Usually these very nice apartments in town are no less than R5000 excluding furniture and electricity. With furniture the amount goes up to about R6000. Usually this amount is shared between two flat mates and the net payment by one tenant is half which is about R3000 per month.
This amount of money is only the blunt side of a double edged sword the other being trying to buy. Once property is similar to that being rented is purchased monthly bond repayments will be about R11 000. This seems like the sharper side of the sword bound to pierce right though the poor professional’s budget. There would off course have been convenience fees in the process of acquiring full ownership which would be another R50 000 upfront.
Nearly impossible but a second look at the “lesser of the two evils” which is rental means that the young bloke is just in another cycle which will be difficult to break. The three thousand as half of rent is money that will not be recovered and is almost money down the drain.
To be in a position to purchase within 12moths the tenant would have to save just over R4000 a month for the lawyer’s fees. In total he/she is then spending R7000 (3000+4000) every month on property,3000 of which is just rental.
All of this shows that there really is no solution to the property prices problem and sadly most young professionals are stuck renting out for the rest of their lives.
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