Buying my first home was one of the proudest moments of my life. I was 27 years old and my-then flatmate needed to move out, leaving me with two options: I could place an ad on Gumtree saying I was looking for a new flatmate, or I could try to find someone else who needed help paying their bond or rental payments; I could also venture out and buy my own home.
The first option was the easier route, but didn’t appeal to me as I had had enough of sharing my space with anyone – let alone a stranger. The second option involved more than that desire to own something and to “not pay off someone else’s bond”: It required an active search across many Johannesburg suburbs in which I had no idea what it was like to live, being mindful of what I was about to get myself into with registration fees, bond costs and coming up with deposits, to complying with the rigorous Fica process and constant questions of affordability. Looking back now, I had no idea what I was doing.
But I made it happen: On a rainy Tuesday in February 2011 a small-time mover with a Hyundai truck and trailer moved my life’s possessions from Northriding to Honeydew Manor, and into my 60-odd square metre one-bedroom sectional title apartment.
After the mover had left I remember looking around my apartment and feeling a great sense of pride and achievement – I was one of the first of my peers to buy my own home.
The truth is I actually now wish I had never bought the apartment I did. Don’t get me wrong, homeownership is greatly positive for many and is a wise financial decision. What I mean is that I was, firstly, too young to buy a property, did not do enough research into the market prior to signing the offer to purchase, was not thinking about the fact that I was going to marry my girlfriend at the time and have a child within three years of buying. I rushed into it before considering all my then-current and future options: I could have asked a number of estate agents in suburbs I liked how those markets were performing, or considered the possibility of renting for longer and having my girlfriend contribute to the rental. Home buying is an exciting journey and can carry you beyond rationality.
After having lived in the apartment for three years, my girlfriend-turned-wife and I were forced to move to Pretoria due to her work circumstances changing. She was pregnant at the time too, so commuting from Honeydew to Hatfield was out of the question – the closest Gautrain stations were in Rosebank or Sandton which would have been equally non-viable.
So we were forced to move across cities.
I called a local estate agent and asked her about my options of selling my apartment as we had admittedly outgrown it and could rather use the sale proceeds for a deposit on a new house.
“You still owe too much interest on your apartment and the market is flat due to there being so many of the same type of homes in this suburb,” she told me. “You would end up making no money if you sold now; in fact, you would have to pay in money. My suggestion is that you find a tenant and rent it out.”
I was lucky to find the tenant I did: She was a young, professional, single woman who was renting a bachelor unit two apartments down from mine and was only too happy to have the extra space (for a below-market rental increase of about R500). I never performed the required credit check on her and gave her a very basic rental contract to sign. While in hindsight I should have been more professional about the whole process, I have been lucky that she has been an easy, low-maintenance tenant.
While her rental continues to cover my bond repayments (though the interest rate has cut into this in recent months), I still lose out with monthly levy and council costs coming out of my own pocket. That saying of tenants paying off the landlord’s bond is not true – not in my case, anyway.
Home buying and ownership is not the be all and end all many young South Africans believe it to be; and there is no shame in renting. This is one of the reasons why I started HomeTimes: I wanted other young (and older first-time) buyers to have all the information they needed to make informed decisions to benefit their own lives.
Buying a house is a big deal! Take your time, consider all your options, kill as much debt as you can, get a financial advisor to help you invest your money in retirement and other investments, save for your children’s future and once you have these aspects figured out, save for a deposit in an account with decent interest. Be prepared to save until you have at least 20% of a home’s value in cash, as well as enough to cover bond costs and registration fees. Remember, too, that you have between 20 and 30 years to pay off a bond, so be sure you know your plan is to have paid off your home before retirement. The last thing you need during retirement is above-inflation rental increases and inflation-linked retirement pay-outs.
I would like to encourage all our readers, from across South Africa, Africa, Europe, the US and Australasia to share HomeTimes with your friends, children, parents and professional colleagues so that we may all learn about better ways to live our lives in either our own homes or in rental accommodation. HomeTimes will continue to educate and we encourage you, our readers, to ask us questions, write about your experiences of home living and to let us know if there is anything you think we should cover to make HomeTimes the residential market educator of choice.
Send me your thoughts, suggestions and questions and I’ll be sure to help where I can. Email firstname.lastname@example.org