15/01/2025
*To Be Deleted* Brothers and sisters earning a salary less than R10 000, let's gather here and have a family meeting. We're going to talk about how you can buy your first property. If you don't have a job, I advice you to get one, even if it pays you a minimum of R3501 gross pm. If you're one of those graduates who like to say they won't work for peanuts, then I suggest you throw away that mindset - and remember that peanuts make peanut butter and peanut butter butters the bread.
I want you to know that contrary to popular belief, the purchase and ownership of property in SA is not reserved for high income earners. South Africa is designed in such a way that anyone, irrespective of background can own property if they really want to.
I want you to also understand that there's no such a thing as an expensive property, there's only property you afford or don't afford. Depending on where you look, there are plenty of flats in South Africa's CBD's and some suburbs that are priced below R150 000. Properties in some of our townships are also below that price. Lebo Grass once said "Don't look for Sandton property with a Tembisa salary". Look for what you afford according to your income. So depending on what your affordability and investment strategy is, you will decide where to start, first let's get you started.
The first thing you will have to do is get serious about fixing your credit record and building up a credit score. At your income level this is the biggest part of your wealth building strategy. The government has made it possible for you to get a housing subsidy of up to R121 626 through their FLISP programme, but you will only be able to access the money if the bank has approved you for a home loan. Don't listen to what negative people have been saying - the bank wants to give you a home loan, that's how they make money but they'll only give it to you if you have good credit. If you're self-employed then you must provide proof of income and affordability to your bank - you must have a track record.
Don't do debt consolidation if you are in too much debt. Just find a way to pay it off. If your debt is over 3 years old and you haven't made a single payment over the 3 years then it might be prescribed, meaning you don't have to pay it. Just call Transunion and ask for advice on how to pay your debts and which are prescribed. Also download your credit report on Clearscore.co.za - It's free. Having your credit report will give you an indication of which debts are ruining your name and you'll have a plan on tackling them.
Now that your credit record is fine, you'll look for a property, e.g. the one with purchase price of R150 000. Just search for property for sale in Gauteng, go onto Property 24, then set your maximum purchase price on R250 000 or on R150 000 and all the properties below that price will appear - from vacant land, township property, to flats.
You will then make an application to the bank, your estate agents (who must be registered with EAAB) will assist you with the application. Once the bank has approved your application, then you will apply for
The FLISP Programme.
The FLISP programme is a housing subsidy for first-time home buyers to assist with purchasing a home. The subsidy is paid to your bank or financial institution and will reduce your monthly loan instalments, making it more affordable to purchase a home. Households with an income between R3 501 to R22 000 may qualify for the FLISP subsidy if they meet all the criteria. The subsidy amount depends on the income of the applicant and ranges between R27 960 – R121 626.
If you earn R3501, you will get R121 626, covering most of your bond for the R150 000 property (or whatever the cost of the property is) and if you earn R10 000, you will get R88 323. If you're somewhere in between, then the money will vary as your salary gets closer to R3501 or closer to R10 000. You can add the transfer fees to the application, and the bank will register a higher bond then let you use the money for transfer fees and bond registration fees.
You obviously have to meet the criteria for the subsidy.
You qualify for this subsidy if:
- You earn between R3 501 to R22 000.
- You are a South African citizen or have permanent residency in South Africa.
- You have not received a government housing subsidy before.
- You have not owned fixed residential property before.
- You are competent to contract - over 18 years.
- You are married or cohabiting.
- You are single with financial dependents.
If you have already purchased your first property, then you can also apply if the property was registered on your name in the past 12 months.
If you're like me, you'd already be thinking of ways to build your property portfolio. You'll rent out the new property, remain staying at home or renting a cheaper unit while your tenant pays you rent for living in your property. A flat with a R150 000 purchase price will have an instalment of less than R1500 and will be less than R300 (if you earn R3501) and your full subsidy is paid into your bond. The rent usually starts from R3400 depending on area. If you find a good tenant who agrees to pay you this amount then you'll have positive cash flow from your investment.
You must do your home work and research.
You will then use the rest of your savings and New rental income to buy your next property. You will have to save for a deposit, bond and transfer costs. You're now a property investor.
As long as you have a valid lease agreement, the rent is paid into your bank account, then the rent is counted as part of your income. It's added toto your salary and calculated at that new level when buying another property.
