Dear PFZA Community
(I'm posting under a new/anonymous account to protect privacy)
We have recently committed to purchase a home in ZA, which we will refer to as "Investment Property C". I would like your advice over whether we should sell or hold what I will refer to as "Investment Property A", an apartment in ZA.
Our long term goals are to split our time between Europe and South Africa, hence we have favoured properties as our investments (although better future returns could have probably been generated from ETFs!)
Details of our finances are as follows:
Investment Property A:
(Currently living here)
Purchased in 2018 for R3,000,000.
Remaining bond: R800,000.
Bond repayment is R8000 p/m (bonded at prime less 1.02%, roughy 15 years to go on bond, but we have overpaid into bond here and there. Initial bond amount was R2,250,000)
Current Market Value: R3,400,000.
Last Gross monthly rental was R17,000.
Last Net monthly rental (after levies, rates, elec and water): R13,000
Net cash in from this property: R5,000 (rent monthly less bond)
Investment Property B:
European-locale property
Purchased in 2022 for EUR: 1,300,000
Interest rate: 1.98% (variable rate, but it's a low-risk country)
Remaining bond: EUR 920,000
Bond repayment: Roughly EUR 1650 p/m (interest-only bond, no obligation to repay principal)
Gross monthly rental: EUR 3250
Net monthly rental (after same costs as above): EUR 2,550
Net cash in from this property: EUR 900 (rent monthly less bond)
Investment property C:
(Where we will be moving to for the medium term)
Purchase price R7,300,000
Bond: R4,000,000
Interest repayment: Estimate ~R40,000 p/m
Yes - we realise it's an incredibly privileged position to be in, foreign currency earnings and stonks have helped big time.
We are worried about being too highly geared on financing, giving the above. With both of our salaries and guaranteed employment, we should be OK. However, we are considering the option of selling Investment Property A to clear down the majority of the bond on Property C.
Given the above, how would you approach it, if this was your portfolio?
(I'm posting under a new/anonymous account to protect privacy)
We have recently committed to purchase a home in ZA, which we will refer to as "Investment Property C". I would like your advice over whether we should sell or hold what I will refer to as "Investment Property A", an apartment in ZA.
Our long term goals are to split our time between Europe and South Africa, hence we have favoured properties as our investments (although better future returns could have probably been generated from ETFs!)
Details of our finances are as follows:
Investment Property A:
(Currently living here)
Purchased in 2018 for R3,000,000.
Remaining bond: R800,000.
Bond repayment is R8000 p/m (bonded at prime less 1.02%, roughy 15 years to go on bond, but we have overpaid into bond here and there. Initial bond amount was R2,250,000)
Current Market Value: R3,400,000.
Last Gross monthly rental was R17,000.
Last Net monthly rental (after levies, rates, elec and water): R13,000
Net cash in from this property: R5,000 (rent monthly less bond)
Investment Property B:
European-locale property
Purchased in 2022 for EUR: 1,300,000
Interest rate: 1.98% (variable rate, but it's a low-risk country)
Remaining bond: EUR 920,000
Bond repayment: Roughly EUR 1650 p/m (interest-only bond, no obligation to repay principal)
Gross monthly rental: EUR 3250
Net monthly rental (after same costs as above): EUR 2,550
Net cash in from this property: EUR 900 (rent monthly less bond)
Investment property C:
(Where we will be moving to for the medium term)
Purchase price R7,300,000
Bond: R4,000,000
Interest repayment: Estimate ~R40,000 p/m
Yes - we realise it's an incredibly privileged position to be in, foreign currency earnings and stonks have helped big time.
We are worried about being too highly geared on financing, giving the above. With both of our salaries and guaranteed employment, we should be OK. However, we are considering the option of selling Investment Property A to clear down the majority of the bond on Property C.
Given the above, how would you approach it, if this was your portfolio?