Having finances that you can tap into at any point is a blessing. Indeed, in a country like South Africa, it makes you part of the top 1%. Liquidity is vital in any business and the real estate game is no different.
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The more financial resources you have, the greater your buying power and liberty to purchase whatever you see fit. However, property is a tricky business and you need to have knowledgeable insight into the options available when you’re a cash buyer.
You immediately become the most attractive offer on the table. Every homeowner is going to jump at the chance of selling their property to a cash buyer who is willing to pay their asking price. You will also have more of a leg to stand on when it comes to negotiations and may even be able to get a discount. The leverage that comes with cash offers is definitely a bonus. You will have a competitive edge over other potential buyers which translates into a closing deal for you.
Cash transactions move quicker as there is no home loan approval process. You also don’t have to worry about paying interest as the years go by. You will have outright ownership of the property. This gives you confidence in knowing that even if the market is unstable or you hit a rough patch with your finances, your home is secure and debt-free.
Cash payments may be preferred, but this doesn’t make them any more convenient when it comes to administrative purposes. The first step is making sure you have your finances in order. You may need to consult with a financial advisor before speaking to a real estate agent to ensure you can afford all the upfront and hidden costs involved.
You will then need to liaise with your bank in order to produce documents that prove you are able to provide the necessary funds for the purchase. After your offer is accepted by the seller, it takes approximately six weeks for the transfer of property to be finalised and the sale to be completed. This is one of the biggest draw cards for those who prefer to pay or accept cash. The next advantage is not having any bond payments to pay interest on.
For those who plan on buying properties for investment purposes, cash is king. Many sought-after properties are quickly snapped up by major investors in the market to expand on their impressive portfolios and add another item to their long list of assets. Investors generally buy properties in cash and rent these commercial or residential places out. This provides them with multiple sources of passive income that are guaranteed monthly.
Considering selling your house and need a sizeable cash injection to buy another property or invest in something else? A cash sale is the safest and quickest way to secure finances for any project that requires liquidity.
Even after speaking with a financial advisor and getting the go-ahead for buying a house in cash, you should still consider the risks. The option of not having bond repayments every month may seem attractive now, but in the long term, your financial health may suffer.
A larger cash deposit with a bond registration is an option that provides you with the freedom to access funds at your disposal. This is ideal for someone who isn’t ready to commit a large lump sum all at once, while still having the leverage of being a cash buyer.
Consider the availability of having a more liquid flow of finances to work with every month. This can’t be attained if a large chunk of your money has already been permanently invested without short-term thought. This can result in not having an adequate amount of cash in case of an emergency. It’s always advisable to keep a little on hand for a rainy day.
Paying cash will also not qualify you for tax-deductible benefits that come with bond interest repayments if you decide to rent out your house. Not having a bond to fall back on is also risky if you need a “payment holiday” from the bank. This is especially dangerous if you’re ever in debt since creditors will find it easier to seize a house not partially owned by the bank.
Whatever option works best for your financial freedom is the one to go with. Peace of mind in your property buying journey is the most valuable asset at the end of the day. Seeff has a team of well-informed and professional property advisors who will assist you with everything from purchasing to decorating. Contact us today.