Sunday, February 08, 2009

Buying a second property with internet money? Haha!

You get this plastered all over the internet. People who claim to have yachts and all sorts of kak they made by working from home. And for R250 a pop they will sell you the secret. Like they would really need that extra cash. Usually its just a scheme where they basically tell you in a round-about way to fuck over the next guy for R250, using the same lies.
For normal people, buying a second property with internet money is highly unlikely buy this is not entirely impossible. This depends on lot of factors. I am going to sketch a little scenario showing the possibility of buying property generated from money on the internet alone (sort of) followed by some factors that will determine the possibility. By the way, I don't own cars and shit bought with quick-rich money. Everything (or the little) I have, I worked for the good old fashioned way, but let's move on...

Everything I mention for this proposed scenario is not 100% factual but rather relies on personal experience, as I am a home owner myself, paid for by my hard earned salary I get from a normal day job.

Have a look at this property in Centurion after reading this post. I am going to use this as an example with some calculations. In now way does this place belong to me, nor do I know the owner. I just went to Private Property's website and searched for a property under R500 in an area which I am familiar with - it is close to where I work.

According to the bond calculator on the website, it will set you back around R6100 per month. You could probably add another R500 per month (if you're lucky) for levies which will bring your total to R6600. If you are already a home owner, like I am, chances are quite small that you will be able to secure another property on a 20 year bond and be totally happy about it at the same time. Let's face it - you would rather stick that extra R6600 into your existing bond. Chances are you don't have that money anyway.

Let me just sketch some background to support the argument:

If you could qualify for a second bond for some reason (maybe your salary is not too kak) there might be a slight chance. In my case, I bought a house together with my girlfriend. Our bond comes to around R14k per month (I am including levy as well). That sets us each back around R7k per month. She however already has a smaller property just around the corner from us that she bought a couple of years ago. When we moved in together she started renting it out at around R4k per month. Her bond and levy amounts to around R6k per month, so there is a shortfall of R2k every month. This fine, as her car is paid off. Had this not been the case and she had to pay off an average priced car of around R2k per month, she shortfall would be R4k per month - if you are following my train of thought.

If you apply for a second bond you could qualify for it if you for instance state that you will get X amount for rental income and if you can prove that you can pay the difference. They will cross-check it with your bank details and salary slips anyway. Back to the example on Private Property. Let's assume you could get a rental income of around R3600 per month for a 2 bedroom place it will leave you with a shortfall of R3000 per month. Money you will need to make online for the purpose of this blog entry.

Is it possible? Yes but only if:

  • You are able to generate R3000 per month on the internet and this happens constantly. It doesn't help if you had one lucky month over December and the rest of the months look dreary.
  • You actually qualify for a second bond.
  • You are close to freeing up other expenses (such as paying off a car that you are happy with and don't need a new one)
  • You are secure in your current job
  • You are actually generating that kind of money on the net right now and the housing market doesn't skyrocket.
  • The repo rate stays fairly stable - its been kind of a hurricane out there the last couple of months.
  • You are very realistic and have a clear understanding of your own finances and possibilities.

Would I do it?
Probably not. I am generating around R1000 per month for the last three months if I average it out. I did make around R2k in January, but it is not a constant. For the moment I am happy covering my hosting and internet bandwidth and I do enjoy buying the odd Xbox game or ten. I am not that disciplined when it comes to spending the extra I get, but I am also not foolish enough to spend more than that little extra.

I probably left out some other factors. If you could think of any, or would like to give your 2 cents, I would like to hear from you. Just gooi it under the comments.

For the next post I will finally tell you the awsome tale of how I made $5 since joining AdSense on the 19th of January. It is riveting stuff!


Johan Swarts said...

ha, ek het 19 dollars gemaak! in your face!


griffin said...

Kick ass, oor 'n jaar betaal hulle jou uit, haha. Ons het ons eerste cheque van Google af gekry vir die Vernon website. Net oor die R1000. En my unpaid balance by Kalahari staan nou net oor R2k. Sal volgende week 'n summary gee van alles wat ek uit try. Die boonste link (Mantality) het sover oor die R300 ingebring en ek wou dit can. Wys jou net ...