MONEY CLINIC: Should I wait to settle my bond before getting another property?
A Fin24 user who has two years remaining on his bond repayments wants to know if he should pay off his bond first before investing in more property. He writes:
We have a property that we bought for R420k four years ago and we have two years left to finish [repaying the bond]. This property has tenants.
We are paying an additional R7 000 off on our bond repayments.
Currently we are renting another property at a cost of R5 300 monthly.
My question is: should we wait for the bond to be settled to get another property, or we can get another property and move in rather than having to wait that long?
The other idea I have is this: settle the rented property, move in and invest any excess money we have.
Simon Brown, financial educator and founder of JustOneLap responds:
I'll preface my answer with the admission that I am not a fan of buy-to-let as an investment strategy. Total costs, including cost of sales/purchase, keeping the property in shape and tenants missing payments or months with no tenants make for a lot of work with average returns.
So I would always suggest living in the property and rather investing the balance of the free cash every month.
Paying off the bond quickly is always attractive. You are very much on track to pay it off in extra quick time, so I wouldn't see a need to further accelerate the payments.
Compiled by Allison Jeftha. This article has been edited for style and clarity.
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