Forward thinking: understanding the importance of planning ahead4th Dec 2018
Before deciding to invest our hard earned money on the JSE we spend countless hours researching the company that we are interested in, studying its past performance, the short and long-term forecasts and expectations of its share value, the share’s vulnerability and responsiveness to economic turmoil, even going as far as finding out whether or not the CEO drinks milk in his coffee.
If we spend so much time and effort trying to understand the stock market why is it that when it comes to property most investors don’t spend a fraction of the time or effort trying to investigate the underlying asset before pouring millions of Rands into a property.
This short-sightedness is caused by our natural instinct to fall in love with a property the moment we lay our eyes on it. The beauty of property is that it is a tangible thing which, unlike shares on the JSE, can be seen and touched. As they say “love is blind”, and this couldn’t be more true when it comes to property.
Whether you are considering buying a property for investment purposes or you simply want to make that house a home you first need to do your homework and this article will focus specifically on how to understand the importance of choosing a reputable developer in the community scheme market, such as bodies corporates and estates.
The potential future growth in value of these types of developments is heavily reliant on the developer thereof. Gone are the days of fly by night property developers that only care about making a quick buck before riding off into the sunset not stopping to think about the long-term sustainability of their development. Property developers are becoming less interested in quick profits and more interested in building sustainable and trustworthy brands. Developers are starting to understand that investors are looking for more than just a well-built house. Investors appreciate a developer that spends time and effort considering the practical aspects of community living, such as establishing beautiful open parks and spaces, erecting useful communal facilities like clubhouses, gyms and swimming pools and installing state of the art security systems.
Apart from the provision of state of the art facilities developers also need to ensure that the governing documents of the scheme are correctly drafted to provide for seamless management of the community and that an accurate budget is prepared well before the development goes to market.
It is for this reason why many developers are opting to involve property management companies, such as Pam Golding Property Management Services (Pty) Ltd (PGPMS), in the very early stages of a development. Property management companies possess the knowledge and expertise required to identify and circumvent the potential difficulties and pitfalls that a development may face once fully occupied.
PGPMS has helped many developers draft well thought out governing documents to cater to the specific needs of the respective community scheme. Aspects that need to be considered well in advance include whether or not the development is suitable for pets, short-term letting or home businesses etc. Investors need to know that their Labradoodle is not welcome before they decide to purchase their dream home.
PGPMS is also instrumental in assisting developers to prepare accurate and realistic budgets to ensure that investors are able to easily identify whether the proposed monthly levy fits within their budget. Few things anger property investors more than an understated levy. An inaccurate budget can have a massive impact on the sustainability and affordability of a development and developers need to be honest and transparent about the impact that the maintenance of the sought after state of the art facilities will have on the levies.
The involvement of property management companies in the early stages of a development is the best way for developers to ensure that their end product is of the highest quality and for property investors to find confidence in the long term growth of their property values.
As part of their due diligence investors are encouraged to investigate whether their developer has sought the expert advice and assistance of a reputable property management company in the early stages of the development should they wish to maximise the potential future value of their investment.
Auren Freitas dos Santos, Legal & Compliance Officer
Pam Golding Property Management Services