Why I Avoid New Development Properties in South Africa 

This is just an example. But financially these properties dont make sense to me, what do you think ? Open to opinions

"What's up Louis it's guys here"😂😂😂

There hasn't been a well built townhouse or flat built in Gauteng since the late 90's. Every single place I've lived in that was built after that has either had a leaky roof, damp problems, bad plaster that falls off the wall when you bump it or something ridiculous like a patio angled in the wrong direction that causes rainwater to come into the house. These developers are not builders, they are scam artists who cut every possible corner to make a buck. Not to mention the fact that the average modern place is so small that you can't even fit a normal headboard into the master bedroom! If you want quality stick to the older stuff, if you want headaches buy an overpriced shoebox made out of chewing gum and hope from a developer....

The idea that new developments are well built is another myth! I lived in a brand new apartment built by Igrow and it was awful. Tiles in every single room started cracking out of nowhere, major plumbing issues to a point where the kitchen was completely flooded multiple times. After complaining they only reached out after I served my notice to leave. 0/10 experience.

The wear and tear on these properties is crazy. I lived in a 1-bed apartment less than a month after completion of construction. I kid you not, two months later, the paint was cracking on the ceiling, inside and outside the hallways and by the balcony. If you stained the wall, you couldn't wipe it off without the paint coming off, even when wiping lightly. Then the toilet seat came loose, the sliding door got squeaky, the drains got blocked easily affecting multiple apartments, and to top it all, the insane water bill of R1 800 (Includingng hot water) which is crazy for a 1 bedroom apartment, single occupancy without a washing machine or dishwasher. There were new tenants every couple of months. So, even from a tenant's perspective, these new developments can be a huge miss.

So glad someone is shedding light on this! Buying off plan was the worst decision my husband and I made. The houses were not even built according to building regulations, they cut corners absolutely everywhere, it was a nightmare. Thank God our property never registered, and we were able to get out. We purchased at The Woods in Kyalami, the developer was Craft Homes, please do not buy from this developer! They have no idea what they are doing, absolute scoundrels!

I am grateful to be fortunate enough to have got vacant land that I am building on, I am doing things properly, taking my time, not cutting any corners, the rooms are spacious enough for myself wifey and the kids, we should just go back to buying vacant land and building our own homes as this development thing is ripping everyone off, only the developers and banks win from this

New developments increase property supply, which should drop the prices, but the opposite is happening in Cape Town because they are pricing and marketing these properties for wealthy foreign investors. The prices don't makes sense for locals earning a salary in rands.

I've looked at new developments in the past and they always feel like they charge you for the future value of the property not the actual market value of the property, if you had to sell one those properties within the first 5 years of buying it, you almost guaranteed that it will sell for less than the list price you paid.

Dude....the levies and rates are insane.

Thanks Louis for pointing out this scam! Other thing is that once the developer is done selling to you he will go and develop more properties around the same area. This creates an oversupply of these new developments and basically no capital appreciation for many years…

They are size of match box, they are the same as RDP only difference you pay alot more

I used to work in the building industry and have also been a professional landlord for over a decade. My advice is to NEVER buy off-plan or in a new development. The initial expenses to fix all the shoddy building work can be staggering for the first few years. Your best bet is to buy a place that's 5 -10 years old. By that time the worst problems will have been fixed at the previous owners expense and/or the problems will be obviously visible. This means that you can at least see what the problems are and get an estimate to fix them.

Thanks for this. Another important detail is that the mortgage repayment is based on a 30 year term. Most mortgages in SA are on 20 years. So you will be paying a bit more.

Apart from the poor quality and constant issues with the Body-Corp, the lifestyle just sucks. These areas may provision for luxuries like pools, function halls and even a driving range but good luck finding a corner shop or cheap food in walking distance. Everything is significantly further away than any of the older neighborhoods that came up organically and that pushed up travel time, vehicle spend and prices. Delivery apps have mitigated the travel issue but now that hyper-secure area has a revolving door of strangers going in and out. Beyond that, they got restrictions on guests. They got limits on additions. They got problems with seemingly any pets. Parking, gardens, paint, kids playing on the street. I'm all for being neat and neighborrly, but why would anyone care about the color of my curtains?

Wow! Just discovered the channel and hooked already. Thanks Louis 🙏🏼🥰

Was thinking about this this week. Also the problem with new developments is the competition. If there's hundreds of units all fighting for tenants then chances are everyone will need to keep their rent down to catch the fish and that's a serious problem.

I can already tell that I am going to learn so much from this channel, dankie meneer.

Thanks for the information. I am currently in the planning process of securing an apartment.

A lot of new freestanding home developments in estates are also constructured with concrete bricks (or worse, cinderblocks) rather than clay bricks. The concrete/cinderblocks tends to not breath like clay, and is prone to cracking.

As usual very informative..🙏🙏🙏, i need the course now🤝

Wow! I was close to put an offer to purchase on an apartment at the new developement in Stellenbosch. Wanted to use it to be closer to my kids on school holidays and rent it out to students during the rest of the year. Your calculation makes me see new developments differently. Thank you Louis

Hi Louis, I just wanted to say i like how kind you are on here and how consistent you are with engaging with your audience in a kind manner. It's admirable. Keep up the great content 😊.

This was such an eye-opener. Thank you for sharing your thoughts with us.

The new development property advantage is building equity without you putting in a cent of your own money, By the time you start paying for the property, the property's value would be up. I'd say choose the new development wisely. Negative is you will sell at a loss if the development is in phases and the developer is still selling his own stock. If you do buy just dont do it in big developments like Munyaka where the developer will still be building for the next few years and you want to sell prior to the completion of the development.

Hi really enjoy the videos very informative and enjoy the fact that its local and kept simple. The spreadsheet looks very interesting, is that only from the course or available as said? It would really be appreciated?

This was eye opening to me! Thanks for sharing

Very informative, so glad i found your channel

Hello, great advice. Thank you! Side note where did you get the neon sign behind made?

And good luck getting your money back if developer is still selling stock when you want to sell yours (medium term). Must pay transfer duty on yours but nothing on developer units for the same money.

Thanks - very informative. South Africa

Very valuable insights thank you

Thanks for the info Loius

Eye opener, thanks bro

Very helpful, thank you!

Thank you! 😊

Love how detailed your spreadsheet is, is it possible that you could share it?

Hi Louis I really like your videos. I was wondering if you could cover how property taxes work in S.A for first time home buyers

love the analysis bro

Great. Thanks.

@louisreynhardt, just a few minutes of your video has opened my eyes 👁️ 👁️. In this regard i thank🙏 you.

Another thing to consider is that if the units don’t sell out , it will be difficult to sell it for more until that happens. As there will still be new units at starting price. Had a client who wanted to buy a property from me and they were stuck because of this.

One thing to keep in mind when it comes to new developments. Property value appreciates if the surrounding suburban area is populated with schools, amenities both public and private and most importantly, if its situated close to a transport node. New development will most likely appreciate as it encourages investor confidence mainly for public infrastructure. True North is situated in a high potential development area meaning its projected ROI is much higher than the 9% mainly because they utilize conservative figures. I do appreciate your opinion on this development.

Great video as always. Keep it up!

You make sense , keep it up ...

Good insights

Hi Louis, please share with me the spreadsheet you used in your presentation, I found it more interesting

Very informative..

Very informative

Thanks for the great content! Could you possibly share the spreadsheet you’re using 🙏🏼

Very informative 👍

Thank you very much for the valuable information. Please can you share your spreadsheet with me.

when the developer realize that he/she is not making enough sale, he/she can reduce the price of second phase by as much as R100k, those who bought the same property during first phase will loose value of their properties

you are dammnnnn right about this. they are fly by nite developers. The development, pay some corrupt officials and dissapear. I know people have have bought them with endless prbs. I bought a 1975 house and its as good as can be. I have my roof and doesnt fly away in bad weather,, no leaks, strong structure etc. Thank u for the explanation as people always think they get a good deal. Sometimes, they duck without even completing the development with YOUR DEPOSIT

I wish I saw this before I invested in a Blackbrick development. There is also occupational interest charged at prime rate of the cost of the unit while awaiting transfer of the property into the buyer's name. This monthly fee is charged as soon as the property is deemed occupiable. In my case it has been payable from March to now which is 4 months @ R8567😢. My property is still not under my name and I don't have a tenant as yet. Currently owing roughly R34000 including the levies. In my opinion this cancels the rental assistance because by the time my property lodgement takes places I will have paid more than the projected rental assit. The other challenge is that no one knows how long it will take for my documents to be submitted at the deed office. In my opinion this overlooked occupational interest can even go on for more than a year. What is worse is that this charge is even above the rental amount of the unit which is R5900 which is actually lower than the projected rental income. I am so stressed. Do you know how legal this is and how long can the developer drag it on . What are my rights as a consumer around this issue? I need advice

Thanks for the video, I recently bought in a new development. I'm definitely not happy at all with the development. Also I saw someone else here on whatsapp who moved in to their new place less than a year ago and already her roof collapsed.

Great video as always buddy 👊

thanks for this bro

Wooow. Very informative

Great video.

As my personal experience buy a place after you verify body corporate financial bcz Trustees are cheating or eating people's pocket. Personal my place has 1.4 Owe to COj. When i brought i thought its my place later i realised i have to pay back old due also, So final my opinion is before u decided to buy a place Verify finacial Verify history of complex or place. Verify all aspects dont depending on advertising please Verify future returns Verify future payments also. But we need some luck in our life too.. even if verify all some crazy people will damage our dreams . Be awre of them Thanks

And these contractors that builds also lift these properties prices sky high,and the new auction trend to drain more people of money

Hi Louis, Great advice. What is a ball park cost to create a living trust and transferring property into the trust?

I’m not in the market. My house is payed off. Really interesting information your giving on your channel. Nice info for the kids. Well done !!

Well extrapolated, all points articulated are very fair and honest. In this circumstances this makes a bad investment. I always aim for some equity whenever I look into property investment (and of course depending on how long I am willing to hold onto that particular investment). Overall lovely lesson here, good simple and basic enough to understand. Keep it up 🙌🏾

Must make sure you know the Customer Protection Act. You can do far as the NCT (Consumer Protection Tribunal) the fine are heavy they can loose their business.

Love The Video ! I am in a situation I believe a lot of young South Africans are in. We do not have the total funds for the initial start up fee. New Developments allows us to cut out that initial R30K+ that we do not have. I have had some suggestion about borrowing the R30K+ within the bond you take as well , And YES , saving is an option but not as easy as believed. I can save about R1000 every month with will take me 30 months + to get my initial start up cost but will take time. I have a good stable job and was pre approved for the loan amount , is it best to cut the 30 months out and include the initial fee in the bond amount or is there another option ? I believed the other option would be a new development that cuts out that cost . Curious to hear your thoughts.

Thanks Louis for sharing your insights. Would new developments in your opinion make more sense if you're looking to make it your primary residence?

In Gauteng for an agency to rent out your property you are looking at 10% others include vat whereas others not

This post is scary. I was looking into buying a property with igrow and almost did. I'm glad i watched this. I'm definitely not going to buy a tin can with such heavy short falls

I appreciate your show,

@lousreynhardt any companies that does renovations but not charging an arm and a song.Also are properties say in areas that are like Highlands north sort of old houses a a wise area for renovations to rent because of how the properties are selling at a low prices current?

Very informative video. But then if you are buying a property that's 20years+ old, how much should you 'save' every month for emergencies? (eg. geyser/pipe bursts)

I've seen that too and everything there by laws are not followed, let alone engineers never seen one

I would say it's not a great way to build, but a good way to reduce your taxes.

Someone I know bought a new development apartment during Covid times. She's had to get a flatmate now because she can no longer afford it. And above that, there are so many problems with the apartment. The developers cut so many corners when building the apartments. She's had to call them multiple times to fix things.

Hi Louis. Thanks for the great content, as always. Do you mind sharing your choice of managing agent? I haven't come across commissions below 8% in my experience - most being on 10%. Or do you negotiate?

My sister used to rent one in Hartbeespoort. Buildings were literally falling apart 3 years after it was constructed, more sand than cement 😂

Hi Louis, where can I get a copy of the spreadsheet you used in this video?

The same situation in Romania.They sell you pictures and the house is fckd up.

Many new developments: double garage with a house attached

Listen to this guy. I wish I knew this before I made this very same mistake.

Hi Louis, Could you recommend some good rental managers/rental management companies in SA...

New Subbie I’m looking at buying a house , glad I came across this

Do you have videos of changing a house into a duplex

Super informative! I really think these developments are to make the developers money. They are so tiny and having lived in one -as a tenant, I know first hand that they use the cheapest materials. I was the first tenant there but the drains were already getting frequently blocked, some of the things were falling apart and there were notable cracks all around the estate and it was not even three years old. Learnt a lesson without getting burnt!

Wish could have had this info. My bond has costed me 5 times more than the initial price.

Hey Guys 😂(Louis) Great content as always. Just a question and perhaps a topic for another video. Is it a good idea splitting your monthly bond payments over 4 weeks, reducing the principal every week and thus paying less interest every month? This in place instead of one payment at the end of the month.

bought off plan for 2.1mil after build(6months) sold for 2.8mil….this is a generalization. not applicable to all properties.

Thanks for this information we just buy houses without doing research first

Can we have a template of that spreadsheet?

So which ones should we go for?

Hi Louis. How can I have excess to the excel sheet?

I'm looking to buy soon and I'm surrounded by new developments everywhere, that's where my attention was focused on as everything else is so far. Are there any recommendations on good developments in Johannesburg? I'll be using the place as a primary residence.

New properties, like new cars, come at a premium.

A property agent friend of mine once told me if you bond such a property whilst its still under construction, your bond repayments only kicks in once the construction is complete, is that true?

You forgot to metion that the levy will go up exponentially after the first year as they still need to raise the reserve fund levy. So very quickly the levy will go from R1k to R2k per month. You might also sit with a lot of snags that the developer is contesting with the BC not the fix....

What about steyn city?

Louis, as you correctly state, the value of a property in a new development will first depreciate. One reason is: why would someone buy your unit when they can buy a brand new unit directly from the developer, PLUS with those perks you took advantage of i.e. no transfer costs, rental assist, etc. If you're not 100% able to stay invested in your unit in these new developments for at least 3 years, it could end up very bad for you.

Lol I love that graham Stephan’ intro 😅