How to invest in property
Category Real Estate Tips & Tricks
Investing in real estate can be a rewarding experience if you are realistic about what you are getting into and willing to put the leg work in before you take the plunge. The current downtrend in the economy, low interest rates and buyer's market make this the perfect time to dip your toes in the property pool. If you're thinking about a buy-to-let property, here's some tips on getting started.
Research is critical. We cannot stress this enough. Countless property owners have been burned by leaping into an investment without understanding exactly what they are investing in. Remember that you will initially be using rental income to pay off a bond as well as other property operating costs, which means the initial profit may be quite low, but you will be building wealth and a property portfolio without the need for a huge upfront investment.
In most cases, buying a property means securing funding. Don't assume that your long-term bank will necessarily give you the best deal. The current market sees banks more willing than ever to offer zero-deposit and low interest home loans.
Consider using a bond originator to take the hassle out of this for you. Here at Maxprop, we recommend our friends at ooba for hassle free bond origination services, as well as their range of tools to make your journey towards property investment as pain free as possible.
After you have secured funding it is time to find the perfect property that suits your budget. This is another point in the process where doing your homework is vital.
Look into crime rates, transport routes, the quality of local schools, proximity of shopping centres and the general sentiment towards the area. Check which property types are currently popular. South Africa's security concerns mean that gated communities will always be popular, and the impact of continued lockdown and job loss has made lower income rentals very popular.
Once you have done this the next step is to look into all of the costs involved in home ownership. Your bond is not the only cost that will need to be covered by the rent. You also need to make provision for rates and taxes, insurance, body corporate levies, general maintenance and repairing damage to the property. Check other rental prices in the area and make sure that you will be able to cover your costs while staying in that same price range.
When you have found your first property and taken the leap into the life of a landlord, it is important to have patience. The property market is the turtle to the stock exchange's hare. You will not be getting rich quickly, but you will be building stability, and a solid portfolio that will continue to appreciate in the long term.
If at any point in the process you feel uncertain or overwhelmed, remember that Maxprop is here to assist you every step of the way.
Author: Maxprop