Now is a great time to invest in property, thanks to the negative real property price growth that makes it a buyer’s market.
An anecdote of an ardent property investor who says the reason property is his investment vehicle of choice is because it’s tangible. “It’s one of the only forms of investment where I can physically touch my money,” the investor is renowned for saying.
Buying in an area where there is sufficient demand for rental properties just makes sense if you’re buying to let
And yes, property is a tangible investment, but one also needs to be careful to assume that the property as a mere building, is where your fortune lies. Property can be a wonderful investment, provided you approach it with clarity, caution and an open mind.
The points would-be property investors should pay careful attention to:
1. Be clear on your goals
It’s important to know what exactly you want the property to do for you: Are you looking for fast capital growth or are you in it for the long-term with a ‘slow-but-steady-wins-the-race’ mentality? The goal is likely to impact many of the decisions you make around this investment so taking the time to ensure you’re absolutely clear on your needs and expectations is very useful.
2. Be patient
Patience is the ultimate virtue when it comes to property investments. “It takes time to build a robust property portfolio, or even just get to the point where your buy-to-let property brings in significant income if it is bonded from the start,” says Van Rooyen. Long-term strategy and planning is crucial and the best is generally to avoid selling, even if it is to fund another buy-to-let property, as the legal fees and taxes can set you back rather substantially.
3. Work with a professional
Most people wouldn’t cut their own hair, service their own car, or do their own surgical knee replacement, unless, of course, they are suitably qualified (and even then, they might not). The point is, if you’re looking for the best results, ensure you work with a trusted property advisor to guide you through the complexity of the property buying or selling transaction.
Property advisors can advise you on everything from the types of investment properties with the highest rental yield to the expected growth in a particular area, to helping you negotiate the best deal on a bond, and plenty more. Property advisors are property professionals and there to make your property experience easier and more efficient.
4. Money, money, money
The goal might be for the property to make money for you, but you need to also be very aware of what the property is going to cost you to begin with. Start by asking your bank for pre-approval of your investment loan as this will give you a good indication of the types of properties to look for. Also, think about things like maintenance costs, levies and taxes, as well as the difference between the monthly rental yield and the bond cost.
Also pay attention to the following:
Buy in a growth area: Buying in an area where there is sufficient demand for rental properties just makes sense if you’re buying to let.