Grow your wealth: Property investment
Property investment is big business, and, if done properly, can quickly become highly lucrative. It involves the purchase of a property, typically one that is still being built (off-plan property), with a view to enhancing it and either selling it on or leasing it out in order to gain a return
Real estate is generally a great investment option. It can generate an ongoing passive income, and it can prove to be a good long-term investment if its value increases exponentially over time. You may even use it as a part of your overall strategy to begin building wealth.
Property investment is still considered to be one of the biggest investment opportunities of all time.
Here are two big reasons why:
Property investment provides financial stability
The main advantages of the property development industry are that it provides a level of stability and certainty to your investments.
However, unlike other investments, there are three things you will need to do to ensure your profits grow:
- Be willing to put money towards the maintenance and care for your property in order for it to be of value and continue to provide a source of income for you
- Continually up skill yourself in terms of property investment and management training to make sure you are ahead of the industry trends and changes
- Develop insight on how to identify the best properties to invest in by considering and researching factors such as neighborhood, taxes, schools, and crime
Property is the only appreciating asset
Buying a property can leave a dent in the bank account, but don’t be tempted to see it as an expense instead of an investment. unlike the stock market tips you may receive from the streets, this is legit.
Property Developers harnessed with the right management expertise can be sure to see their investment appreciate as time goes on, and what’s appreciating, even more, is the land the property is situated on.
Historically, the property has provided excellent appreciation in value, far exceeding all other investment types. As long as you are effectively managing the asset, rent prices – as well as the value of your investment – will appreciate.
7 tips on how to beat the averages and buy a great investment property
Many people pay less attention to the location, the Property value is intrinsically tied up in its usefulness to the future tenants.
The property you choose should be well located, close to desirable places of work and transport nodes and routes will be more valuable to tenants. For example, a townhouse in Sandton will be easier to let out,
Type of property
If you’re looking for an investment opportunity in the residential market, it’s always critical to know which types of property are best performers.
In South Africa, data reveals that one bedroom and studio apartments have been the best-performing for over 12 years. Investors who choose a one-bedroom apartment receive better returns than those who invest in a two or three-bedroom flat.
However, more South Africans continue to purchase two-bedroom apartments despite lower returns.
The “seller’s agent” secures his or her 3-month sole mandate by hyping up the property value. Then they start the process of bringing the seller down to reality in the hopes of securing a sale.
Naturally, it will be difficult for an investor to get a great deal from one of these agents.
A “buyer’s agent” uses a different methodology and secures his or her mandate by pricing the property realistically (and often undervaluing it) for a fast efficient sale. This type of agent is solid gold to you, the investor
Local agent networking
Once you have selected your choice investment location, the work begins; Start by looking up up the agents who are very active in the area and cultivate relationships with them.
A regular monthly email or phone call from you will keep you top of mind for when that “urgent/bargain” deal crosses their desk.
Scouring the internet adverts can reap good dividends, but cannot completely substitute getting out there and looking at properties.
Once you have targeted specific townhouse or cluster complexes and geographic areas, there are websites that will scour the internet for you and return any new listings of your selected complex to your email inbox.
People naturally perceive greater value in a property that is newly painted, spotlessly tidy and ready for show-day. They, therefore, will pay a higher price.
A property in poor condition, requiring paint and perhaps some running repairs to the cupboards and/or inhabited by a messy tenant who feels threatened by a sale, will be overlooked by many potential purchasers.
This provides an excellent negotiating opportunity for an investor to factor into his price a paint job and some minor repairs. I call this seeing through the clutter and discerning the true value of a property.
Bargain hunting Property
Investment is a long term decision that, when done correctly, provides massive returns on your investment.
Most investors cannot recall the exact prices paid for properties purchased 10 years ago, and even if they did, the numbers would make you laugh!
In summary, follow these steps, do your homework, know your areas and prices and when a good opportunity presents itself, secure the property.