The Golden Rules For Investing In Property

The COVID-19 pandemic has ironically created an unprecedented buyers’ market. Ernest Zamisa, a financial adviser at Momentum, says that this is “a lucrative opportunity” for first-time buyers because of a favourable interest rate (the lowest in 55 years) and the fact that banks are willing to give 100 per cent home loans.

No matter the market, there remain key property investment principles and recommendations.

Chris Renecle, managing director at Renprop explains that location is everything. “If you look at Rosebank for example, it is one of the city’s oldest, most established suburbs and it is hitting an all-time peak in development investment of both commercial and residential properties. When looking at the area in numbers, in the past three years a remarkable 200 000m² has been developed, completed, and occupied.

“This demonstrates the incredible growth of the area, thus making it a sought-after address for businesses, individuals, and families. And a perfect location to buy in,” says Renecle.

Second, doing research prior to purchasing a property is critical. “Ensure that the property you want to invest in will have a good yield, based on the rental income in the area. Rental income depends on various factors, including location, the condition of the property, and the state of the property market. “So again, research thoroughly when considering an investment property. Also, calculate all the expenses involved in buying the property and make sure that you budget for unexpected costs, such as maintenance and repairs. Bear in mind that you could have to pay levies and home insurance, as well as income tax on the rental income received from the property,” says Carl Coetzee, CEO of BetterBond.

Momentum’s Zamisa explains that the amount of capital one has shouldn’t deter a prospective investor. “Although there are distinct advantages to investing and owning your own property, if you don’t have the capital – or are a little more risk averse – but still want the investment exposure that property brings, the property market is still ripe with investment opportunities,” he says. A property unit trust, for example, is an option.

Finally, take a long-term view. Herschel Jawitz, CEO of Jawitz Properties, says that property is not a liquid asset like shares and he costs to buy and sell property are high. “Long-term means you should think of your property investment as part of your retirement funding, like you would your pension fund.”