PROPERTY ADVICE
Q
I want to invest in property , what do you think I should lookout for and probably prevent before venturing in the sector ?
A
Be honest and ask yourself : why am I investing in property ? Let ’ s be frank , any investment must deliver the returns .
Investing Options There ’ s the stock market , ETF ’ s , unit trusts and REITs . There is direct property ownership – getting a house on a bond and renting it out to a tenant and let the rent pay for the expenses . This one seems pretty straight forward and easy for people who are starting out in the industry .
MICHELLE DICKENS TPN Managing Director
How to : Before you sign on the dotted line , let ’ s talk strategy . Buy-to-rent , flipping properties , speculating or short-term holiday all these require a fundamentally different approach .
If your strategy is to invest in property for buy-to-rent , the next decision is the asset classification of investing in either residential , commercial , office , retail , industrial or storage . So , you if you choose residential buyto-let you then need to ask yourself is this going to be in the innercity , suburban , free standing house , complex , multi-lets , affordable properties or luxury properties ?
Be aware of the following : The current risks of residential buy-to-let property investment includes high vacancies , high tenant delinquencies and negative escalation . The reward of property ownership , is making a return every month on the rental income .
More risk to factor in is that property expenses are increasing faster than the rent escalates . Budget every cent ! Levy cost are often broken down by line item with an eye watering total , rates and taxes , sewerage , refuse removal , agent fees , bank fees , interest repayments , capital repayment and repairs and maintenance .
The reward ! The cherry on top here is the future reward of selling the property for more than you bought . This future profit you make on the sale of the property is largely determined by what you bought it for , the goal with property investment is to buy at a discount .
Research , research , research commonly known as the TPN Investor Report does the due diligence for you right down to suburb level : market value , capital growth , rental price index , rental yield , delinquency , tenant or owner-occupied area . Build a strategy based trusted data analytics .
SA Real Estate Investor Magazine FEBRUARY 2021 5