INVESTING
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South Africa is witnessing the emergence of skilled residential property investors adept in diverse investment strategies , including long-term rentals , property flipping , short-term rentals , and student accommodation . While historically drawing inspiration from international figures like Robert Kiyosaki , Dolf de Roos and diverse expertise from US and British authors , local investors are increasingly tailoring their approaches to address the country ’ s unique socio-
South Africa poses unique challenges for investors such as :
1 . Legal System Favouring Tenants : The South African legal framework weighted to protecting tenants over landlords , making landlords cautious when entering into rental agreements . This necessitates a thorough vetting process and robust contractual agreements to safeguard investments .
2 . Service Delivery Issues : The inconsistent supply of essential services such as electricity , water , and waste management often require landlords to invest in alternative solutions and / or provide these services themselves , adding to capital and operational costs .
3 . Interest Rates : Fluctuating interest rates and higher than average rates compared to first world countries keep investors on edge in South Africa . The potential for interest rate increases necessitates careful financial planning and risk management .
4 . Regulatory - National Credit Act : Designed to prevent reckless lending , this act has also inadvertently limited the commercial application of mortgage financing in residential properties , thus slowing down market growth .
These challenges , though daunting , have fostered a breed of investors who exhibit unparalleled determination and risk management skills , uniquely tailoring their strategies to thrive in the South African context .
Diverse Investment Strategies
The South African property market , despite its limitations , offers a wide array of investment opportunities .
Currently some of the more popular strategies include :
Buy-to-Let Buy-to-let investments account for over 10 % of bond applications in South Africa and have proven resilient through various interest rate cycles . This strategy , while seemingly straightforward , demands a long-term perspective and a deep understanding of legal and tenant management issues .
Net yields can typically range from 6 % to 7 % per annum , with potential to reach 10 % with expert management . The TPN Rental Report highlights a ‘ good standing ratio ’ of 81 %, indicating that most tenants remain current with their rent , though a small percentage poses risks such as squatting .