INVESTING
Start Early
Living at home allows young adults to invest in entry-level properties , generating rental income while minimizing living expenses .
Financial Focus
Approach investment property purchases with a numbers-driven mindset , prioritizing rental yield and capital appreciation over emotional attachments .
Current Market Advantage
With interest rates potentially decreasing and a thriving rental market , now is an opportune time for young investors in South Africa .
Start early : Invest while you can stay at home As a young adult , you may still have the opportunity to live with your parents or guardians , significantly reducing your living expenses . This is an ideal opportunity for purchasing an entry-level property with the intention of renting it out . It ’ s a no-brainer and will set you up for your journey as a property investor at a relatively low cost . The property can generate rental income , which , if managed well , can cover mortgage repayments and even provide beer money .
Make it a financial decision , not an emotional one Purchasing an investment property should be driven by financial smarts rather than emotional attachments . Unlike buying a home , where factors like aesthetic appeal and location convenience play a significant role , an investment property is all about the numbers .
The focus should be on rental yield , capital appreciation potential , and the ability to manage the property effectively . This pragmatic approach helps ensure the property generates a return on investment ( ROI ) over time .
Current Market Conditions Interest rates in South Africa are currently high , with the repo rate only recently reduced to 8.00 %, after a 15-year peak at 8.25 %. The South African Reserve Bank ( SARB ) maintained this level for over a year to control inflation .
However , there is growing anticipation that rates may start to decrease further , as inflation eases and approaches the midpoint of the SARB ’ s target range . This shift could make financing a property purchase more affordable than in recent years .
34 REI MAGAZINE NOVEMBER 2024