Real Estate Investor Magazine South Africa August 2016 | Page 66

LESSONS

From Your First

Investment Property Onwards

Essential considerations to achieving a profitable portfolio.
BY PIERRE VAN DEN BERG

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stablish a long term plan or strategy, and stick
to it. Included in your plan could be aspects
such as a set goal to achieve; an exit strategy;
refinancing; etc. But be conservative when you
refinance - keep potential interest rate hikes in mind,
and don’t jump too big too soon!

Decide in which entity to buy

It is probably not the best idea to buy lots of properties
in your personal name. If married out of community
of property, ownership of properties can be shared
between you and your spouse. Purchasing in the name
of a Trust might be a good alternative, as long as you
know what you are in for and understand exactly
what this complies. Registering a Trust brings much
more responsibility, duties, costs, record keeping and
role players, etc. You can always start to buy in your
personal name and if necessary, transfer to a Trust at
a later stage.

Make the mind shift between good and bad
debt

Realise the huge positive potential, and empowerment
gained by qualifying for a bond from the bank.
Financing should be pursued and your cash seen
as the last resort. Therefore make full use of OPM
[“other people’s money”] when purchasing and
rather treat your own money like gold, especially
with higher risk properties. That said, if your only
option is to buy in cash – just know that this is