Real Estate Investor Magazine South Africa December 14/ January 15 | Page 28

STRATEGIES

By Koos Du Toit

Why Invest

in Property?

H

ere are seven great reasons why an investment
in buy-to-let property is often the right
investment choice:

implement. In fact, buy-to-let property investment
is virtually risk-free if prudent risk management
strategies are applied.

1. Solid past performance, secure future
Over the past 20 years, annual local property
values have risen to 10.5% on average, There is a
solid fundamental reason why property in South
Africa will continue to perform well: the demand
for housing continues to exceed supply, given the
country’s housing backlog.

5. Ongoing passive income
For many, passive income seems like a pipe dream:
receiving income every month without spending
time, money or effort to earn it, and regardless of
whether you are working or not. However, passive
income is exactly what a well-chosen buy-to-let
property delivers. The monthly rental income from
a well-maintained buy-to-let property is ongoing,
for as long as the investor owns and rents out the
property. This is also passive income, since whether
the investor is working or not, this monthly income
is earned.

2. Low out-of-pocket investment
To acquire R600,000 worth of shares, an investor
will need R600,000 in cash. However, to acquire an
income-generating, capital-appreciating property
worth R600,000, the out-of-pocket investment can
be R32,000. This is because the property asset is
acquired with a mortgage loan. The loan repayments,
as well as other property expenses, are covered
by the rental income generated. There is no other
investment that can be acquired in this way.
3. Keep control of your hard-earned money
You must never give your hard-earned money to
an unknown third party to invest on your behalf.
Instead, you must keep 100% control over your
invested money. Always know exactly where your
money is and what it is doing – preferably where
you can see and touch it. A buy-to-let property
investment allows you to do exactly this: understand
thoroughly how the investment works and keeping
direct control of your investment.
4. The low risk investment
All investment entails risk. However, what sets buyto-let property apart from other investment options
is the ability to manage – if not eliminate - the risks
involved, through tried-and-tested risk management
strategies that are simple and cost-effective to
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December 14 /January 15 SA Real Estate Investor

6. The multiple return investment
With a buy-to-let property, investors do not have to
choose between – or even try to balance – income
and capital growth. A buy-to-let property gives
investors both an immediate and ongoing inflationlinked income, as well as capital growth. Buy-tolet property investors enjoy capital appreciation
on the property itself, as the value of the property
increases. At the same time, the buy-to-let property
is producing a passive, inflation-linked income in the
form of monthly rental.
7. The best hedge against inflation
Buy-to-let property has been proven to outperform
inflation. Property price growth, while experiencing
short-term fluctuations, continues to keep pace
with long term inflation. Inflation boosts prices of
physical property. The monthly rental income keeps
pace with annual inflation.

RESOURCES
P3 Investment Group
www.reimag.co.za