Real Estate Investor Magazine South Africa February 2015 | Page 37

RESIDENTIAL

4. Lock in your interest rate
It is something of a game for seasoned investors to try
to beat the market by second-guessing future interest
rates by locking in a fixed interest rate. The gamble is
that the fixed rate you lock in will be lower than future
variable rates for the period for which the rate is fixed.
‘Betting’ on interest rate moves is a speculative
venture and trying to forecast future interest rates
is far more difficult than choosing a good property
investment. The real benefit of fixing your interest
rate lies in giving you certainty. Knowing your bond
repayments for a given period of time is a great way to
manage risk.
5. Use a trust
The protective benefit of a trust for a property investor
is that if you have debt enforcement action taken out
against you or you go bankrupt, assets in which you
have an interest via a trust (including properties) will
be sheltered from such action.
There are other benefits of a trust, most particularly
the ability to distribute income on a basis to minimise
tax liabilities. From an asset protection point of view,
the value of a trust is the risk associated with the
debt or liability