Real Estate Investor Magazine South Africa July 2015 | Page 16

COVER STORY

P
Diversify
Your Property Portfolio
Smart options to consider
BY MONIQUE TERRAZAS

14

JULY 2015 SA Real Estate Investor

roperty remains the
asset choice of the
world’s wealthiest,
from the Queen
of England and
Donald Trump to
listed property companies and
large institutional investors such as
pension funds.
The
buy-to-let
property
investment model remains one of
the most effective ways for investors
to build wealth. An investor simply
acquires a well-chosen property in
a carefully selected area that offers
both strong rental demand and
good prospects for future capital
growth, using gearing (a mortgage
loan), and then rents the property
to a well-screened tenant. The
rental income should cover most –
if not all – of the property expenses,
including the mortgage bond
repayments. As the rental increases
year after year, the property starts
producing a monthly profit, which
increases exponentially once the
mortgage bond is paid off. At the
same time, the property – if well
maintained - produces capital
appreciation year after year.
In essence then, with the right
buy-to-let property, investors can
build an ongoing inflation-linked
annuity income stream through
an asset that also generates capital
growth, using very little of their
own out-of-pocket money to do
so, as the property is acquired
with mortgage finance and the
rental income covers the mortgage
repayments and other property
costs.
Despite the economic, political
and social uncertainty in the local
market, there are undoubtedly
investment hotspots in South Africa
that are delivering inspiring returns.
As just one example, the Rawson
Property
Group
Brackenfell
Roslyn franchise recently reported