more than the bond payments , you can start saving to build up an emergency fund or invest any extra cash you have . Remember though , people rarely buy a property outright and they come with running costs , so bond costs , agents fees must be worked out and they will eat into your return .
Once bond , costs and taxes are taken into account , you will want the rent to build up over time and then potentially be able to use it as a deposit for further investments . This means you will have benefited from the income from rent , paid off the bond and hold the property ’ s full capital value .
Think about your target tenant Instead of imagining whether you would like to live in your investment property , put yourself in the shoes of your target tenant . Who are they and what do they want ? If they are students , it needs to be easy to clean and comfortable but not luxurious . If they are young professionals , it should be modern and stylish but not overbearing . If it is a family , they will have plenty of their own belongings and need a blank canvas .
Remember that allowing tenants to make their mark on a property , such as painting , or adding pictures or taking out unwanted furniture makes it feel more like home - these tenants will stay for longer , which is great news for a landlord .
Look further afield or fix up a property
Most investors look for properties near where they live . But your town may not be the best investment area . Having a property close by has its advantages , but if you will be employing a reputable agent they should do that for you . Cast your net wider and look at towns that are popular with families or have a sizeable university .
It is also worth looking at properties that need improvement as a way of boosting the value of your investment . Tired properties or those in need of renovation can be strongly negotiated for a better price and then spruced up to add value .
Shop around for the best bond Do not just walk into your bank and ask for a bond . It sounds obvious , but people who do this when they need a financial product are one of the reasons why banks make billions in profit . If you are looking for advice , consider using a specialist bond originator who will shop around for the best offering . Remember , asking for information is not an obligation to use them .
Partner with specialists There are two areas that you need to have managed by experts : your investment and its process , and the rental . In both cases , with the right assistance and guidance , you would not be only investing in your wealth , but also in your time . Make sure the property works for you , not the other way around .
Letting agents will charge you a management fee , but will deal with any problems and have a good network of plumbers , electricians and other workers if things go wrong . You can make more money by renting the property out yourself but be prepared to give up weekends and evenings on viewings , advertising and repairs .
When picking an agent , select a shortlist of agents big and small and ask them what they can offer you and weigh up their services , costs and what works for your investment model .
Get the right mindset Buying income-producing property requires a different mindset than purchasing a home . Buying a home is an emotional purchase , whereas an investor buys a property because of its value , the income it will generate and its potential for capital appreciation . So make sure you view the property as an investment with the right perspective and the end-goal in mind .
www . reimag . co . za Residential E-Book 2016 7