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