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.
Tired properties or those in need of
renovation can be strongly negotiated
for a better price and then spruced up
to add value.
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
www.reimag.co.za
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.
Residential Handbook 2015
9