6
INVESTOR INTELLIGENCE
Ways to Action your
Property Investment Strategy now!
Having a good psychology is key
BY NEALE PETERSEN
M
ore psychology is needed in investing.
Change is inevitable; if we don’t change
and transform ourselves change will take
charge of us. We have moved from the agricultural
age 30 000 years ago followed by the industrial age
300 years ago to the information age 30 years ago,
The shift from 2006 onwards has been the flow from
local to global or glocalisation, the flow to and power
to the individual.
Six intelligent ways to action your property wealth
strategy
1
Set your goals and strategy from the outset
What are you looking to achieve? Are you
looking for capital growth or passive income? By
what date do you want to achieve that? How are you
going to get there? For example – what do you want
to achieve by 31 December 2017? For example – I
have 3 cash flow positive residential houses and one
cash flow positive commercial property.
2
Have a solid base to start
Where are your funds now? Are they accessible
or are they tied up? If you are borrowing money to
invest is the finance immediately accessible?
3
Invest with the head not the heart!
It is easy to fall in love with a property for all the
wrong reasons. Ask yourself does it fit in with your
strategy as an investment?
4
What is your exit strategy?
This should be one of your first considerations.
Do I want to hold the property forever or buy and
sell in a few years? When you want to realise your
4
Residential Handbook 2016/17
profit on sale that will want to buy this property? Are
you making the investment widely sellable or are you
limiting your options by being too specialised?
5
Learn how to use leveraging sensibly
Borrowing other people’s money to grow your
portfolio is a great way to grow your portfolio
quickly. If you do this make sure you are allowing for
interest rate increases and rental lapses, etc. Work out
a worst-case scenario and then calculate how much
you should borrow.
6
Buy under market value
You are more likely to determine the success of
your investment by how you pay for your property
rather than how much you sell it for.
For example, if you purchase a property for
say R600 000 with a real 20% discount you
are already! Ensure it is a genuine discount by
analysing comparative prices through using data like
Lightstone. Attractive discounts can also be obtained
by investing off-plan at the earliest possible stage.
You are more likely to determine the success of
your investment by how you pay for your property
rather than how much you sell it for. For example, if
you purchase a property for say R600 000 with a real
20% discount you are already! Ensure it is a genuine
discount by analysing comparative prices through
using data like Lightstone. Attractive discounts can
also be obtained by investing off-plan at the earliest
possible stage.
RESOURCES
Lightstone, REIM
www.reimag.co.za