DON’T
AVOID RISK – LEARN TO MANAGE IT
When investing in property, most people go into it in trepidation, wanting to avoid making the wrong decisions. Avoiding risks will tempt you into buying whatever is being sold to you. As with most investments, the higher the risk, the higher the return. With property your risk is easier to manage, as you have more control over this asset class. You decide where to buy, how to qualify your tenants, what will add value to your investment and what realistic return you are aiming for.
It is important for you to gain knowledge about your market, area and solid investment strategies. There are many books on the subject as well as internet resources you can use to develop this skill, but nothing beats knowledge gained through experience. Of course, using a PROPERTY NETWORK agent provides you with all that experience and knowledge without having to go through it all yourself.
The durability and intrinsic value of property is timeless and therefore the best part of investing in property is that in the long term property will forgive you almost any mistake you have made.
CHASE INCOME – CAPITAL GROWTH LOOKS AFTER ITSELF Top
It is always amazing how many investors are concerned with the capital growth prospects of an area, often ignoring great income potential. Yet lower end properties produce the best returns. Always make sure you aim to be cash flow positive from the outset or as soon as possible thereafter. The area in which you decide to invest forms part of your risk management strategy.
Some properties can be immediate “cash cows”, such as CBD areas where student and transient accommodation is at a premium and investors can manage their risk by being actively involved in the development of these areas and the management of these sectional title units.
Focus on profitability and cash flow – any property will automatically give you capital gain over time.
STICK TO YOUR TERRITORY Top
Diversification to spread your risk requires too much capital. Not only are you subjected to what the market is doing in those particular areas, as you don’t have a substantial stake, but it also becomes an expensive exercise trying to manage a diverse investment portfolio.
When planning your investment strategy, select an area that shows potential for reconstruction and development. Get to know the area well, as intimate knowledge of your territory mitigates risk. Be prepared to tramp the streets. Know your territory better than anybody else. It is pointless buying property in an area you don’t visit, where you don’t know the inhabitants or anything about the council’s plans. If you live too far away to be involved in its development, avoid risking investing in the area unless you have a hands on representative or estate agent that will be able to undertake this on your behalf.
BUY “WISE” WHILE OTHER ARE PANICKING Top
The statement “buy when everyone is selling”, still remains a truism and one well worth remembering. Add wisdom to that however and seek areas that are well known or “notorious”. Sooner or later everybody will come to their senses and the tide will change.
Take the effort to get involved in upgrading such areas by holding government responsible to its commitment to repair infrastructure, supply sanitation and abolish crime. Not only will you contribute to society as a whole, but your investment will increase considerably in value.
LEARN TO SAY NO Top
Stick to your investment strategy, area of choice or maximum capital outlay. Don’t get caught in the hype of “fabulous investment opportunity”. If it doesn’t conform to your investment strategy, it is not an opportunity for you. Decline the offer and move on with your strategy.
That being said, after you have said no, although it does not match your current strategy, it would be well worth your while to take your time and consider what was on offer. Do a full investigation. Maybe your strategy needs adapting. Be ready to learn and fully prepared the next time a similar offer comes along.
LEARN TO MANAGE YOUR CLIENTS Top
You may decide to buy in an area that is not quite up to scratch yet, but there is no reason for you to become a slumlord. Treat your tenants with respect and dignity and they will reward you accordingly.
Ian Fife, the property editor of the Financial Mail has significant investments and his favourite investment areas are Hillbrow and Berea.
He ensures that all his properties are clean, have electricity, running water and good kitchen and bathroom facilities. “The poor pay better than the rich if you treat them well,” he says. In the process he has become a landlord of choice and never has a problem with his tenants, as they also know that his properties are in high demand. By spending R30 000 to upgrade a flat, he is assured of immediate capital growth, tenancy preference and the reputation of being a man of integrity.
HAVE PATIENCE Top
Investing in property is not a get-rich-quick scheme. It is a process that takes time, patience and dedication. An astute property investor will often attribute their personal success to being in the game for the long haul. Ian believes that you do not sell your investments during tough times, but rather release equity to manage these downturn cycles, as they will inevitably change again.
Some people may have heard all this before, while for others this is a new take on property investment. The secret doesn’t lie in having all the knowledge, but in applying such knowledge. Which territory are you taking ownership of?
BUY EARLY AND WAIT Top
This pearl of wisdom was gleaned from a successful property investor some many years ago and is what drives our property investment strategy – “Buy while nobody else wants the property”. If capital gain – very high capital gain is your target then this must be your maxim.
Look to where development is heading. Find areas that will develop in the medium to long term – normally on the fringes of the urban area. What you purchase today as a small holding at around R50,000 per hectare will become prime residential land in the future. Subdivide each hectare into 12 or so plots and you can do the sums as to your returns.
This is where the big money lays – if you have the foresight and patience.
Relevant Articles
Property Investment Advice from Professionals
Key Considerations in Investing
Investing in Commercial Property
Rental vs Buying
Professional Property Management
When investing in property, most people go into it in trepidation, wanting to avoid making the wrong decisions. Avoiding risks will tempt you into buying whatever is being sold to you. As with most investments, the higher the risk, the higher the return. With property your risk is easier to manage, as you have more control over this asset class. You decide where to buy, how to qualify your tenants, what will add value to your investment and what realistic return you are aiming for.
It is important for you to gain knowledge about your market, area and solid investment strategies. There are many books on the subject as well as internet resources you can use to develop this skill, but nothing beats knowledge gained through experience. Of course, using a PROPERTY NETWORK agent provides you with all that experience and knowledge without having to go through it all yourself.
The durability and intrinsic value of property is timeless and therefore the best part of investing in property is that in the long term property will forgive you almost any mistake you have made.
CHASE INCOME – CAPITAL GROWTH LOOKS AFTER ITSELF Top
It is always amazing how many investors are concerned with the capital growth prospects of an area, often ignoring great income potential. Yet lower end properties produce the best returns. Always make sure you aim to be cash flow positive from the outset or as soon as possible thereafter. The area in which you decide to invest forms part of your risk management strategy.
Some properties can be immediate “cash cows”, such as CBD areas where student and transient accommodation is at a premium and investors can manage their risk by being actively involved in the development of these areas and the management of these sectional title units.
Focus on profitability and cash flow – any property will automatically give you capital gain over time.
STICK TO YOUR TERRITORY Top
Diversification to spread your risk requires too much capital. Not only are you subjected to what the market is doing in those particular areas, as you don’t have a substantial stake, but it also becomes an expensive exercise trying to manage a diverse investment portfolio.
When planning your investment strategy, select an area that shows potential for reconstruction and development. Get to know the area well, as intimate knowledge of your territory mitigates risk. Be prepared to tramp the streets. Know your territory better than anybody else. It is pointless buying property in an area you don’t visit, where you don’t know the inhabitants or anything about the council’s plans. If you live too far away to be involved in its development, avoid risking investing in the area unless you have a hands on representative or estate agent that will be able to undertake this on your behalf.
BUY “WISE” WHILE OTHER ARE PANICKING Top
The statement “buy when everyone is selling”, still remains a truism and one well worth remembering. Add wisdom to that however and seek areas that are well known or “notorious”. Sooner or later everybody will come to their senses and the tide will change.
Take the effort to get involved in upgrading such areas by holding government responsible to its commitment to repair infrastructure, supply sanitation and abolish crime. Not only will you contribute to society as a whole, but your investment will increase considerably in value.
LEARN TO SAY NO Top
Stick to your investment strategy, area of choice or maximum capital outlay. Don’t get caught in the hype of “fabulous investment opportunity”. If it doesn’t conform to your investment strategy, it is not an opportunity for you. Decline the offer and move on with your strategy.
That being said, after you have said no, although it does not match your current strategy, it would be well worth your while to take your time and consider what was on offer. Do a full investigation. Maybe your strategy needs adapting. Be ready to learn and fully prepared the next time a similar offer comes along.
LEARN TO MANAGE YOUR CLIENTS Top
You may decide to buy in an area that is not quite up to scratch yet, but there is no reason for you to become a slumlord. Treat your tenants with respect and dignity and they will reward you accordingly.
Ian Fife, the property editor of the Financial Mail has significant investments and his favourite investment areas are Hillbrow and Berea.
He ensures that all his properties are clean, have electricity, running water and good kitchen and bathroom facilities. “The poor pay better than the rich if you treat them well,” he says. In the process he has become a landlord of choice and never has a problem with his tenants, as they also know that his properties are in high demand. By spending R30 000 to upgrade a flat, he is assured of immediate capital growth, tenancy preference and the reputation of being a man of integrity.
HAVE PATIENCE Top
Investing in property is not a get-rich-quick scheme. It is a process that takes time, patience and dedication. An astute property investor will often attribute their personal success to being in the game for the long haul. Ian believes that you do not sell your investments during tough times, but rather release equity to manage these downturn cycles, as they will inevitably change again.
Some people may have heard all this before, while for others this is a new take on property investment. The secret doesn’t lie in having all the knowledge, but in applying such knowledge. Which territory are you taking ownership of?
BUY EARLY AND WAIT Top
This pearl of wisdom was gleaned from a successful property investor some many years ago and is what drives our property investment strategy – “Buy while nobody else wants the property”. If capital gain – very high capital gain is your target then this must be your maxim.
Look to where development is heading. Find areas that will develop in the medium to long term – normally on the fringes of the urban area. What you purchase today as a small holding at around R50,000 per hectare will become prime residential land in the future. Subdivide each hectare into 12 or so plots and you can do the sums as to your returns.
This is where the big money lays – if you have the foresight and patience.
Relevant Articles
Property Investment Advice from Professionals
Key Considerations in Investing
Investing in Commercial Property
Rental vs Buying
Professional Property Management
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