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Most first-time property investors opt to invest in residential property – for various good reasons. It’s usually more affordable than commercial or industrial real estate and the process is a lot simpler. For some, an investment in commercial or industrial property may be the right step, but if you’re getting started, residential property is likely to give you a good introduction to the world of property investment.
When you’re looking for the ideal buy-to-let property, remember the old real estate adage: location, location, location. Think about where your prospective tenant would like to live and what sort of amenities they would want access to. You’re less likely to find a tenant wanting to rent a luxury country villa than you are to find one looking for a one-bedroom apartment in a vibrant inner-city neighbourhood that’s close to workplaces, gyms and nightlife.
Top property types to be on the lookout for as an investor include two-bedroom apartments that are 50 sqm or bigger with a parking bay. Another type of property that’s popular among tenants is three-bedroom freestanding houses with at least 100 sqm of space inside and a double garage.
Once transfer formalities are concluded and your buy-to-let property is officially yours, the clock starts ticking! You want to get a tenant into your property as soon as possible to offset your bond payments. To do this, any renovations you need to get done need to be organised efficiently. The best solution is to have a prearranged team – consisting of at least a handyman, a painter and a plumber – on call. By being organised, you can ensure that your asset starts providing you with a return on investment as quickly as possible.
Q: Which property is best for investment in South Africa?
A: Sectional title properties make a great investment in South Africa. For starters, they are sought after among tenants because of the security and amenities that they offer. Secondly, because they are usually smaller than other properties, they tend to be more affordable. As an investor, you may not live nearby and if you buy into a sectional title, you get the peace of mind of knowing that certain aspects of your property’s exterior will be maintained by the body corporate.
Q: How should a beginner invest in property in South Africa?
A: There are two things you should do to kickstart your property investment process. The first is to find a property practitioner who you trust and the second is to liaise with a bond originator to find out how much you can afford and get preapproved for a home loan. Once you’ve found the right property, your bond originator will work towards securing a home loan for you.
Q: Is it good to invest in property now in South Africa?
A: The interest rate – which plummeted during the pandemic – has been steadily rising, which makes it tougher to invest in property in South Africa. On the flip side of the coin, that means that rental properties are likely to be in higher demand, which means that this is an ideal time for savvy property investors to enter the buy-to-let market.
The best advice for anyone considering investing in property in South Africa is to have a qualified and experienced property practitioner on their team. Seeff has decades of experience in helping people in every corner of South Africa buy and rent out properties. Contact us and let’s find your ideal investment property.