Investing in rental properties is still one of the smartest ways to grow your wealth. Through the various trials and tribulations that our country and our world have gone through, real estate has consistently proved to be a resilient investment.
Join Seeff as we take a look at everything prospective property investors need to know.
How do you successfully invest in property?
If you’re new to property investment and rental properties, the most valuable piece of advice we can give you is to enlist the help of a property practitioner. Take advantage of their years of experience and ask as many questions as you can think of. What areas are best for investment? Based on my current financial resources, how much should I be spending? How do I find a great tenant for my rental property? Knowledge is power and the more prepared you are, the more successful you will be.
To successfully invest in property, you need to have the financial means to put down a deposit and pay for any renovations that may need to be done before your rental property can start paying dividends. You’ll also need funds to tide you over during times when you may not have a tenant in your rental property.
Another important tip is to make the most of the tools at your disposal. For example, using a bond originator can help you get the best possible deal on your home loan with the lowest possible amount of effort on your part. Bond originators apply to all the banks for home loan finance on your behalf and you only have to fill in one set of paperwork.
Ultimately, to successfully invest in property, you’ll need to find the right property in the right area at the right price. Over and above this, you’ll need to find a reliable tenant. If this all seems overwhelming, never forget that help is at hand.
What kind of properties are best to invest in?
Many property investors have found that sectional title properties make the best investments. There is a lot to be said for the security on offer for an investor who buys in a sectional title or in an estate governed by a homeowners’ association. Over and above this, if your rental property is in a complex, the body corporate will take care of certain obligations on your behalf, including buildings insurance and maintenance of the exterior of your property. At the same time, a well-run body corporate will have rules in place designed to create a harmonious living environment for your tenants to enjoy.
When thinking about the size of your rental property, the important thing to think about is what a typical family needs. Depending on your budget, the best type of property to invest in is either a two-bedroom apartment of at least 50-60sqm or a freestanding house of at least 100sqm. In the case of the apartment, it should come with at least one parking bay. A freestanding house should ideally include a double garage.
Frequently asked questions about investing in rental properties
Q: How much do you need to invest in real estate in South Africa?
A: This depends entirely on the property that you want to invest in. You’ll need to either have enough money to pay for the property, or the necessary means to get a home loan. You’ll also have to pay transfer duties if the property you’re buying is worth more than R1 000 000. There are also various admin-related charges that crop up when you’re buying property. Over and above this, you’ll need to have resources to invest in making your new property look great for would-be tenants.
Q: Is it good to pay cash for a rental property?
A: The advantage of paying cash for a rental property is that your offer will look particularly appealing to the person selling the property. However, having cash is not essential if you are able to apply for a home loan.
The Seeff team has helped entire generations of property investors to enhance their wealth through rental properties. Get in touch today and we’ll advise you on the best locations, property types and financing strategies for your next rental property investment.
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