Property investment strategies: short-term versus long-term

Welcome to the world of property investment, where your decisions play a role in the future value of your home. Whether you’re aiming to flip your home for a handsome profit in the short term, or to build value over the long term, Seeff has the property investment strategy that will make your property work for you.   

Let’s delve into the differences between short and long-term property investments and how to get the most out of each. People often ask which is better between short-term investment and long-term investment and as you’ll see, the answer lies in your motives and in what type of investor you want to be.

House-flipping 101 - everything you need to know about short-term property investments

Buying a home that’s described as “needing TLC” and transforming it into a sophisticated masterpiece before selling it again to make a handsome profit is known as “house-flipping”. While it is considered a shorter-term form of property investment than buying a home you intend to live in or rent out, the amount of work and required investment should not be underestimated.  

The first thing you’ll need to do if you’re interested in becoming a house flipper is set a budget – and then stick to it. Your budget needs to include what you will spend to buy the property, transfer fees and other costs associated with buying property, the funds that you’ll invest on upgrading the property and agent’s commission when it’s time to sell the property.

One of the most important factors to consider is the location of your new property. A newly renovated home in a great area is likely to give you a great return on your investment. Chatting to a property practitioner about the location of the property you’ve got your eye on is a great idea – even if you know the area well. It’s also important to do your homework on the area’s future. For example, if a new shopping centre is earmarked for your quiet neighbourhood, the changes ahead may have an impact on your investment’s value. Ask your property practitioner to show you the area’s sales data for the last six months.

Avoid decorating the property lavishly as this will firstly add to your expenses and secondly make it a home decorated to your tastes, rather than a blank canvas on which a would-be buyer can imagine his or her own life. 

Building long-term security — the ‘why’ and ‘how’ of long-term property investment

The main difference between long-term and short-term property investments is the time involved in getting a return on your investment. Rather than being a home that you buy and flip, a long-term property investment opportunity could be a home that you live in or one that you rent out to tenants. It could also be vacant land or commercial real estate.

Buying property to let it out is one of the most popular property investment strategies in South Africa. For starters, you get to reap the benefits of monthly rental and your tenants ultimately help you to pay off your investment. Over and above that, your property will grow in value, leaving you with an asset that you can sell for a profit later. If it’s time to sell your long-term property investment, there are various renovations and upgrades that can help you get the maximum return on your investment. Kitchen and bathroom remodels top this list, and need not cost a fortune if you look at affordable measures like changing the handles on your kitchen cupboards rather than replacing the whole cupboards.

Even if you’re not considering selling your investment property in the near future, spending money on maintenance is a wise investment. A well-kept property will attract great tenants and it will also prevent large expenditure being required when it is time to sell.

Whether you’re looking to make a short-term or long-term real estate investment, you need a great property practitioner on your team. The Seeff team has decades of experience in helping property investors achieve their goals. Contact us today for more information.