Property investment allows you to build wealth and secure your financial future. It’s an attractive option for any South African hoping to bring in passive income, build a portfolio of assets, and escape the financial hardship so rampant in our beautiful country. Property investment for beginners, however, is a daunting prospect.
Samuel Seeff, chairman of the Seeff Property Group, states that rental property (in particular) can be a great investment if you buy in the right area and there is demand for the type of property (for example, apartments).
For first-time property investors, it’s important to understand the basics and to be aware of common pitfalls. From understanding the basics of the process to taking into account the risks and rewards, these tips provide guidance on property investment for beginners:
A guide to property investment for beginners would be incomplete without mentioning costs and the importance of planning for unforeseen expenses. Maintenance and repair costs, property taxes, insurance, and other fees can quickly add up and cause you to lose money on your investment.
Without a plan and a budget, your situation could go disastrously wrong. Consider the following costs before you invest in property:
Are you wondering which of the above expenses can be passed onto your tenant? It's crucial that your lease agreement outlines who pays for what. Typically, tenants are responsible for rental fees and utilities, while landlords cover property taxes, levies (if applicable), and maintenance not caused by tenant negligence.
Here are two important considerations for you:
Landlord Insurance. As the owner, it’s your responsibility to insure the property itself. As for the contents, it's the tenant's responsibility to insure unless the property is furnished (in that case, you should insure the contents).
Effective Lease Agreement. Ensure that your lease agreement provides for periodic property inspections with the tenant's permission.
For extra peace of mind and convenience, it's advisable to enlist a Property Practitioner to manage the property, particularly if you're a novice investor or live far away from your investment property. A Property Practitioner can help you navigate the intricacies of property management and guarantee that everything runs smoothly.
Property investment for beginners is daunting but exciting. With the right strategy and guidance from a qualified Property Practitioner, you can confidently begin your journey into the world of property investment. Seeff is here to help. For more guidance, read our blog on the best property investment tips for South Africans.