A Beginner’s Guide to Investing in Property

Considering buying property for investment purposes? You’re not alone. This method of wealth generation is very popular and, if you do it properly, can be very lucrative. Many people have made money by buying property that appreciates over time – whether it’s because the location becomes more sought after, they make attractive renovations that increase the property’s value, or they rent the property out to tenants who cover a large portion of the mortgage. Of course, some people choose to do all three. Here’s what you need to know before you invest in your first property.

What are the risks?

Buying and selling properties is a time-consuming and expensive process. The various transactions can take several months to finalise and there are fees and costs involved every step of the way. You could also be placed in a precarious financial position if you struggle to find a tenant or if interest rates go up.

What are the benefits?

If you do your due diligence on your finances and on the property you want to buy, the process can be quite simple and most of the risk is reduced. Investing in property also offers an element of control and stability that other forms of investment lack; property isn’t as volatile as the stock market, for example. The long-term nature of the investment means that you should be able to cover your costs at the very least. In most cases, however, you’ll make a profit.

Where should you start?

Your first step involves finding out whether you’re eligible for a home loan (assuming, of course, that you’re not in a position to pay for a property in cash). Take a look at the repayments you’d have to make and factor in all of the other upfront costs. As a first-time buyer, it’s better to err on the conservative side of what you can afford. Start slowly. If your first investment property is a success, you’ll be in a better position to buy another one in the future.

Then, it’s time to start looking for your property. Don’t forget to take into account how much you’re willing to spend on renovations (if you’re doing them), as well as the levies, insurance and maintenance costs you’ll need to cover every month.

Ask for help

Although playing the property game is relatively straightforward, it can be daunting for a newcomer, so don’t be scared to ask for help along the way. Speak to estate agents in the areas you’re considering buying in, making sure you have a clear understanding of what you should be paying and how much you could potentially charge for rent.

Remember that it’s unlikely your rental will cover your entire mortgage or all of your monthly costs, especially in the beginning. You’re probably still going to have to contribute some of your own money every month. But as time goes by and you chip away at the bond interest, your rent will start to cover more, and within a few years you should start to reap some tangible rewards.


Property24: https://www.property24.com/articles/a-beginners-guide-to-buy-to-let-property-investment/22589

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