Is now a good time to invest in property?
DURBAN - Contrary to popular belief, residential property remains one of the more attractive and risk averse investment strategies in South Africa.
While the market is in decline, there are still pockets of excellence (sought-after areas), and that taking a long-term view to property investment will serve homeowners and investors well in the long run.
It is a buyers’ market, and this is set to continue for at least 18-months. There have been reports of high levels of sales during lockdown where buyers have either bought properties that they saw prior to lockdown or that they viewed via a virtual tour. We’ve also seen a resurgence in property demand on the East Coast in areas such as Ballito and Umhlanga”.
I foresee an uptick in residential property buyers, largely due to low interest rates but cautions that buyers should consider both best- and worst-case scenarios before investing. Covid-19 has taught us to prepare for every eventuality. When the interest rates rise again, can you still afford your home? As an investor, can you afford your bond repayments should your place stand empty, and for how long?
Where to Put your Money
Co-living and communal spaces (particularly ‘student lets’) remain an exciting area for investments - particularly in the current climate. Here, an owner has multiple leases to s single property, therefore with all things considered, their overall risk should be lower.
With our large, young population, secure estate living remains popular for new families or couples looking to start a family. Buying off plan is also a great option as it gives you time to save and generally starts increasing in value before you even move in.
There are various strategies that one can take. It’s best to seek guidance on the correct path to follow but common investment strategies include buy to let, short-term letting, rent to rent, develop to rent and commercial multi-lets.
Each of these has its own set of pro’s and con’s and here it is important to once again determine your long-term goals and strategies before selecting a suitable option.
In terms of accessing finance, Grant shares a few options to consider. Consulting with a trusted financial consultant is the best way forward on this. It’s imperative to do your homework and to identify a path which will yield the best returns. Options include partnerships, joint ventures, structured finance and seeking assistance from family or angel (outside) investors.
Top Tips for Investors
Determine your strategy and goals: Do your due diligence and educate yourself. Rather than listening to various sources, find a trustworthy source of information and stick to your plan. Know your ‘why’. If you are purely investing for quick gains, then the property market might not be for you. We need to take a long-term view to the market and be realistic about the returns in the short, medium and long term.
Things change: It’s important to continuously revisit your goals and strategies. As we grow older, our appetite for risk changes, as does our finance independence.
Negotiation: When negotiating, factor in every cost. Our levies are on average R1500, a proportionally high cost often forgotten when evaluating a property. Our interest rates will change, the market will change. Insurance is needed, bond and transfer costs are to be factored in and even the cost of eviction. Eviction is an expensive and laborious process so be sure to factor in a monthly fee using a trusted service provider.
Grant Smee, is a property expert and entrepreneur.
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