Investing on South African soil

Private Property South Africa
Cath Jenkin

Plant a tree

There’s an old adage: The best time to plant a tree was twenty years ago. The second best time is now. The same could be said for investing in property: it’s never going to be as cheap to buy your first property as it is right now. As the cost of living has soared over the past decades, and property prices seem to have done the same, there’s one thing that can be said about property: the value continues to grow.

A personal anecdote

If you’ll allow me a personal anecdote, that I’ll use to illustrate this point: My parents made wise property choices, from an early stage of their marriage. My mother used her savings from her career as a professional ballet dancer to build their first home, and when they opted to sell that property and move on to building their second home, from scratch, it cost my parents a mere R6000. Yes, that’s R6000 for a four-bedroom, suburban home in a good neighbourhood, with a large garden, double garage, and extra plug points installed. Nowadays, I am very certain they wouldn’t be able to feed their family of five for a month on that R6000, much less build an entire house! There is simply no reason to hold back on buying your first property, and I’m sure my parents would agree with me here.

Start your asset engine

As an investment opportunity, property is one of the largest growth assets you can get involved in, and that’s a global truth. As a tangible asset, where its value is first defined by how much you can afford to devote towards investing in it, property presents an incredible opportunity for generating wealth - not only for you, but your family too. If you’re considering investing in property for the very first time, don’t delay: the sooner you start your asset engine, the better your returns will be.

An inflation buster

It’s a general rule of thumb for every investor: immovable assets are considered to be lower risk, and offer higher returns on your investment. Of course, when you buy property, you purchase an immovable asset. And theoretically, the value of an immovable asset is relatively unaffected by a rising inflation rate. In fact, rising inflation can help you as a property investor, because it boosts your property’s value. In the long term, increased property prices pay off for you as an owner, when the time comes for you to sell.

Collateral benefits

Very often, your ability to obtain a line of credit depends on another big C word: collateral. Collateral can be defined as something you offer a credit provider, as a surety that you’ll be paying back that loan. Your property investment could serve as collateral, if you need it to, and that may lead to further investment opportunities, that enable you to further your financial growth.

Your second income stream

Everyone’s feeling the pinch on their budget and bottom line, and creating a second stream of income is no longer a luxury decision: it’s a definite necessity for modern living. When you buy a property to rent it out, you’re creating the opportunity to earn a second income, without too much day-to-day effort. Although being a landlord can sometimes be difficult, the benefits of paying off a bond and creating secondary income opportunities for yourself often outweigh the pitfalls. The rental income you generate can be used to pay off a bond, save for the future, or utilised for other investments.

Comparatively speaking

As a property investment opportunity, South Africa is unmissable. Foreign property investors have long known this, with investors from overseas purchasing properties in upmarket suburbs for a comparative steal. Rather than investing your capital in foreign countries, consider the capital investment you have available to you, and just how much more bang you’ll get for your buck, by buying property in South Africa.

Starting small

It’s relatively easy to start small when investing property in South Africa: properties purchased for under R1 million feature as part of the most active segment of the property marketplace. That makes total sense too, because properties under the R900 000 mark attract no transfer duties. That’s a significantly low barrier to entry if you’re looking to make your first investment into the property market.

Read more: 2019 is the year for first time home buyers

Your capital investment

Also, if you’re saving up for a deposit right now, and plan to invest in property in the near future, don’t sweat too much: many financial institutions are willing to offer 0% deposit home loans, giving first time buyers a 100% home loan.

A buyer’s market

The good news about 2019: we’re in a buyer’s market. An election year usually lends itself towards a buyer’s market, where the average property prices dip. This presents an enormous opportunity for property investors, where they’re able to pick up a new investment property at a lower-than-expected price.

It’s time to start your asset engine and make your first investment: build your wealth with property.

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