Property Advice

Private Property’s crash course on becoming a property investor: Part Four

Private Property Reporter | Feb 10, 2026

This is not the ‘ultimate’ guide because the property market goes through many cycles that are impacted by a number of factors, but it does give you working knowledge about how to invest in one or multiple properties to ultimately build a portfolio with confidence.

The purchase of your first investment property

In Part One we stressed the importance of knowing and understanding your financial position, and in Part Two we mapped out how to use equity from your primary home loan to buy your first investment property. In Part Three, we covered the considerations involved in the search for investment properties.

When buying your first investment property, it is always a good policy to start small. This allows you to test the market and determine whether this type of investment suits you. However, crossing your fingers and hoping for the best is not a good idea; you need some capabilities and understanding of the market, including demand for rentals in the area you wish to purchase.

The mindset shift

Buying an investment property requires a different energy than that of purchasing a home in which you will live. The latter is an emotional decision, and the former should be analytical. The investment is about securing reliable tenants who will help you to pay off the property’s home loan and ultimately earn you profits.

Your mindset must shift to the financial considerations, such as the return on investment (ROI) and the long-term appreciation and future value.

At this point, if you haven’t already done so, it is worth revisiting your thinking, bearing in mind the risks:

Economic downturns can impact the demand for rentals and the value of the property.
It is not always easy to manage difficult tenants. There are also stringent laws protecting tenants that may make it difficult to evict a rent-defaulting tenant.
You are expected to maintain the property and keep it in good condition. Part of your income from the rental should account for this.

It is wise to prepare yourself for the property being unoccupied at certain times. You may find yourself having to adjust the rental fee downwards from time to time to account for this. Remember though, that a long-term tenant who pays the rent on time and never defaults may be preferable to one who pays a higher rental over a short term.

Choice of property

In South Africa the best choices, based on demand, for a rental property include:

One- to two-bedroom apartments with in-house amenities such as gyms, swimming pools, concierge, coffee cafes, and group working spaces: ideal for young professionals.
Two- to three-bedroom properties within well-managed and secure estates, especially those with a small garden. These are popular choices for single families, the empty-nester who is downsizing, and singles or retired couples.
Bachelor apartments that have a separate bathroom. Consideration must be given to the high turnover rate if these are rented to students and that the property may be vacant for two-to-three months of the year.
A small property near a popular coastal region. These may also experience slow occupation rates during colder months but generally fetch a high rental in peak holiday periods.

Start your search here

Location

All the above require investigation into the location, including nearness to transport routes and parking, medical, educational, and retail facilities, office or manufacturing precincts, and social activities. The closer your property is to these amenities, the better your chances of securing a tenant, and hopefully one that intends to rent for the long term.

Working with agents

If you have time constraints and can’t spend time searching online nor viewing properties that may not be exactly specific to your requirements, it is beneficial to reach out to local agents. They have a wealth of connections and networks and often are aware of properties that are about to come on the market, which may give you an advantage in being one of the first to view a prime property.

An added advantage is that some agents also have a rental side to their business. For a fee, they will show the property to potential tenants, interview and undertake credit checks, facilitate the lease agreement, do property inspections, and navigate the legal compliances. This can be a lifesaver for the novice investor.

Preparing the finance

The costs associated will include:

A deposit, which is typically around 10% of the property’s value.
Home loan and registration of the home loan fees.
Transfer costs to have the property put into your name.
Levies that are applicable in a sectional title or body corporate managed estate or apartment block.
Building insurance to cover any financial losses if the property is damaged or a geyser bursts.
Municipal deposits and fees for ongoing electricity, water, and refuse removal, and rates and taxes.

The buying process

Buying an investment property follows the same procedure and process as buying a primary property:

Ensure you have a deposit.
Put together your paperwork that will be required: e.g., ID documents, statement of accounts—usually three months of utility bills, and proof of income.
Ask a home loan provider for a pre-qualification, which reassures the seller that you are likely to be approved for finance.
Submit an offer via the Offer to Purchase (OTP) agreement, including any special conditions.
Negotiate the sale price if your first offer is rejected.
Once accepted, apply for finance.
The seller will appoint a conveyancer, with whom you will liaise for the transfer process and who will also direct the costs involved.

Once the property is transferred into your name … congratulations … You officially own your first investment property and can start renovations if necessary and seek a tenant.