PROPERTY NEWS - Property can be the best investment that you make and is most certainly the best way to build wealth, but beyond your primary homestead, investing in a rental property for example can become a financial nightmare.
You need to know what you are getting yourself into, especially if you are a novice investor. Property, and South African property in particular, has proven to be one of the best investments that you can make.
Aside from investing in your own residential apartment or home, there is always the option of investing in an additional property or multiple properties as part of a portfolio of properties to rent out and earn rental returns or yields while your investment value grows year-on-year.
Many, many pitfalls
Rental property in particular seems to have grabbed attention as attractive investment options for buyers. While you cannot really go wrong with local property unless you hopelessly overpay, buy a structurally unsound property or buy in the wrong area, when it comes to property that is not your primary home, there are many, many pitfalls.
Buyers should know that while it may look as easy as buying a property and getting tenants in, there are in fact many hidden nuances, logistical, legislative and financial that you need to be aware of, especially if you are a newcomer to the market.
While it may seem like a great idea and could be very tempting to invest your cash or finance in a second property because you can off-set some of the costs against a monthly rental income, novice investors should take great care.
Unless, you are in the business of rentals, we would urge prospective buyers and investors to do their homework thoroughly, investigate the market carefully and think about the costs, not just financial, but also the time and hassles that can come with a rental property.
Poor economic outlook
While the demand for rental accommodation is likely to again tick up notably as the weak economy and rising costs drive more consumers to the rental market, the poor economic outlook can likewise dampen the performance of rental accommodation. Rental rates tend to remain flat as consumers simply cannot afford to pay more.
This is just one of the aspects to consider as the costs of a rental property almost always tends to be significantly higher than initially budgeted for. For novice investors, this can be financially crippling.
Rental property in particular seems to have grabbed attention as attractive investment options for buyers. While you cannot really go wrong with local property unless you hopelessly overpay, buy a structurally unsound property or buy in the wrong area, when it comes to property that is not your primary home, there are many, many pitfalls.
Buyers should know that while it may look as easy as buying a property and getting tenants in, there are in fact many hidden nuances, logistical, legislative and financial that you need to be aware of, especially if you are a newcomer to the market.
While it may seem like a great idea and could be very tempting to invest your cash or finance in a second property because you can off-set some of the costs against a monthly rental income, novice investors should take great care.
Unless, you are in the business of rentals, we would urge prospective buyers and investors to do their homework thoroughly, investigate the market carefully and think about the costs, not just financial, but also the time and hassles that can come with a rental property.
Poor economic outlook
While the demand for rental accommodation is likely to again tick up notably as the weak economy and rising costs drive more consumers to the rental market, the poor economic outlook can likewise dampen the performance of rental accommodation. Rental rates tend to remain flat as consumers simply cannot afford to pay more.
This is just one of the aspects to consider as the costs of a rental property almost always tends to be significantly higher than initially budgeted for. For novice investors, this can be financially crippling.
