Top tips for first-time property investors
Category News
Investing in your first property - whether you plan to live in it or rent it out - is an extremely exciting undertaking. Having spent decades helping property investors from all walks of life and financial circumstances succeed, Jawitz Properties has some tried-and-tested strategies to share. Read on for #RealAdvice on getting your finances in order, understanding the market with comparable statistics and choosing your location carefully.
Getting your finances in order
Before you buy your first property, you need to have some financial resources at the ready. While 100% home loans are a possibility, you're likely to get a more favourable interest rate if you put down a deposit. There are also other expenses such as legal fees and transfer duties to pay when you buy a property, as well as rates, levies, maintenance costs and other expenses once the property has been transferred into your name.
Before you start looking for your first property investment, you need to know exactly what you can afford. You can do this by getting preapproved with ooba. This will give you a ballpark figure as to what you can expect to be granted as a home loan. When it's time to actually apply, there are many advantages of using a bond originator. Firstly, you only have to fill in one set of paperwork and your application will be sent to all major South African banks.
Understanding the market
The area in which you buy your investment property will determine the type of tenants that you will be renting to - and this in turn will determine the type of property you should buy. If you're buying a family home in a suburban neighbourhood, it should have secure parking for two cars, for example. On the other hand, if you're going to rent out a slick urban apartment, the most important factor might be proximity to public transport options. Research is also key here, as you need to know what rental properties are being priced at in the area.
How to tell if a property is priced to sell/buy.
It is very important to start strong if you're building a property portfolio, as your first investment - if not a sound one - can leave you in a financially precarious situation. The best piece of advice is to work with a reputable property practitioner, who will be able to do a comparative market analysis to determine whether a particular property priced to sell, meaning that it's priced in line with comparable property sales/transfers in the area. Spend time browsing available listings in areas that you are interested in, taking note of how long properties typically take to sell and what type of properties are the most popular. Also look at the types of properties that sell quickly.
Choosing your location carefully
Location is arguably the most important factor in any real estate decision. You may find a unit on the market in a stunning block of flats, but if the area around the block is deteriorating, you should think twice about buying there. Do as much research as you can into the area and what is planned for its future before you sign on the dotted line. You can glean a lot of information about the area by talking to a property practitioner in the area. Ask him or her to provide data about recent sale prices in the area and whether or not sellers are getting figures close to their asking prices.
Becoming a property investor takes time, financial resources and due diligence. As the old saying goes, "time spent in reconnaissance is seldom wasted" and the more time you spend planning and researching, the sounder your investment will be. The Jawitz Properties team is always on hand to answer your #RealQuestions and guide you through the process of becoming a property investor.
Author: Jawitz Properties
