5 Simple Ways to Invest in Real Estate
Category Advice
Have you ever thought that property investments are a wealthy person's playground? Think again!
Getting your foot in the door to the property market is not as tricky as it may seem. Armed with good information, great advice and an exceptional property agent, you too can become a property investor in no time.
Like any other investment, buying your first property will, of course, require capital. The key to a successful investment is to be strategic to ensure that you reap the rewards despite the potential risks.
Here Are 5 Simple Ways To Invest In Real Estate
1. Home Loans
Also known as bonds, home loans are typically the most common way to secure your first property purchase. If you are able to pay 20-25% of the purchase price up front in the form of a deposit, most banks are willing to offer up the rest of the amount while you pay it off over time, with interest.
Remember, just because you can make the monthly payments doesn't mean you can afford the property. Choose a good property that is well within your budget and allows you enough breathing room for unforeseeable costs.
2. Flipping Houses
Flipping houses is a popular way to secure a property at an undervalued or reduced price. As an investor you would purchase a "fixer-upper", fix it up, and sell it for more than you purchased it for.
To flip houses successfully though, having knowledge and experience in real estate valuation, marketing and renovations will stand you in good stead. It takes a lot of time, energy and patience to oversee, but if you have the vision and passion to see big projects through, flipping houses is a great way to see a fairly quick return.
3. Rental Properties
Starting small can yield big results. Buying a rental property, like a small apartment, is a great way to start your property investment journey. If you have a knack for DIY and enough patience to manage tenants, a rental property can be a steady source of income to fund the bond for your property or any other properties you might have.
Starting out, it might be wise to consider a newly built property in a new development. Many new developments offer units to buyers without transfer costs and other hefty administration fees.
4. Real Estate Investment Trusts (REITs)
If you're interested in investing in property but can't commit to the day-to-day admin and management that comes with it, a Real Estate Investment Trust can be a good option. A REIT is a company that generates income from the ownership, trading, and development of income producing real estate assets.
Investing in a REIT allows you to purchase shares in the underlying assets, like property, of publicly traded companies listed on the JSE. You will also enjoy a steady stream of income and special tax benefits.
5. Real Estate Investment Groups (REIGs)
Investing in a REIG is a good way to reap the rewards of a good property investment without the management hassles. REIGs are like small mutual funds that invest in rental properties on your behalf. Typically, a company will buy or build a block of apartments or condominiums. They would then open it up to investors for purchase through the company, who would thereby join the investment group.
Whether you own one or multiple units, the company who purchased the apartments would manage all units, maintenance, vacancy communication, etc. All investors agree to pool a portion of the monthly rentals each month. That way, even if your unit is empty you still stand to earn some income.
Looking for the right property management company to partner with?
Our team of professional agents specialize in all kinds of property management services, including rental property management. If you're about to invest in your first property and could do with some professional advice, we'd love to hear from you.
Contact one of our offices today or find an agent near you to set up an introductory meeting.
Author: SAProperty.com
