Don't be blindsided by the costs involved in owning property. Before investing in the property market, there are certain things you need to consider.
- Property is a long-term investment. Unlike a car, which loses its value very quickly, property generally increases in value, yes, it will have its ups and downs but the benefits can be more fruitful, especially over the long term.
- To reap the best benefits from investing in property, you may want to build up a property portfolio that you can expand steadily.
- Now is not the time to play monopoly. Do not buy too many expensive properties. Rather buy one, fix it up and let it bring in some profit before you move on to the next purchase. Later, as your income increases, it may be possible to buy more than one property at a time.
- Try to invest in both freehold and sectional title residential property, and small commercial and industrial units. Avoid buying only in one area. Since the market fluctuates, spread your purchases so that you are cushioned when the market changes.
- Your home matters. As our lives and salaries change, we want a bigger and better home; this often means huge bond repayments. Opting for a moderate home will mean a smaller bond. You could use the spare cash to buy elsewhere, and let it earn rental income.
- When considering selling your property, there are important things you need to keep in mind - the costs of buying and selling are high - remember there are capital gains tax (CGT), agent's fees, transfer duty and conveyancer's fees - all of which you need to consider as they will eat into your profit.
- Focus on your income rather than capital growth. The more cash you can collect monthly, the better your chances will be of buying elsewhere. Focus on the cash and the capital growth will look after itself.
Why not chat to one of our friendly financial advisers.