- Listen to what people say, but always do your own research and make up your own mind.
- Always purchase with long-term growth potential in mind, as every time you sell you pay commission to an agent, transfer costs and duty. Try to keep property once the bond is paid off, as this is when it becomes profitable.
- Notwithstanding your long-term view, always have an exit strategy, by buying property only where you believe there will be lots of purchasers in the future.
- Buying property is an inflation hedge. The property price will escalate with inflation over time and the bond will devalue in real terms due to that same inflation.
- When purchasing, buy off-plan where possible. However, even if you trust the developer you need to do your own research to be sure the developer will deliver what it promises. Off-plan may give you a big kick in value as development approaches. In most of my estates there is normally a ‘kick’ of 30% to 35%.
- Never over-capitalise. Buy a cheap stand in an expensive area.
- When you invest, do so gradiently to manage the risk.
- Keep your first property until it breaks even and you no longer need to service the bond – then buy the next and so on.
If you follow these elementary rules, you will be able to get up to ten properties relatively quickly.
First published in entrepreneurmag.co.za
