Seasoned investors approach a property with a checklist to ensure that it is in good condition and to help them better anticipate and plan for maintenance, renovations and repairs.
Pay particular attention to things like the integrity of the walls, the foundation, the condition of the finishes and the workmanship of the electrical components and the plumbing.
A trusted property advisor is able to help you establish the state of an investment property, or you could consider hiring a certified building investor to do an in-depth inspection for you. While this might cost you in excess of R2000 it could save you hassles and money later on.
Maintenance costs should form part of the budget for the property. “Investment properties need to be looked after in exactly the same way as a primary residence. Even if an agent will be managing the investment for you, the onus is still on the owner/investor to ensure the property is properly maintained.
Obvious as this sounds, don’t forget that something is only an investment if you can afford it. Affordability is determined by completing a personal cash flow statement of all your income and expenses.
If you’re financing the investment, the lender [typically the bank] will need proof that you can afford the monthly bond payments on the property, which is concluded by looking at both your fixed and variable monthly income and expenses.
Be sure to shop around for the best financing deal, as even the smallest difference in the interest rate can make a very big difference in the long term.
No investment is 100% fail-proof, which is why a diversified property portfolio makes the most investment sense.
In the property game diversification means opting for a flat if you already have three large family homes, or looking to areas where you don’t yet have investments.
Diversification is the way to manage exposure to risk and maximise your returns, and can be a smart way of managing your cash flow.
The level and extent of the diversification will be different for every investor, and typically depends on lifestyle choices, net worth, preference and risk appetite.
Most important is that YOU are comfortable with your investment. And of course it should be in the kind of property you are interested in. No need to invest in agricultural land, if you’re particularly interested in developments in security estates, for example,” Viljoen concludes.
Courtesy of myproperty & Leapfrog Giel Viljoen