BY PROPERTY ASSIST
According to the latest FNB report in real terms, which includes the impact of inflation, house prices have declined by 20.8% since August 2007, from the peak of the pre-2008 boom period. The constant negative general media reports coming through various property analysts is not all doom and gloom for investors in 2019, according to Daniel Lombard, Director of Property Assist.
In short the forecasts that FNB make are that residential property expects growth rates will fluctuate between 3.5% and 5% while residential rental net yields will only deliver between 5% and 7% per annum. Not a good return that will excite any investor wanting to outperform the market averages.
The question asked by property investors is how do you combat this and secure property investments in 2019 that will generate above average returns?
Here are methods and principles you can use which Property Assistcurrently utilizes to ensure above average returns:
- Do not let greed or fear drive you during your investment process
- Purchase properties from owners that are in distress without taking advantage of the owner’s misfortune to enrich yourselves unfairly (Negotiate a win-win transaction for all, including for the owner in distress)
- The number one factor that determines a higher than average return is a proper assessment of the true value of the property
- Secure all your returns and terms upfront before signing any agreements
- Ensure that your transaction is facilitated by experts in the distress property market
- Get experienced assistance with due diligence on the seller and on the property is prime
- Before paying deposits and fees to any third parties ensure that the risks are mitigated, and suspensive conditions are met
- Utilize existing and established professionals with proper track records
- Property inspection and structural due diligence by specialists is key to avoid pitfalls and unexpected losses down the line
- Ensure that all participating role players all benefit during the transaction
- Ensure your finances and investment strategy is in order prior to starting to invest
- Do not accept that every estate agent knows the market in a specific area – ensure that they are true area specialists
- Make sure payment of fees for services and knowledge is based on performance and results
- Align the interest of all parties to achieve the final outcome as envisaged
- The notion of making a difference and impact in others’ lives should be foremost in your thinking
Implementing these methodologies in your future property investment strategies will ensure that you minimize risk, avoid pitfalls and enable you to secure higher predetermined returns of above 15% p.a. returns as the norm. You can also ensure these solid returns whilst helping those in need with the right strategy and right team in place.
Despite the low predicted capital growth rates and low forecasted rental returns, Property Assisthas been able to consistently achieve higher than average returns over the last 5 years for many investors.
The right property can consistently deliver higher than average returns in the medium to long term and if approached correctly with experienced parties. The team you choose to work with need to have the character and value system that ensures that when things go wrong (because at some point it may) that they will not disappear, but stand with you through the process to recover and turn it into a good result.
There was a very wise man that once said, what you sow is what you will reap and therefore make sure the way you approach property investment is the same.