Top 10 Tips For Investing In Property
By Jaco Grobbelaar
Managing Director of Prosperity Enterprises
10 Things we have learned about property investment in the past 10 years
One of Warren Buffet’s sayings has always stuck with me: “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
We should apply this to property investment as well. Currently, there is a lot of uncertainty and fear in the world. However, it is this very uncertainty and fear that is creating opportunities to purchase properties at great prices!
My wife recently reminded me that we’ve been investing in property for 10 years. So, to celebrate, here are 10 practical lessons that we’ve learned through our experience and mistakes about investing in property for the past 10 years.
Small Action is Better than No Action
Possess the land little by little. When you take the right small steps continuously, you will get BIG results!
Buy Property in an Entity
Do not buy in your name! Not even one property. You can build a significant larger property portfolio in an entity or entities than in your own name.
Have Cash Reserves
If you run out of cash reserves, it is game over. You stand the chance of losing everything that you’ve built up. It’s as simple as that.
You Make your Money When you Buy
When you buy a property below market value, the chances are that you will make a great return on your investment.
Use your Own Conveyancing Attorney
The service I get with my own attorney is always better, and the costs are significantly less.
Apply for Financing at Multiple Banks
Don’t assume that your bank will give you the best financing. We’ve often gotten a better deal from a different bank.
Register your Bond for More than what you Bought the Property for
When you refinance in the future, you do not have to apply for a second bond; you can merely take an advance on your existing bond, which is much easier to do and cheaper.
Renovate (Not too Much and Not too Little)
Don’t overcapitalise on your investment properties and spend more than what is necessary. Also, don’t delay fixing problems or allow your property to deteriorate.
Rather Accept Lower Rent than an Empty Unit
The math is simple… Having your unit vacant for a month or two is much worse than dropping your rent and immediately placing a (good) tenant in your property.
Be Strict on Rental Collections
Debtors will always pay the creditors who shout the loudest first. If your tenant pays late, take decisive action.