Investment Advice For The Real Estate Entrepreneur

Updated on 18 September 2014

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Investment advice for the real estate entrepreneur

With talks of a recession slowly gaining momentum, taking out a big loan with a financial institution is not a very bright idea and the same can be said about buying a property. However if you buy the “right property” in a solid performing area, this can turn out to be the best property investment one can ever make.

It is then vital to carefully look for property in a good performing area with all the important features such as schools, easy access to major routes, good security etc. that meet the basic needs of most households.

Recovery in the residential property market

Although many property experts argue this, but the truth of the matter is the residential property market as a whole has been in a recession up until mid 2013. Now the trend is showing positive growth for residential properties.

Buying a residential property in a security complex now will not only make for a good buy, but also an excellent investment. The market for this type of properties is growing rapidly, with more and more young people flocking to these complexes.

Positive growth on the horizon

Financial institutions have recently made property growth projections for the next couple of years, and an estimated growth average of 12% was common across all institutions. This is good news for anyone looking to buy property either to live in or for investment purposes. With the latter being the best of the two options.

“The property you buy now will generate enough rental income to cover the loan repayment”

These predictions means property prices will see a year-on-year increase in capital growth of approximately 10%, numbers which will make any property owner grin from ear to ear.

Seeing the opportunity during the storm

An increase in the interest rates means loan repayments will also increase, making it harder to meet the monthly bond repayments. But the same can be said for bond affordability by new property buyers, therefore the demand for good rental properties will be on the increase during this period as well.

Fewer and fewer people are able to afford houses, thus they are resorting to renting as a more viable option. The property you buy now will generate enough rental income to cover the loan repayment back to the bank and in some instances add a rand or two in your pocket.

It is still important to follow the basics “Location Location Location”

Each neighbourhood has its own unique market that does not necessarily resonate with that of the rest of the city, country or the world for that matter. Property performances depend largely on the demographics of a particular area. This means one has to be careful to select the area you want to buy in, and study the market carefully.

Knowing the nature of people who reside in a particular area will help establish how the values of properties will perform. Collecting important information such as the average age group, average education levels, and the average household income etc. will give a clearer view on the kind of area the property is in.

About the author: Lesiba Mooka is the  founder and CEO of Cobalt Blue Properties an all-inclusive property services firm. Mooka is a real estate entrepreneur from MahwelerengMokopane in Limpopo, with an undying love for investing in different kinds of properties and helping others build a solid property portfolio of their own. You can also find him on Twitter at @CobaltBlueProps.

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