select
|

Investing in property a smart move?

Andrew Carnegie had a point when he said that 90% of all millionaires become so by owning real estate just look some of the Forbes list entries: Minoru Mori (Japan) $1.9B, Donald Bren (USA) $12B, the Otto Family (Germany) $17.6B and we all know Donald Trump.

Looking at these fortunes – all amassed by investing in property – one might be forgiven for thinking it’s too good to be true. And to a degree it is; certainly not everyone who speculates in the real estate market makes money; in fact many have dabbled in the market only to lose badly. Most investors, including the successful ones, will tell you story after story about bad properties and the lessons learnt there.

It’s clear that there is money to be made in property but, how to do it? “Whether you’re buying a property to live in or as an investment the key at the moment is to take a long term view. The local real estate market is barely recovering and the smartest move at this point is to hold on to your property if at all possible”, believes Jan le Roux, CEO of Leapfrog Property Group.

Le Roux goes on to indicate that he wouldn’t advise buying property to let at the moment; “If you need a home to live in - purchase, if you’re looking for a buy-to-let investment however I’d advise you to bide your time.

A group of property authors confirmed this point of view at a recent breakfast held by the South African Real Estate Investor magazine. Pieter Louw (From Poverty to Property), Jason Lee (Making Money out of Property in South Africa), Mike Smuts (Buying London Property) and Gordon Mackay (The Streetwise Millionaire) have all used property to create wealth and in most cases believe in holding on to an investment for the mid-to long term, they were also unanimous that you only buy when the numbers make sense.

American investor and billionaire Warren Buffett recently made news by claiming that he would buy thousands of American homes at distressed prices if he could find a way to manage them all. As with anything Buffett says thousands across the globe scrambled for ways to apply his strategy locally. In South Africa however the situation is markedly different: “Whilst the local property market has been affected by the liquidity issues it hasn’t hit the same all time low as the American market. As such prices here are not as reduced and investors will have to look harder to find those bargain gems”, says Le Roux. He goes on to state that investing at present is still risky if the plan is to re-sell quickly. The best way to hedge your money at this point is to take a long term view and to hold on to the property. "Short term investors should look at other markets but potential homeowners can buy now".

The South African market may not have bottomed-out but, if like Gordon Mackay, you take a long term view of investing in property there are still deals to be made locally. Jason Lee shared a few pearls of wisdom in this regard:
·         Run your own race, i.e. invest at your own pace not trying to keep up with the guy who has a portfolio of sixty plus properties.
·         Quality over quantity: “rather own one good property than ten bad ones”, believes Lee.
·         Building a portfolio takes time and more importantly patience – bide your time.
·         Be a seller of every property you own – at the right price.
·         Reinvest the money from your property sales into investment property.



  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 23 Nov 2017
      Reserve Bank Governor, Lesetja Kganyago, said that the Monetary Policy Committee had once again decided to let the interest rates remain unchanged with the repo rate at 6.75%, and the prime lending rate at 10.25%.
    • 23 Nov 2017
      As the holiday season approaches, most of us are counting the days until that year-end bonus hits our account. There’s nothing quite like a little bank balance booster to get us in the holiday spirit.
    • 23 Nov 2017
      The Adelphi Centre (now entitled “ARTEM") in Sea Point, Cape Town, is being extensively renovated, and once complete will offer an ultra-luxurious galleria style shopping centre unlike any other seen on the Atlantic Seaboard or in Cape Town.
    • 23 Nov 2017
      If you are looking to sell your home in today’s real estate market, there are certain things that you need to include both inside and outside your house. Today’s generation of home buyers is looking toward a more eco-friendly, energy and water conscious home, and if your house stands out then you are more likely to be able to sell it.
    • 22 Nov 2017
      Most people know of the Community Schemes Ombud Service (CSOS) and that levies must to paid to fund its operations. In this article the experts at Paddocks will address some of the issues that are causing confusion.
    • 22 Nov 2017
      While sales have noticeably slowed in most sectors in most Cape town suburbs, the security estate sector in Constantiaberg has bucked the trend by remaining buoyant, with sales by August this year already surpassing total sales in 2016.
    • 22 Nov 2017
      The end of the year is fast approaching, and so are all the travellers, tourists and holidaymakers. For those who live near or own a property in a holiday-hotspot, the festive season also brings with it an abundance of short-term rental opportunities. Its a great way for property owners to make a few extra rand for their own holidays or to put towards their savings.
    • 21 Nov 2017
      The buying process is over, and the moving truck has delivered your household goods to your new property. Now it’s time to unpack and turn your new house into a home.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK