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Property - your biggest asset

For most people, purchasing a property will be the biggest investment decision that they will make - and it’s one that will affect their financial well being possibly for the rest of their lives, says Adrian Goslett, CEO of RE/MAX of Southern Africa.
 
He notes that from an investment perspective, the property that they purchase will most likely make up the largest percentage of their net wealth.  “For this reason, it is comforting for those who have invested in property to know that property ownership is a viable investment that has proven, over time, to be a major factor in the building of personal wealth. That is provided of course that the buyer adheres to the core principles of purchasing property and all investments are well researched,” says Goslett.
 
According to Goslett, although market conditions will play a significant role, the main element that sets a successful investor apart is knowledge. “Regardless of the investment, whether property or otherwise, it is extremely important to take the time to research all possible aspects of the endeavour before committing to anything. We know that current market conditions favour buyers, however regardless of the market conditions the buyer must still make an informed decision considering all factors that influence the property’s possible appreciation in the future. These factors would include elements such as location, type of property and the property’s features. Irrespective of the conditions surrounding the market in which the investment is made, these factors remain important and need to be factored into the decision,” advises Goslett.
 
He notes that buyers who are unsure of anything should consult with a financial adviser or experienced real estate professional before making any investment decision. “Due to the fact that property investment can have such a massive financial impact, it is definitely worthwhile to seek out the expertise of a professional for guidance in the right direction before putting pen to paper. Even though real estate investment can be a lot more forgiving than some of the other vehicles of wealth creation, lack of knowledge leading to a poor investment decision could mean the difference between losing thousands and being able to enjoy the fruits of solid financial profits,” says Goslett. 
 
He notes that generally property is less volatile than the equity and share markets and moves through fairly predictable phases. “Looking at the property cycles over the past few decades, there is a definite pattern that can be followed over a period of nine years. Every nine years there is an economic downturn which takes an average of 10 months to complete from the top of the cycle to the bottom. The bottom of the cycle usual lasts approximately 24 months, followed by a slow yet solid upturn to the top with a recovery period of about 64 months,” says Goslett. “Understanding the property cycles will assist investors in knowing when to purchase property in order to see the highest return on investment. Based on the history of the property market and it cyclical nature, investors can confidently take advantage of the slower periods knowing that their investment will see significant growth during the booms and solid appreciation over the long term.”
 
According to Goslett, another attractive element about property is that it is the only appreciating asset class that can be financed. Unlike other investment options, banks are willing to provide the money to a qualifying property buyer for them to purchase a property.  However, the buyer will need to show the required criteria and affordability in order to qualify for a home loan.
 
“Property remains a vital component of any investment portfolio, but it is always important to view it as a long term investment. An important consideration to make is the length of time you hold onto the property before selling. Adhering to the correct methods and purchasing the right investment property can be the key element to building personal wealth in the future,” Goslett concludes.



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