Proper management is key to building a great property portfolio
Category Advice
There has been much talk in recent times about the benefits and advantages of Buy-to-Let investing and whether it is the best way of getting a good return on your investment.
Tyson Properties CEO Chris Tyson says property remains a strong and sound investment, whichever way you look at it, and that it is gaining in popularity, particularly with people planning for retirement who are looking ahead at ways to bolster their income.
“Building up a substantial property portfolio over a period of time is a great way of creating a future income stream and ensuring a financially-stable retirement. Despite economic and market conditions which fluctuate with time, in the long run, your investment will pay off,” he said.
“There is no doubt that there are many issues to consider, but if you follow some simple guidelines and make wise decisions along the way, it can be hugely rewarding,” he said.
The best place to start is to draw up a long-term plan so that you have something to work towards and steps to follow. Buy-to-let investments are not a get-rich-quick scheme either and your investment will need time to appreciate in value. So envision where you want to be in ten years and take the necessary small steps to get there. Patience is key.
“Remember that entry costs can be high, you will need to have a deposit and pay transfer costs. Your investment will be locked in the home, so make sure that you are happy to tie up your capital,” said Tyson.
What you buy and in which area is also very important. Be realistic about what you can afford. Research the area you wish to invest in and don’t forget the basics of location, transport routes, and proximity to good schools and shops. The better your buy, the better your income potential.
Unless you have in-depth experience in renting out properties and managing them yourself, Tyson advises the use a reputable agency to advertise your property on the best platforms and to find you a reliable, good quality tenant.
“A good agent will screen your tenants, confirm their employment, get a reference from a previous landlord, do a credit check and look at recent bank statements to ensure that you are getting a quality tenant.”
Having an agent manage your property will also provide you with peace of mind and allow you to enjoy your rental income without the stress of worrying about maintenance issues.
“Provided you look after your property, your investment will look after itself and remember that you are the owner of an asset, one that is tangible and which grows in value. There are also hundreds of ways you can add value to your property which will increase your income. Property values do rise and fall but over time they tend to increase, providing you with decent capital return as well as an income in the meantime,” said Tyson.
However, this is not to say that there may come a time when tenants are hard to find and rents fall. Rental yields can be cyclical so make provision for the leaner times too.
“Have spare capital available for these leaner times and also for times when your property may need major repairs,“ he said.
In the current market there are many aspiring buyers unable to get onto the property ladder and so they rent instead. A recent survey by First National Bank showed that Buy to Let buying has increased in recent quarters and that the rental market is moderately improved.
“We are also seeing greater investment by foreign buyers who are looking to invest in a South African rental property, which bodes well for the Real Estate market.”
Author: Tyson Properties
