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Golden Rules For Rental Investment
And rule two is you should concentrate on income rather than capital growth. "Having a piece of land worth X rands is not wealth. Having steady income in your back pocket from a portfolio of flats is. Concentrate on the income and the capital will tend to look after itself." Returns today on flats are rarely above 5%. High-risk inner-city flats return below 10%. But that's more income than on an empty piece of land.
Rule three: accumulate, don't rush. Accumulate a low risk portfolio and you will end up with a decent living. "You could make quick money by buying off plan when prices were rising by 30% a year," he says. "Now you must take your time.
Rule four: choose a niche and become an expert in it. "It can be quite a small area like a city suburb or even a street of shops and flats." The property market is imperfect because information on it is not easily available, so you can quickly dominate your chosen territory
Rule five: a home with a big bond is not an investment. "People tend to buy bigger houses and take on bigger bonds as their jobs improve," says Schaefer. "But you are paying large monthly installments – after you've paid tax. You'll make far more money living in a smaller house, buying rented flats or townhouses with tax deductable bond payments. But you can use your house to a limited extent to raise, say, a deposit to buy an investment property |
Posted on Monday, April 23, 2007 (Archive on Thursday, May 31, 2007)
Posted by hayleym Contributed by hayleym
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