by Dr Dolf de Roos, international real estate investor and a New York Times and Wall Street Journal bestselling author.
“The deal of the decade comes along about once a week.” This has become something of a signature phrase in my life – not just because it is true for me, but because it has proven itself to be true for countless students. Property is generally a win-win investment choice; it comes with multiple benefits and has the ability to help you generate wealth in a sustainable way.
Investing in real estate has been a life-long passion for me, and not without reason. If you compare the merits of investing in property with investing in shares, property’s advantages are orders of magnitude greater.
Shares, for instance, come with substantially more risk: while some investors may enjoy great success, some will only see average returns and others will actually lose money. The deviation from the average and potential for loss is much smaller when you invest in property.
Property is typically an appreciating asset and gains in value each year, even when the sector is reacting to volatility and uncertainty in the economy or political climate. It generally acts as a hedge against inflation, offers tax benefits that other investments often don’t and, perhaps most compelling of all, generates cash flow.
It is, of course, critical to have knowledge of the market itself, as well as the broader outlook of the city and country you are looking to invest in before making a decision. While South Africa’s real estate market contracted in the last few years, it has seen an upturn in the last few months, showing signs of improvement in the wake of “Ramaphoria”, with home loan approvals reaching their highest level in a decade in the first quarter of this year. This indicates a growing confidence in the sector, and illustrates an appetite for greater investment.
Combined with sound rental opportunities – particularly in larger cities such as Johannesburg and Cape Town – and pro-landlord laws, the country is well-positioned as a real estate investment destination for investors, especially if the political environment remains stable and the economy shows real growth.
Although there is no set recipe for success as a property investor, I have picked up a number of key tips and bits of advice that I’d like to share with you that may help you gain access or make your way up the property investment ladder:
ü There is no time like the present – invest today. This is one of the most important pieces of advice I can give any prospective investor. If you wait for the perfect time, then you’ll always find a reason not to invest. The best time is right now.
ü Creativity determines net worth. The only limit to your success as an investor in real estate is your own imagination. One of my books is 101 Ways to Massively Increase the Value of Your Real Estate Without Spending Much Money; it covers how you can use your own individuality and creative flair to transform an average property to a high-value one without spending that much money. You can renovate your property at a modest expense and significantly improve the rental and market value of your investment.
ü Be willing and able to adapt to change. The world is in a constant state of flux, and those that get the best return from their investments are the ones who embrace and are responsive to change.
ü It is a fallacy that you need cash to buy a second or third property. Once you’ve invested in that first property, you can borrow against its equity to finance a second one or alternatively find another source of finance. There are, in fact, numerous options open to you, so explore them.
ü Consider it a long-term investment. Don’t be tempted to sell if the market takes a knock. The property market is cyclical, and will inevitably go through peaks and troughs.
The key to successfully investing in property is understanding the ‘why’ – once you know why you should be investing in real estate, the ‘how’ becomes easier and fun to learn. And as you immerse yourself in the intoxicating world of real estate, you will find your addiction to be profitable and most enjoyable.