Most jobs don’t pay enough to turn the average South African into a millionaire, with a number of people instead of relying on a mixture of entrepreneurship, investments and starting a side business to build their wealth.
According to estate agency Seeff, the real estate industry presents ample opportunities to achieve this, but it is important to have a good starting point.
Below it outlined some of the lucrative opportunities for increasing one’s wealth through real estate in South Africa.
Purchase an investment property
“If you’ve thought of buying a property and renting it out, you’re on the right track. However, due to the high property prices, you will need to plan well and set attainable goals,” said Seeff.
Seef suggested the following few strategies you could use to purchase an investment property.
- Apply for a home loan: If you earn enough and have a good credit score, you could apply for a bond.
- Invest as a group: You could partner with others that have the same dream and buy an investment property together (be sure to have a contract in place to prevent disputes in the future).
- Save a down payment: Following this option will take a bit more patience than the above two options but is less risky than taking a 100% bond or partnering with others to buy a property.
“Once you have purchased your investment property, use the rental income to pay the bond off as fast as possible,” Seeff said.
“One way to do this is by contributing a little extra towards the bond whenever possible.
“If you are contributing an additional amount to your bond regularly or on an ad hoc basis, make sure to let your bank know about the additional contribution to make sure you are paying off the capital amount and not just the interest.”
Buy a fixer-upper in a good area for reselling purposes
People have been buying neglected properties, fixing and selling them for years; however, this is not a method to get rich quick, warned Seeff.
“It is essential to take a long-term strategic approach to house flipping to make a success in this competitive industry.
“When deciding to enter the property flipping market, you’ll need expert support to identify the right property, complete a renovation at a reasonable cost and make a profitable sale.”
Short-term rentals for holidaymakers
Many property owners are transforming their own homes into holiday rentals on both a part- and full-time basis.
Platforms such as Airbnb have made it easy to put up listings, find clients, and facilitate bookings in a safe and secure app.
Again, having short, medium and long-term strategic goals is the key to building wealth through the property industry, Seeff said.
“If you decide to make use of short-term rental strategy, it is advisable to have a plan for your additional income such as saving for a deposit on another property or contributing to your bond.
“Becoming a millionaire, no matter which industry you are in is about making smart financial decisions, diversifying your income streams and minimising your monthly expenses.
“The real estate industry is no different and if you plan on entering the market, you will not only have to invest your money but also your time. The results of your investment might not be immediate, but they will be significant if you make strategic moves.”
*Article sourced from Business Tech*