As a long-term investment, it makes sense to start building a property portfolio as early in life as possible, but with prices as high as they are in many parts of South Africa, getting that first foot in the door can be a daunting prospect.
It's a myth that you have to be old or rich to start a property investment portfolio. Having capital available certainly makes things simpler, but there are plenty of ways young professionals with determination can kick off a property portfolio from a relatively early age.
One of the more common ways to breach the affordability barrier for first-time purchasers is to team up with friends or family and make a joint purchase.
Choosing that first investment property wisely is vital to the success of your future portfolio, however, regardless of whether you're sharing the expense with co-investors.
A solid first investment forms the foundation - and often financing - for subsequent purchases. That makes it extremely important to do your research well before settling on a property.
A second bond allows you to borrow the difference between the price of your property at date of purchase and its current value - at the discretion of your bank, of course. For example, if you bought your house for R1 million and it's now worth R1.5million, you could potentially borrow another R500k. That could go a long way towards financing the purchase of a second property, using your first property as low-risk collateral.
The first few purchases are always the most difficult, particularly as a young person at the beginning of your career trajectory. The trick is to start small, but start strong, and don't be afraid to ask for advice. The potential for growth is substantial, but there is risk involved as well and you need to make sure you're informed of all the possibilities.
|Core Version: 7.01.08|