Before you invest in property, ask yourself these 3 questions
Investing in the property market has and continues to be the preferred choice investment vehicle for most people in South Africa and around the world. People are constantly hearing about real estate success stories on either TV or at friend’s dinner parties. Property is a tangible product, it’s something we can touch and feel so it’s no surprise it appeals to so many people.
But, does its popularity make it something everyone should get involved in?
Let’s consider the top 3 questions you need to ask yourself before buying your first investment property:
Are you mortgage (bond) ready?
Unless you are one of the lucky few, in order to buy and own a property you will need to obtain a mortgage. The average mortgage term is anywhere between 20 and 30 years meaning that for the next 20 to 30 years you will have to meet the monthly bank payments. With so many spending temptations all around us this requires a great deal of discipline and commitment. It is helpful to have your goals written out and pasted somewhere prominent. When the next shiny new (insert holiday, clothing, boots, gadget) catches you eye, you can focus on the end goal and walk away, knowing your future you will thank you for choosing to spend your cash on that mortgage payment.
Are you mentally prepared?
When done with the right amount of research and due diligence investing in property can be extremely fruitful. Is it fair to say that quite often, despite our best efforts and desires things don’t always go according to plan? I know that has certainly been the case in my life. Whether it be a change in personal circumstance or general market conditions, owning a property can become a burden. Considering the cost associated with buying and selling property and the possibility of selling in a down market this is a burden that most people often have to live with for extended periods of time. Make sure you hedge your bets by doing your due diligence thoroughly. Go into the investment with eyes wide open!
How much spare time do you have?
Investing in property is not only popular but often times extremely addictive and very lucrative. So lucrative in fact that many investors start off with one investment property then soon find themselves owning a portfolio of 5 or more in just a matter of years. They realise that time wasted on Facebook updates or staring mindlessly at the TV would give better returns if that time was spent sourcing properties. Their part time hobby easily morphs into a full time job.
Investing in the property market can be a life changing experience but it certainly isn’t without its own unique challenges. Each investor is different but what determines your ability to make a success of it, is your ability to stay focused and push through the tough times.
Investing in property remains without a doubt one of the best
and safest methods of achieving financial freedom.