The Astute Investor Market continues to retain an appetite for residential property, particularly the Buy-to-let Investor.
In good times and bad, investment in real estate has proven difﬁcult to beat on almost any measure. Long term investors in quality real estate have been well rewarded. Returns on residential property have two elements, a capital growth portion which over the years has comfortably outstripped inﬂation and, for investors rather than owner occupiers, a rental component which is also normally inﬂation proof.
But, what really contributes to the intrinsic value of a property, assuring the owner of future good returns when they wish to sell the property, or rent it out for a sound monthly income?
The astute investor market continues to retain an appetite for residential property, particularly the buy-to-let investor. Their purchase decisions are carefully considered on the basis of price, location, features and importantly, yield potential. Multiple housing projects under sectional title can result in investors achieving extremely sound returns, driven by those who understand the ultimate value of buying into a preferred housing well-run schemes with excellent communal facilities and the potential to rent out apartments and townhouses easily due to their broad appeal. This makes good sense as new developments in well established areas are attracting like-minded people on the basis of lifestyle and convenience regarding access to major routes, the workplace, good schools, amenities, and shopping and leisure facilities.
It is logical that location plays a major role in the buying decision, Given that the smallest, average property in a sought after area is likely to increase in value at the same rate as the other properties demonstrates the fact that location and price appreciation go hand in hand.
In family-oriented suburbs that consist predominantly of family homes, proximity to good schools, shopping centres and public transport and/or arterial roads are important, it is an advantage to be out of sight and sound of arterial roads and away from the hustle and bustle of retail centres.
Generally speaking, the adage still applies – it is better to have a shack in a good position than a palace in a poor one. Also, security and sufﬁcient covered or at least secure parking is important everywhere.
Investment properties are popular in established areas where rental demands for apartments are high. Rental returns are highest at the lower end of the market – percentage wise, decreasing with increasing property value. If you are growing a portfolio of properties then having more, smaller properties versus fewer, larger properties spreads the risks and will increase the rate of rental return, although not necessarily capital growth. Bear in mind that young working or professional singles and couples and those at the other end of the spectrum who are scaling down often opt for easy, low maintenance, secure city living for the ambiance and style as much as the convenience and security. As an investor it’s important to do one’s homework and decide what you want.
It is very important to acquire the right property at the right price in the right address, ﬁrst consider the type of property that involves lower maintenance, such as a cluster home or a sectional title development. The right price is very important as every cent spent over the market price will need to be recovered over time and this can eat into a potentially rewarding investment. Avoid an emotional purchase and look at the facts and return. Remember, although a property may look discounted and may offer a good deal if it is in the wrong location it may never be as rewarding ﬁnancially and it may also be more difﬁcult to ﬁnd a tenant. Also consider good security and good access to public transport and highways.