Tips on How to Make Money in Property

How to make money in residential real estate
Jackie Cameron*
12 September 2008

10 of the best tips from Realestateweb.co.za's commentators. Add yours to the list

The great thing about internet news sites that are open for comments is that the only or last word isn't left to editors, official company spokespeople or whoever has the smartest PR.

Often site community members make valuable contributions, like on Realestateweb.co.za where property investors - past, present and budding - have been contributing fantastic pearls of wisdom on the bricks-and-mortar asset class.

Here's a selection of some of the best ones, sparked this week by insightful article "Property investment as your own business", which was written by P3 Investment Group CEO Dr JD du Toit.

Du Toit explains why property's returns can sound too good to be true because people mistakenly think these are passive investments instead of viewing residential portfolios as businesses.

Residential buy-to-lets can be an alternative to a pension through using other people's time and other people's money - and can help you stretch your resources to the maximum, notes Du Toit.

If you are contemplating becoming a property investor, do read the article as well as the debate and additional advice and tips generously given below it by visitors.

Realestateweb.co.za compiled this list with a view to highlighting some of the pros and cons of investing in residential real estate now.

Of course we may have missed some that you believe more important, too, so please add your favourites or new suggestions to the list by using the comments' tool below:

1. Property is painful when you first start. As time goes on it gets easier and fun (when you become cash positive). Be careful not to get greedy though...eish. From: Mthoko
2. It is no secret that currently prices and rents are out of sync, and it will take a while before the equation makes sense. I am a BTL (Buy-To-Let) investor myself , but would be very careful in expanding (and especially starting) the business now. From: Gem
3. You do not remortgage one to buy another, you treat each one individually...the more you have, the greater the economies of scale with expenses and also any possible downsides (like maintenance and vacancies). From: Gem.
4. Buying properties that are cashflow positive means that when you are ready to buy again the banks view your other properties in a positive manner.
As an example: say I have a property purchased at R500k with a monthly bond of R7 500/pm. Now let's say I purchased it 5 years ago, have been renting it out and currently getting R8 500/pm rental. So I am (in) cash to the tune of R1 000/pm.
Now if I have 10 like this, that's R10k/pm. So when I go to the bank to buy property number 11, I have R10k income to add to whatever other income I have and basically ALL my other properties are not seen as exposure - so I can basically buy forever using these principles.
At some stage I can also refinance if I choose, but it's all about cashflow. From: Brennan
5. Nothing could be simpler than buying shares. Almost no paperwork, no government departments to deal with, no lawyers, estate agents, management agents, get the picture?
Buying SATRIX40 is a no brainer. From: OS
6. Take a good alternative: ApexHi shares.
They (listed property shares) pay quarterly interest, with an initial yield greater than 10%.
Use the income that you will be sacrificing upfront on your BTL venture and buy these. As the interest is paid out to you, reinvest and buy more. From: Willem Ras.
7. If declining interest rates are a bull signal then buy now because the R157 (a government bond) indicates the falling interest rate scenario is with us. Your biggest friend is the NCA (National Credit Act) because it is keeping the masses out of the market. However, their pent up demand will be unleashed as interest rates fall. It is always best to buy when sales are slow and the mood increasingly desperate. From: Free the Rest.
8. I predict: That after the property crash, there will be a property boom.
All you property bears may laugh at me that property prices can never go up. But yes they will.
I predict so therefore I am right. From: Naustrodamus.
9. Bottom line is yes you gotta understand your investments and/or business. From: Brennan
10. Property is here to stay. Shares come and go...property is mostly for keeps. From: TJ

Got a great property investment tip? Share it on Realestateweb.co.za by commenting here or below other articles.

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