With property values as high as they are, it can be challenging for young buyers to enter the homeownership space, let alone consider the possibilities of building a property investment portfolio in their lifetime.
Although it might be a daunting goal, Adrian Goslett, the regional director and CEO of RE/MAX of Southern Africa, says it is achievable for those who put in the work to develop a plan and have the tenacity to stick to it.
“Building a property portfolio takes careful planning and strategic financial management. For many, it will most likely require sacrifices in lifestyle and diligent saving habits. If you are serious about turning this dream into a reality, set up appointments with industry experts, including a financial planner and a real estate professional, to work out an action plan you can follow,” Goslett recommends.
Although the path to achieving this goal will look different for each individual, RE/MAX of Southern Africa shares a few nuggets of wisdom that could help a young property investor start their journey towards becoming a property mogul.
• The key is to start small. Begin with lower-cost properties to minimise risk and gain experience. Focus on up-and-coming areas with potential for appreciation rather than established, expensive markets. Affording your first property will always be challenging. Thereafter, each property you add to your portfolio becomes a little easier to afford than the one before because of house price appreciation and the home’s ability to generate income.
• To be a successful real estate investor, you must be there at the right time and place. This is when developing a close working relationship with a reliable real estate professional is crucial. Real estate professionals can share market insights and trends, which can help investors spot the right opportunities that suit their risk appetite and budget.
• Part of being successful is acting when the right opportunity arises, meaning working out beforehand how to finance your next property purchase. There are several ways to afford this. For example, you could use the equity from your existing properties to finance new purchases, team up with friends, family, or other investors to pool resources, or revert to traditional home finance if you can. Work closely with a financial advisor to learn which option works best for you.
• As with any investment, diversification will help minimise risks. It is better to invest across various geographic locations to mitigate suburb-specific downturns. It might be wise to diversify investments across residential, commercial, and industrial properties to help spread the risk across different market sectors.
“By following these tips and remaining disciplined in your approach, you can build a robust property portfolio that provides income and growth potential over time,” Goslett concludes.
