Tips for property investment success
Investing in property is one of the most reliable ways to build long-term wealth, but not all properties offer the same return on investment. Identifying the right property requires careful evaluation of several key factors that determine its profitability and growth potential.
Antonie Goosen, principal and founder of Meridian Realty, explains that location remains the most critical factor in property investment. “A well-located property will always have demand, whether for buyers or tenants. Areas with strong economic activity, good schools, and accessible transport links tend to perform better in terms of value appreciation and rental income,” he says.
Beyond location, market trends play a crucial role in determining whether a property is a good investment. Investors should analyse supply and demand in the area, looking at vacancy rates, property price growth, and rental yields. “A property in an area with oversupply or declining demand may struggle to generate returns,” Goosen warns.
The condition of the property is another vital consideration. While fixer-uppers can offer good returns if renovated wisely, structural issues or high maintenance costs can quickly eat into profits. Investors should conduct thorough inspections and assess the long-term maintenance requirements before purchasing.
Cash flow potential is also key. A good investment property should generate consistent rental income that covers expenses, including bond repayments, levies, rates, and maintenance. “Many first-time investors make the mistake of focusing only on property appreciation without considering whether they can afford to hold onto the property long enough to benefit from it,” Goosen advises.
In an article published in May, Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, shared tips on how to price your rental property.
“Overpricing your property may result in longer vacancy periods, while under-pricing could attract tenants who cannot truly afford the property. Those who set rental rates that are competitive and are in line with market trends are more likely to attract quality tenants,” he adds.
When deciding what rent to charge, a landlord can either conduct some research themselves or allow a rental agent to tap into their resources for a more accurate view of the following:
Competitive market analysis:
Review the rental rates for properties that compare with yours in terms of size, location, and amenities. This will help you to establish a baseline on which to determine a competitive rate for your property.
Take vacancy rates into consideration:
If there is a large number of properties to let in the area, you may need to carefully consider adjusting your rental price to attract consistent and reliable tenants.
Consider local economic factors:
Take into consideration what is happening in the local economy before setting the rental price. When things like interest rates, inflation, and unemployment levels are high, then rental prices will need to reflect that reality.
Internal and external drawcards:
The unique features that set your home apart from other similar rental homes in the area can help you charge a higher rate. Nearby employment opportunities, infrastructure, and access to amenities (such as schools and hospitals), and crime levels can all influence the property’s appeal to prospective tenants and can push up rental prices in the area.
After pricing the home correctly, landlords will then need to select the best applicant. A professional rental agent will screen prospective tenants on a landlord’s behalf to ensure that they have the best chances of securing a reliable tenant.
“A good rental agent will talk to the tenant’s previous landlords and employers to get a better understanding of the tenant's overall character and reliability. They will also verify their income and run a credit check on the prospective tenant to make sure they do not have a history of missing payments or making late or partial payments,” says Goslett.
To give your rental property the best chance of success, Goslett recommends enlisting the help of a managing rental agent. “Your local RE/MAX office will help you find and retain good tenants so that you can achieve long-term stability and profitability from your rental properties,” he says.
Goosen goes on to say that future development in the area can also impact a property’s value. Infrastructure projects, new commercial developments, or planned transport upgrades often drive up demand and property prices. Conversely, negative factors like rising crime rates or neglected municipal services can have the opposite effect.
A property’s potential for capital appreciation is what ultimately makes it a solid investment. “Investors should think long-term and focus on properties in growing areas with strong fundamentals,” says Goosen. “With thorough research and a strategic approach, property investment can offer financial security and wealth creation over time.”
Original Article: https://www.property24.com/articles/tips-for-property-investment-success/32539