Investing in property has always been an attractive and rewarding way to grow your money and the market in South Africa has plenty of opportunities for savvy investors. If you want to start building your property portfolio from your first bond, here’s how get started on the right path to financial success.
How to Turn a Single Bond into a Property Portfolio
As a first-time buyer who successfully applies for a 20-year access or flexi bond at average interest rates (these differ from bank to bank and are decided on an individual basis), you would pay approximately R9,800 per month until you owned the property.
By renting this property and ensuring that the repayment amount would be covered by the rental amount, you are covering your costs completely. If your rental amount is higher or you are able to put in extra money into the bond each month (say R5,000), the bond will be paid off in less than half the time, saving you a huge amount of interest. This allows you to then buy an additional property and add to your portfolio.
Another tactic is to withdraw money from your flexi or access bond in order to buy a second property. This can be done at any time, for example, taking out enough to buy a R500,000 property that can then again be rented out. In this scenario, you would still be covering your first bond through its rental and you would own the second property outright. This allows you to save more (as you can live in the R500k property without paying rent or a bond) or allows you to rent it out as well for additional income. This additional money can be used to pay off the first property at an even faster rate, allowing you to recoup the money spend on the second property. When this builds up enough in your access or flexi bond sufficiently, you can then start the process again by buying another R500,000 property outright.
While this sounds like a fantastic strategy, it is vital to have someone at your side to help you find the best investment properties. Knowledge and research are key when it comes to building a successful portfolio and developing a sound strategy.
Jason Scholtz is the CEO at Envision Investments and a leader in the property and strategic investments industry in South Africa. For more investor tips and an insider’s look into the South African market, be sure to get in touch, keep an eye on this blog or visit http://www.envisioninvestments.co.za/ .
