There are a number of investment opportunities out there but property investment has stood the test of time as one of the world’s most solid investments. Not only do you have a tangible asset that you can touch and feel but it will bring you a rental income each month and, if you’ve chosen well, your property will appreciate while your bond costs remain fixed. Here are our top 5 reasons for why you should invest in property.
Why Invest?
Investing mitigates financial risk, helping you to create another source of income which you can use to help supplement your income revenue stream or to buy those large-scale purchases in life such as a car or a dream home. Investing in your 20s and 30s gives you a strong financial edge, as you are able to secure a 20- or 30-year bond which you can continue to pay, using your salary up until your retirement age. It can also serve as a steady source of income, improving your financial status in the eyes of the bank.
There are multiple avenues for investment such as savings accounts, fixed deposits, stocks, bonds, crypto currency, gold, Kruger coins and property investment among others. The route you choose is usually associated with how much risk you are willing to part with, when you need to access your investment and whether you can receive other financial benefits including tax savings in the package.
When it comes to property investment, The Bolton has a tailormade solution for property investors where tenants are vouched for and rental income can start immediately, covering your monthly bond repayments.
Cash Flow
Compared to waiting for an investment to mature, such as with a fixed deposit, property investment with a buy-to-let goal, can offer you immediate cash flow each month. It is important to have a steady source of cash flow that you can use and track against expenses. It can help to schedule regular financial payments and show a proven track record of good bookkeeping practices in your personal finances.
Tangible Asset
A tangible asset not only provides a personal sense of wealth – by being able to touch and feel a brick and mortar possession – it can also provide liquidity to your personal finances. This means you are able to easily convert the asset to cash should you need to. While property is one form of tangible asset – and easily one of the highest in value – there are also others, including gold, cars, jewellery, collector’s items and antiques. The difference being that property is more likely to appreciate in value while a car, for example, depreciates once it is driven off the lot.
Appreciating Asset
Property investment gives you all the advantages, the key is to invest in a central location where residential units are in high demand. An area where development is taking place can also help when it comes to appreciation of the asset. The Bolton, Rosebank is in an area that has seen 6% year-on-year capital appreciation of sectional title units. You are likely to get a higher price if you sell your unit next year and you will likely see rental income increasing year to year.
Rosebank’s favourable capital appreciation status is due to its status as one of Johannesburg’s traditional suburbs to live in, the ease of walking to malls and recreational hotspots, the number of prestigious and elite schools in the suburb and the continued improvement and development of the suburb by the municipality. The Bolton is an example of how the Rosebank suburb continues to innovate, the development is the result of the successful conversion of two prime office buildings into a tailored, residential offering to young professionals entering the area.
Long-Term Security
Property investment is often earmarked as a key strategy to save for retirement, ensuring long-term security of your assets and personal finances. Investing early is a key to generating a sizeable retirement plan. The majority of those starting out in their careers usually prioritise day-to-day living and social expenses; however, there is merit to planning ahead.
By investing early, you can pay off your bond and own a unit that you can use yourself, or further down the line, that your kids can use when they enter the professional world. It can also bring you a sizeable cash payment when you decide to sell it and purchase another unit for property investment, or another larger home for family living.
Owning property can also provide you with a good lending track record for when you approach the bank or a mortgage originator for a bond on another property or for vehicle finance or a business loan. It can also help to increase your credit score overall and secure more favourable bank terms.
Protection Against Inflation
In the last few months we have seen interest rates rise in quick succession, increasing by roughly 0.25 percent each quarter. The last hike brought the interest rate to 9.75 percent. The good news is if you secured a bond during the all-time low interest rates of the past 2 years, that bond repayment amount remains fixed throughout the 20 or 30 year term. In essence, your property investment asset protects against inflation, keeping your basic bond repayments fixed as other costs soar.
Property investment is indeed a smart choice and the benefits pay off in the short-term and the long-term future. We encourage you to enquire about the opportunities for property investment at The Bolton, Rosebank and see how far your asset can work for you.
