Real Estate Investor March 2021 March 2021 | Page 26

Benefits of owning property
FINDING

Gain a foothold in property ladders

Benefits of owning property

South African interest rates are at a record low and first-time buyers have the strongest appetite to gain a foothold on the property ladder by owning their own homes . With this arises an obvious question from aspirant home owners , of ‘ whether residential property makes for a sound investment or not ?’

Globally , many fortunes have been

made through investment in property throughout the ages and today ’ s tighter market conditions present an ideal opportunity to acquire residential property at reasonable prices , often well below their actual replacement costs .
Owning a Residential Property It is widely acknowledged that owning your own home has constantly proven to be a sound medium to long term investment and remains so . This , despite the fact that there may be some valleys and peaks in the capital growth of the property along the way , depending on economic trends , the desirability of the property and its location . A further advantage is that you will immediately be able to start enjoying all the lifestyle and other benefits of owning your own home . You will have the luxury of making improvements to your home over time which will further add to the value of your property .
Benefits of Property Investment
Returns Property investment offers two types of returns – capital , which is derived from property price growth , and income , also known as yield , which is derived from rental income . When choosing a property , it is important to decide on which type of return you are seeking to prioritise . Properties suited best for capital growth may sometimes cost more and offer a lower yield while properties suited better to maximise on yield may cost less and offer lower capital growth prospects .
Location Property is also one of the few asset classes against which one can leverage and borrow , which is especially beneficial in these times of low interest rates . Bear in mind that its only logical that location plays a major role in the buying decision , particularly from an investment perspective . The fact that the smallest , average property in a sought-after area is likely to increase in value at the same
24 MARCH 2021 SA Real Estate Investor Magazine