For many aspiring investors, the biggest hurdle to entering the property market is securing the capital needed for a deposit and financing costs. However, there are several strategies that first-time investors can use to get started with limited capital.
READ: How can first-time investors get started in the property market with limited capital?
Antonie Goosen, principal and founder of Meridian Realty, believes that strategic planning and leveraging financial tools can help new investors overcome the initial cost barrier. “Property investment doesn’t always require a large upfront capital outlay. With the right approach, first-time investors can start small and build their portfolio over time,” he explains.
One of the most effective ways to enter the market with limited funds is by looking for 100% home loan financing. Many banks in South Africa offer full home loans to first-time buyers, particularly those with a strong credit history and stable income. “Getting pre-approved for a home loan gives you a clear idea of what you can afford and improves your chances of securing financing".
Another strategy is to invest in partnership with family or friends. Pooling resources allows investors to share the financial burden and enter the market sooner. However, Goosen cautions that clear legal agreements should be in place to outline each party’s responsibilities and exit strategy.
Buying a smaller or more affordable property is another practical approach. Entry-level apartments or studio units often have lower purchase prices, making them more accessible to first-time investors. “Smaller properties tend to attract high rental demand, especially in city centres and near universities".
For those struggling with affordability, purchasing in an up-and-coming area can be a smart move. Emerging neighbourhoods often have lower property prices but strong potential for future growth as infrastructure and amenities improve. “Investors who buy in these areas early can benefit from significant capital appreciation over time,” Goosen notes.
House hacking is another creative strategy where investors purchase a multi-unit property or a home with a rentable section, such as a granny flat. By renting out part of the property, investors can offset their bond repayments and reduce their financial burden.
Government incentives and first-time buyer assistance programmes can also provide financial relief. Some banks offer reduced or zero deposit loans for first-time buyers, while developers sometimes provide incentives such as transfer duty savings.
“The key to getting started in property investment is to think creatively and explore all available financing options,” says Goosen. “With careful planning, even those with limited capital can take their first step onto the property ladder and begin building wealth through real estate.”
READ: Agents and clients | Safety measures to consider when selling and letting homes
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.
READ: Maximising opportunities in a thriving rental market
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.
READ: What factors make a property a good investment?
Want all the latest property news and curated hot property listings sent directly to your inbox? Register for Property24’s Hot Properties, Lifestyle and Weekly Property Trends newsletters or follow us on Twitter, Instagram or Facebook.
Print
