“Savvy investors might carry debt as part of their portfolio investment strategy, but the average person should avoid it whenever possible. If your tenant ever happens to default on payments, you do not want to be in a position where you will be unable to make the necessary repayments on your debts.
“Purchasing a rental property may not be the right move if it will overstretch any other financial commitments such as outstanding student loans, unpaid medical bills, or even children on their way to university.”
The other aspect to bear in mind is financing the purchase.
“Acquiring the lowest possible interest rate on your home loan is a crucial part of maximising the return on a buy-to-let investment. When applying for finance, keep in mind that most banks do not take the potential rental income on the property into account when assessing your bond application,” said Goslett.
Goslett also pointed out that investors should factor in all of the costs before renting out property.
“Once you learn how much you can charge in rental income for the property, you still need to take into account what your expenses will be and subtract them from the income to find out what your bottom line will be. Remember to include any applicable fees, including insurance, levies and/or Homeowners Association fees, utilities, etc,” says Goslett.
The location is another thing that investors should consider.
“Ambitious millennials are often looking for a cosmopolitan lifestyle, usually near urban vibes. There is also a drive for family homes in suburban rental markets across Johannesburg, Pretoria, Durban, and Cape Town."
"Ultimately, the best way to find out if you are ready to become a landlord is to consult a local real estate professional as well as a financial advisor. Owning a rental property can be hard work, but it can also be the foundation to creating wealth over the long term – especially when you have the right support at your side. With a reliable rental agent managing the property for you, you can sit back, relax, and reap the long-term financial rewards of being a landlord,” says Goslett.
Are you ready to be a landlord?
Have you ever thought of wanting to be a landlord but did not know whether you are ready to become one?
No worries! Re/Max of Southern Africa has a list of things to consider to test if you are ready to be a landlord.
According to regional director and CEO of Re/Max of Southern Africa Adrian Goslett: “While generating income from a rental property is a great way to bolster personal wealth, it can also lead to some financial troubles if tenants are not properly vetted and expenses are not properly budgeted for.”
Therefore Re/Max to has come up with ways for investors to consider and help them decide whether they are ready to become a landlord.
Goslett says the first thing to consider is to ask yourself how much free time you have.
“Being a landlord can be a good way to earn additional income, but it can be big on time and sweat equity if you do not involve an agent to help manage the property on your behalf. In addition to selecting the right property, preparing the home for tenants, and finding reliable tenants, there will also be ongoing maintenance hassles and tenant challenges.
“Those with less time available should factor in the cost of involving a real estate professional to help manage the rental on your behalf,” says Goslett.
The second thing to consider is how much debt you are carrying.
“Savvy investors might carry debt as part of their portfolio investment strategy, but the average person should avoid it whenever possible. If your tenant ever happens to default on payments, you do not want to be in a position where you will be unable to make the necessary repayments on your debts.
“Purchasing a rental property may not be the right move if it will overstretch any other financial commitments such as outstanding student loans, unpaid medical bills, or even children on their way to university.”
The other aspect to bear in mind is financing the purchase.
“Acquiring the lowest possible interest rate on your home loan is a crucial part of maximising the return on a buy-to-let investment. When applying for finance, keep in mind that most banks do not take the potential rental income on the property into account when assessing your bond application,” said Goslett.
Goslett also pointed out that investors should factor in all of the costs before renting out property.
“Once you learn how much you can charge in rental income for the property, you still need to take into account what your expenses will be and subtract them from the income to find out what your bottom line will be. Remember to include any applicable fees, including insurance, levies and/or Homeowners Association fees, utilities, etc,” says Goslett.
The location is another thing that investors should consider.
“Ambitious millennials are often looking for a cosmopolitan lifestyle, usually near urban vibes. There is also a drive for family homes in suburban rental markets across Johannesburg, Pretoria, Durban, and Cape Town."
"Ultimately, the best way to find out if you are ready to become a landlord is to consult a local real estate professional as well as a financial advisor. Owning a rental property can be hard work, but it can also be the foundation to creating wealth over the long term – especially when you have the right support at your side. With a reliable rental agent managing the property for you, you can sit back, relax, and reap the long-term financial rewards of being a landlord,” says Goslett.