With the uncertainty surrounding the global economy, investors can be forgiven if they have some concerns about seeking a mortgage to get into the South African property market. Still, real estate investments remain one of the best long-term vehicles for wealth creation. Investors who want to realize consistent returns from their investments, however, need to understand how to manage these loans properly.
There are a number of key factors that every investor must take into consideration when deciding whether or not the time is right to jump into the real estate market. These factors include the current interest rates, the National Credit Act’s ramifications, and various purchasing options.
The interest rates charged on these loans has been decreasing steadily for a number of years. While these rate decreases can negatively impact certain security investments, they have a positive impact on the overall prices paid for mortgage bonds. For the right kind of property, these low rates can prove to be an enticing investment opportunity for those who can afford to buy.
Though the Credit Act was designed to better regulate lending institutions and prevent bad loans from being made, it has had a stifling effect on lending in some areas of the country. For those who have sound credit and the required deposit, however, it remains a buyer’s market. Savvy investors can take advantage of the difficulty that other investors may have in securing the financing they need.
There are a variety of different property options available to investors who are trying to enter this lucrative market. These include repossessions that are being sold at auction, as well as discounted properties that need to be repaired before they can be resold or rented out to tenants.
First-time investors should also be aware of the fact that they do not have to invest in a property on a solo basis. There are many opportunities for a small group of investors to jointly purchase a property, and then share in any returns. The key is to have the right legal documents in place to detail both the division of ownership and the sharing of any profits.
Ultimately, the decision to invest in any real estate market is an intensely personal one. For those who have the resources and the patience to undertake this kind of long-term investment strategy, purchasing an investment property with a home loan can offer a tremendous potential for positive financial returns.