“When a man tells you that he got rich through hard work, ask him: ‘Whose?’”- Don Marquis
Isn’t the property market absolutely amazing right now? No, I’m not being sarcastic nor was this written years ago. With so many bargains around (and interest rates finally coming down), now is the perfect time to take advantage.
Obviously you have to be smart about what you do, but fortunately there are great resources like Rich Dad’s Success Stories by Robert Kiyosaki and Making Money out of Property in South Africa by Jason Lee. They suggest the following:
1. Get prepared
The secret of success is to get in early and get out early. Put together a plan for each individual deal. This is a clear roadmap to follow once the property is acquired. Don’t be blinded by love to the extent that you discard basic fundamentals when making your decision to purchase. There is simply no substitute for your own intuition and gut feeling.
Choose your advisors carefully. Spend time with active property investors and use a tax consultant to help you decide on an appropriate legal structure. Ask around for good estate agents and property developers then form healthy relationships with them. Tell them what you’re looking for and get onto their databases.
2. Find a place
Jog, walk, or drive around certain area for ten minutes once a month. Look for real estate for sale signs wherever you go. Turn your attention to inner- and outer-city slums in pursuit of deals that offer potential for capital growth. Also use auctions as an alternative. Move with the middle class to new and emerging-market areas. However, if large tracts of land remain undeveloped, this can be seen as a vote of no confidence.
Call three or four agents per week and ask them to tell you about the property. Is it an investment property? What is the rental rate? What is the vacancy rate? What is the average rent for that area? What are the maintenance costs? What types of financing terms are available? Will the owner finance? Practice calculating cash flows for each property.
When you assess a property, ask yourself what you want to do with it and find out whether or not you can. It is important that the property has certain features that make it attractive to future purchasers. Consult a conveyancer to advise you on any restrictive conditions that may apply to yours and adjoining properties.
3. Seal the Deal
There is no such thing as a standard agreement of sale, so make sure you consult a lawyer. Make sure the agreement matches the property description and the description of the seller. Avoid paying a deposit, carefully review suspensive conditions, and buy yourself time to mitigate the risk. Make sure you are buying from a motivated seller and don’t give him or her too much time to think.
Make offers because someone might say yes! To start with, make use of a mortgage originator to get offers from as many banks as possible. Then make the decision yourself. Later on, you can begin by approaching the banks yourself. Look professional, come prepared, and be polite. Remember that everything is negotiable. Make the banks know that you can give them more business in the future or that you’re prepared to go to other banks.
When renovating, find yourself a professional architect and general contractor to oversee the project. Check out references, track records, financial standings, and preferably choose someone with partners. Do not commence building until the local council has approved.
Recommended Reading
Fast Forward your Retirement through Property by Jason Lee
Real Estate Riches by Dolf de Roos
The Real Book of Real Estate by Robert Kioysaki
The ABC’s of Real Estate Investing by Ken McElroy
The ABC’s of Proprety Management by Ken McElroy
The Advanced Guide to Real Estate Investing by Ken McElroy
About Me
I have been an active writer for over a decade and published my first book in August 2007. This marked the start of Varsity Blah, a personal development blog that has now received almost 250,000 hits from over 120 countries worldwide. This article is one of almost 100 posts that were compiled into my upcoming book, which was reviewed on Authonomy.com: “This is some very insightful stuff… The way the book is structured, paired with your capabilities of drawing great narrative, leads this on the right path. This cleanses the mind.”
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Graduating from college with distinctions in financial accounting and classical piano has given me a uniquely creative approach to all I do. As a personal development copywriter, I specialise in creating content on improving health, relationships, finances, and career. This includes writing and editing articles, papers, blog posts, web copy, and much more. My professional background in marketing (as well as my extensive experience as one of the first external bloggers for the World Advertising Research Centre) means I can also provide case studies, company profiles, and whitepapers focused on branding, communications, digital media, and market research.
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