Resource: Advice: How to build a property portfolio – Market News, News (property24.com)
Although it may be a daunting goal, Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa says that it is achievable for those who put in the work to develop a plan and have the tenacity to stick to it.
“Building a property portfolio will take careful planning and strategic financial management. For most, it will most likely also require some sacrifices in lifestyle and some diligent saving habits. If you are serious about turning this dream into a reality, then set up appointments with industry experts, including a financial planner and a real estate professional, to start working out an action plan that you can follow,” Goslett recommends.
Craig Mott, Business Development Manager for the Rawson Property Group, also shares the top 4 techniques used to build these high-performance portfolios that deliver mogul-worthy returns.
Goslett says, although the path towards achieving this goal will look different for each individual, RE/MAX of Southern Africa shares a few golden nuggets of wisdom that could help any young property investor start on their journey towards becoming a property mogul…
Read the FULL article on Property24 Advice: How to build a property portfolio – Market News, News (property24.com)
Contact Gerhard Lourens Incorporated for expert legal advice and assistance with all your property transaction needs.
Building a property portfolio offers several benefits, including:
1. Income Generation
- Rental Income: Owning multiple properties can provide a steady stream of rental income, which can be used to cover mortgage payments, property maintenance, and other expenses, with the potential for profit.
2. Capital Appreciation
- Property Value Increase: Real estate generally appreciates over time. As property values increase, so does the overall value of your portfolio, contributing to long-term wealth accumulation.
3. Diversification
- Risk Mitigation: Diversifying across different types of properties (residential, commercial, industrial) and locations reduces risk. If one market sector or area experiences a downturn, others might remain stable or grow.
4. Leverage
- Using Equity: The equity built in existing properties can be used as collateral to finance additional property purchases, allowing for portfolio expansion without needing significant upfront capital.
5. Tax Benefits
- Deductions and Depreciation: Property investors can benefit from various tax deductions related to mortgage interest, property management costs, maintenance expenses, and depreciation, reducing taxable income.
6. Inflation Hedge
- Value Retention: Real estate often retains value during inflationary periods, as property values and rental incomes typically rise with inflation, preserving the investor’s purchasing power.
7. Control Over Investments
- Active Management: Unlike some other investment types, property owners can actively manage their investments, making decisions about property improvements, tenant selection, and rental rates to maximize returns.
8. Wealth Building
- Long-term Security: Building a property portfolio is a solid strategy for long-term wealth creation and financial security, providing a tangible asset base that can be passed down through generations.
9. Opportunities for Forced Appreciation
- Property Improvements: Investors can increase property value through renovations, upgrades, and better property management, leading to higher rental income and increased market value.
10. Retirement Planning
- Sustained Income: A well-managed property portfolio can provide a stable and substantial income stream during retirement, supplementing other retirement savings and investments.
11. Equity Growth
- Loan Repayment: As tenants pay rent, the property’s mortgage balance decreases, building equity over time and enhancing the investor’s net worth.
By strategically building and managing a property portfolio, investors can achieve significant financial benefits, providing both immediate income and long-term wealth growth.
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