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Why is real estate such a trusted investment?

Buying real estate is more than finding the right home or location for your business – owning property is an investment that holds more benefits than you might know.

Income Predictability

While interest rates may alter mortgage repayments at first, real estate offers a somewhat constant financial investment. Once home loans are repaid in full, real estate offers the owner a constant income that does not fluctuate with the market, an income that can increase with inflation. Of all the investment types, real estate is the safest from external influence.

Increasing Value

Property appreciates in value over time. Thanks to South Africa’s reliable climate, real estate investments rarely depreciate due to natural causes, so long as the property is well looked after by its tenants and owner. Appreciation levels have increased at 6% per year, on average, since 1968, meaning your investment will grow no matter what.

Improve Your Investment

Where other investments rely on the financial market, the greater economy and an organisation’s performance to increase their value, property value can be greatly improved by improving the actual property. With a little elbow grease and dedicated planning, you can increase the value of your investment yourself.

Retirement Ready

A great benefit of owning property is that it is there when you need it the most. While the initial burden of home loan down-payments on cashflow can be rather strenuous, the weight lessens considerably over the years as the principal reduction increases. This means that your cashflow will increase as you near retirement, allowing you to invest your money more appropriately.

Up Your Equity

While you pay off your home loan, you are also increasing your equity as your property counts as an asset in your net worth. Through increased equity you will be able to gain more leverage in financial situations, when obtaining a loan, for example, and you will be able to grow your wealth more steadily as well.

Portfolio Diversification

Real estate investment holds less risk than other major class investments, allowing you to create a diversified and safer investment portfolio. Through a diversified investment portfolio, you ensure that your investments are not all influenced by the same external factors, such as a fall in share value (as has been seen during the COVID-19 pandemic).

When you start looking at investment options, it may be a wise decision to consider including real estate in your portfolio early on. Remember to reign in the assistance of the experts to help you find the perfect property to invest in.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

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