How to make money from your house

Investing in property is one of the best ways to build wealth and the sooner you start the better, advises the chairperson of the Seeff Property Group, Samuel Seeff.

Seeff said while it is ultimately about securing the roof over your head, you are at the same time investing in a valuable asset.

“An important benefit is that you can finance the purchase with a home loan. While rents go up yearly, your monthly repayments will remain fairly stable, subject only to interest rate fluctuation. Eventually, you will pay less than the prevailing rents in the area, and once paid up, you can live rent-free.

“At the same time, the property will also grow in value. According to the StatsSA Residential Property Price Index, for example, values rose by between 71% (Johannesburg) and 141% (Cape Town) since 2010.”

• Making money from your property

The banks always value property ownership. If you want to start your own business, you could take a second bond (if there is value in your property) and use the funds to finance the new venture.

You could use a second bond to purchase a second property for rental investment purposes, but Samuel said to be aware of the pitfalls of rentals.

If you are financially able, you could sell the property for a handsome profit which can be invested as a good deposit on a bigger or better property.

You could rent out your property. If you are cash-strapped or need to work in another location, you could put your home into the local rental market. If you need help with the home loan and upkeep costs, you can rent out a room or get roommates to share the accommodation and costs.

Renting out a garage for storage is another opportunity. People often need to store things for a variety of reasons, and you could charge a fee for this. Depending on the location, you can create an Airbnb, especially if you have a nice room with an en-suite bathroom and your property is in an ideal location.

You could turn it into a guest house in its entirety. It may require more administration compared to residential tenants but can be financially more rewarding. You could create a start-up business from home and save on rent, provided there are no noise or parking nuisances, and the business complies with local municipal bylaws.

Subdividing and selling part of the land, or developing a sectional scheme with a second dwelling on the same property to sell or rent out could be another opportunity.

• Do your homework

Local municipal bylaws dictate what can be done, and what approvals need to be sought. Always check up on these. Subdividing and rezoning are more complex and costly, and you need to consult with a property attorney.

If you are renting out the property or sharing accommodation, enter into a proper lease agreement that protects your interests and ensures you are not stuck with someone who does not pay rent or deliver their part of the deal. Shared duties and responsibilities should be included in the lease.

Any income earned from your property will likely be subject to tax, although there is usually the opportunity to deduct expenses (not of a capital nature), incurred in connection with generating the income such as marketing, cleaning, maintenance, and so on.