It’s OK to put all your eggs into your property basket

Investors always tell you not to put all your eggs into one basket but to spread your investments around. However, property might be one exception, and it is one area where it is fine to put all your money into paying off your home, says Samuel Seeff, chairman of the Seeff Property Group.

Owning a home is not just about having a roof over your head. Seeff says it is an investment in your future, stability, and wealth creation.  It provides a secure base for building a life, raising a family, and achieving long-term goals.

Why should you invest in property at any time?

There is no right time to buy; it depends on your circumstances. If you are starting out with your first home, you can start small and grow from there. Interestingly, the lower price bands have achieved some of the best value growth over the last ten years.

Property builds long-term wealth. In most instances, property will appreciate in value over time, and you will end up with an asset of considerable value. However, it is a long-term asset, meaning the longer you keep it, the more it grows in value.

It is also an asset which generally retains its inherent capital value, provided you maintain the property. You can add further value by making improvements and upgrading the property, which means every Rand invested could further add to your wealth.

Property is a tangible asset that you can see and touch. Unlike other asset classes, it generally retains its inherent capital value and will continue to appreciate in value over time, provided it is maintained.

It is a hedge against inflation. As inflation rises, so does the cost and value of property. The SA property market has largely remained stable during economic fluctuations, with few examples of wholesale value collapses or price collapses.

It is also an asset that can work for you. You can use it as security for credit to build up other assets. You could also earn a passive income through rental yields, renting out part or all of the property to help you pay your bond or earn an income.

You can finance property as an asset by taking out a mortgage loan to acquire the asset and pay back the loan over a period of time. While you repay the loan, the property asset will continue growing in value.

How do you ensure you make a good property investment?

Property is not entirely without risk. Economic fluctuations and interest rate hikes can affect your ability to retain the property. Always ensure you buy below your means and carefully manage your finances and budget.

Investigate the area, prices, property value growth and the property itself before you make a final decision. Do not overpay unless you really want the house and are financially able to absorb the additional costs until the value catches up to what you paid.

Keep the property maintained. A derelict and neglected property will not hold its value or attract much buyer interest to get it sold. Look after the property and keep it maintained to retain its value.

Always invest further into the property. Start by putting extra money into your home loan to pay it off faster. Keep it maintained and upgraded. If you are investing for rental purposes, consider risks such as vacancy rates or low rental growth.

Writer: Gina Meintjes