How to get started in real estate investing with R100 000: Understand Value

Since I started investing in real estate when I was 19 years old, I often got asked to answer a very common question among new real estate investors, “Where should I start?

As I always say, a proper valuation using the most reliable of information is the first step to a good deal. Just spending a little bit of time researching the comparables and properly determining the value of a deal can save you a lot of money, time, and heartache.

At the moment, individuals are attempting to figure out what the most optimal investment is in the residential property sector.

These questions can be answered by a few quick guidelines. First, let’s look at how much money you have to invest. Let’s say you have access to R100,000- you don’t want to use it all up in the purchase because then you’ll have nothing left for repairs, back up plans and  emergencies.

So, I suggest you take a third and set it aside, and take two thirds at most for your investment. In this example that would be about R66, 000. I suggest starting slow with one or two lower value properties, and put down what will be the most comfortable for you if you are getting a loan. If you are using cash only, I suggest buying now and getting a 50% loan after you’ve taken transfer so you can unlock cash down the line in order to buy more properties or invest elsewhere.

Okay, so now that you know how much you have to invest, the next most important step in real estate investing is knowing values.

In a good real estate deal, you make your profit when you buy.  How?  By buying right.  I highly recommend that you access reliable data so that you can properly analyse the current and future value of a deal.

Knowing the value of a property before you buy is always the best way to be successful in real estate investing. You should consult real estate agents, other sellers and a friendly banker, and ensure that you are being fed the correct information before you take the investment plunge. If you know the value of a property, you will be a wise investor.

You should always aim to make your profit not when you sell your property but when you buy it.