Purchasing and managing an investment property – a few fundamentals3rd Dec 2019
It seems every investor is jumping on the property investment bandwagon and boasting about margins and fantastic rental incomes. Granted, the property market, especially in Cape Town CBD, has been given a shot in the arm thanks to short and medium-term-type rentals and the success of student accommodation, Airbnb, Bookings.com and the likes, but believe me, managing and making a favourable ROI on a second or third property is not a walk in the park. Getting it right, though, can be one of the best investments you ever make.
The trouble is, many investors are left wondering if they’ve left it too late: is the sector saturated, is the season over? To be honest, those who got in early have certainly reaped rewards, but what we don’t hear about is that many a ‘school fee’ has been paid on route. The buy-to-let rental market is a whole new ball game, and investors should make sure their recipe for success is fool-proof.
Being in the property game, we’ve done our homework and researched this South African market extensively. In fact, our research got us so excited; we have actually set aside a number of our apartments at Eaton Square in Cape Town to service that market specifically. We’ve selected the most suitable units, carefully selected a suitable furniture pack and refined our offering, partnered with rental operators and developed an exceptional investment for those who are looking for a managed solution. Our property development team has brainstormed with some of the most experienced and best minds in conceptualising a turnkey solution for those hands-off investors who are looking to sit back and enjoy the fruits of this excellent investment option. However, for those who’d like to fly solo, I’d recommend you make sure of a few fundamentals:
Although location is important, it’s evident that the rental market is also looking for great access – walking distance to transport, coffee shops, restaurants. Seems like a no-brainer but many investors make the mistake of selecting an address above access.
Tenants are looking for slick, easy access with the least amount of rules, regulations, paperwork and a hassle-free process. Swift check-ins, no running around, 10 thousand phone-calls later meeting the friend of a friend who has got the key.
Make sure you’ve got great Wi-Fi, there’s enough connectivity for television and cable services and parking is available.
Yip, be prepared that your furniture is going to have a shelf-life and that pretty is not going to cut it. We’ve included a furniture pack in our units at Eaton for this reason precisely. Although you might be tempted to splash out and decorate, we’ve seen plenty of cash go out the window with bad furniture purchases
Newcomers to an area are always sceptical and cautious of their surroundings when it comes to safety (and so they should be). A few security checks won’t do you any harm – find out if there’s a neighbourhood watch and what the crime rate is like. Also, make sure your tenants are aware of any security concerns.
The bottom line is, if you set yourself up properly and you don’t mind managing the process yourself (trust me, it’s time–invasive and time-consuming), there’s no reason not to go it alone. If, however, you’d prefer the ‘package deal’, find a reputable developer who has, like us, done their homework and ticked off all the boxes.
About Flyt Hospitality
Property has always been an attractive investment to add to a portfolio. Anuva Investments has partnered with Flyt Property Investments, a Cape-based property development company, to offer a property diversification via Flyt Hospitality, a Section 12J fund dedicated to finding exceptional opportunities in the property sector.
All investments are underpinned by Flyt’s prime property developments/real estate, and investors have the option of an attractive exit after 5 years or to continue earning passive income for as long as they like.
Our strategy is simple; find outstanding opportunities in the property sector, good quality, strategically located hospitality properties with a focus on sectional-title serviced apartments. Our developments come with a complete management solution and an experienced operator in place.
Minimum investment: R1Million
Tax deduction: 100% of invested amount
Period: Minimum 5 years
Benchmark ROI: 11% pa compounded
Distributions: Zero during first 5 years
Quarterly after 5-year period
Geared: Yes, up to 40% loan via Investec Private Bank
Instagram: Flyt Property Investment
About Flyt Property Investment
Flyt Property Investment is a Cape-based property development and investment team committed to finding opportunities that challenge the status quo. We work in the public domain on spaces that have the potential to change things. We never shy away from complex problems and believe in finding the solutions from within, unlocking opportunities through innovation, taking a different angle, thinking intelligently and laterally.
Flyt buy, develop and add value to property through joint venture and independent projects. We maximise return by completing rigorous project evaluations upfront, by co-investing in work we believe in, and by closely managing our business. We currently have 5 projects actively on the go and our pipeline is a very exciting one. We’ve stuck to our recipe of creating wealth for our shareholders, all the while contributing positively to the built environment and progressive landscape of the Cape.
Instagram: Flyt Property Investment
About Anuva Investments
Anuva Investments is an FSB-regulated and FAIS Act-compliant Venture Capital Company, formed in 2014 by a combined team of tax and investment specialists. Anuva invests in small and medium-sized companies where the opportunity exists to significantly enhance profitability through a management involvement process. Higher risk investments are balanced by investments into well-established businesses with proven profitability and stable cash flows.
The positive cash flows that result from a well-structured VCC investment are matchless. The investor can potentially receive a full tax deduction on the funds invested as well as substantial dividends from his investment on an ongoing basis.