Getting into property investment is one of the best ways to build a portfolio and grow your income, but achieving success often relies on understanding the finer details. Beyond choosing the right location or property type, investors need to consider important factors that influence their success.

Our RE/MAX team will walk you through the top considerations you need to make before investing in property and why these are so important.

 

Two Top Factors Investors Should Consider

1. Return on investment (ROI)

The potential return on investment (ROI) is usually one of the most important factors to consider before purchasing a property. ROI provides a clear picture of how your investment performs financially compared to other opportunities on the market. 

ROI is calculated by subtracting the cost of the investment from the gain and then dividing the result by the cost. The higher the ROI, the better the investment opportunity.

2. Current tenants 

If a property you’re investing in already has tenants, it’s essential to dig deeper into the details. While this can be complex at first, it will save you a significant amount of time and potential issues down the line. Some things to consider include:

  • Lease agreement: Review the lease terms to understand the tenant’s rights and obligations, and ensure they align with your investment goals. 

  • Compliance with rules: Verify that the tenant has signed off on any body corporate or building rules, ensuring a harmonious relationship with the property’s management.

  • Tenant status: If the tenant is a foreign national, confirm their visa status to avoid legal complications.

  • Deposit security: Check that the deposit is held with a licensed and reputable agency, giving you peace of mind.

  • Payment history: Ensure the tenant has a reliable track record of paying rent on time. A tenant who is consistently behind on payments could become a liability.

Why Are These Factors Important?

Considering these factors is crucial for laying a strong foundation for your property investment journey. They help ensure you get the basics right to build a rewarding and sustainable property portfolio.

Failing to consider these factors thoroughly can lead to complications that may harm your investment. These may include: 

  • Legal risks: Overlooking foreign tenant documentation—such as checking if their visa is valid—could result in you being accused of housing an illegal immigrant, exposing you to costly legal consequences.

  • Regulatory challenges: If tenants haven’t signed body corporate agreements and leases, it could lead to difficulties in enforcing regulations or maintaining harmony with property managers.

  • Financial strain: An unvetted tenant with poor payment habits or unreliable deposits can strain your cash flow and affect the profitability of your investment.

By addressing these factors upfront, you’re not just protecting your investment, you’re also setting yourself up for long-term growth and peace of mind.

Property Investment Management Made Easy with RE/MAX Living

Investing in property is an exciting journey, but it requires carefully analysing key factors to ensure success. Our RE/MAX Living team understands the complexities of property investment and has the expertise to guide you every step of the way.

With decades of experience in Cape Town’s real estate market, we is here to help you make informed decisions, avoid potential risks, and achieve your investment goals. Contact RE/MAX Living today and take the first step toward a smarter, more secure investment future.