Do you want to retire early and live financially free? We can show you how! Retiring early isn’t just an unobtainable dream, it can become a reality for young investors who adopt key strategic steps. Property investment tips are game-changing tools to generate a passive income and help you achieve your long-term goal of building wealth for retirement. By putting these tips for building an investment property portfolio into place, you will achieve financial independence and be able to retire 10-15 years sooner than average. Let’s dig deeper and uncover how younger investors can turn their early retirement dreams into reality and escape the rat race! We include a real-world case study to show you how someone with a monthly income of R30,000 can get started in property investment.
Property investment helps you reach early retirement
Young property investors start early, which means you have a lifetime in which your property value will appreciate, your rental income will go up yearly, and you will have a secure monthly income.
Jacques Fouché, CEO and founder of IGrow Wealth Investments, emphasises the effectiveness of purchasing buy-to-let properties because this was how he started his own wealth journey in his 20s. He worked out that in a year, he could earn 11 times his annual salary without having to lift a finger, after buying a property portfolio of 5 properties at 100% loans! This allows young professionals like you to retire almost 2 decades before normal retirement age and live a financially free life pursuing your passion and purpose. You can start building a portfolio of buy-to-let property that raises your net worth quickly with the right guidance.
What factors of property investment help you retire early?
1. Passive rental income ensures financial freedom
Buy-to-let properties offer you a continuous, monthly rental income, generating a secure cash flow that could replace a working salary over time as you build your property portfolio. This means that once your property portfolio sustains enough wealth, you can quit your 9 am-5 pm day job altogether!
2. Leveraging OPM, OPT and OPK
Jacques Fouché emphasises the importance of leveraging to achieve this goal:
- Other People’s Money (OPM): Use seller financing or IGrow’s bond originator team to help you secure a home loan from bank financing to cover your property purchases.
- Other People’s Knowledge (OPK): Use the IGrow team’s expertise and guidance regarding sourcing the best investment properties at the best prices, property financing, and setting up company and trust structures to protect your wealth and make your investment tax-efficient.
- Other People’s Time (OPT): Use IGrow’s Rental Management and Property Maintenance teams to manage your investment on your behalf. In this way, you can focus on upscaling your investment portfolio and create a property empire before retiring. You also ensure solid tenant vetting and rent collecting to ensure your investment is profitable and hassle-free.
Case Study: Investing a portion of your salary in property
Meet Ben Davis, a 30-year-old who earns R30,000 a month in software development at an IT firm in Johannesburg. Ben dreams of retiring at 45 so he can focus on travel and mountain biking. At this point, he has a stable income and has worked hard to live within his means, so he has R1,500 – R2,000/month disposable income that he can afford to invest in property.
While browsing the IGrow Wealth Investments website, Ben spots a buy-to-let investment property at Tradewinds in Ferndale, Randburg, priced at R679, 000, which is perfect for first-time investors. Can he make a bold move and go for it?
This is how Ben Davis can buy his first property through IGrow:
Ben could save monthly to build up a big deposit, but with the help of the IGrow team, his property investment dream can come true a lot sooner using leveraging! His first step would be to contact an IGrow Wealth Investments strategist, who can evaluate his personal financial situation and goals accurately and help him secure the right type of property investments for his income and stage of life.
The right property in the right location at the right price
Ben is right that Tradewinds is the perfect entry-level investment. The apartment complex and its entire neighbourhood have been carefully researched by IGrow Wealth’s Project Management team. They have 2 decades of experience in the industry and know this property offers fantastic potential for long-term rental demand and stability with an excellent location, affordability, and amenities for tenants.
They have the negotiating power to secure below-market-value prices for IGrow investors as well, which means this property is worth more than Ben is paying for it, should he ever need to sell.
The apartments are already tenanted, meaning that Ben would start earning rental income immediately on registration of his bond.
Ben is really keen, but he still isn’t sure he can afford to buy a property without a large deposit, and he wants to move quickly to take this great opportunity. The consultant explains that, due to this being an income-generating property, the monthly contribution he will have to make on a 100% bond is only R1,657 (on a 30-year bond at 11%). To make it this affordable, IGrow contributes to up to R90,000* rental assist to boost rental investment income.
But Ben is still worried about upfront costs. His sister just bought her own home, and he’s heard her complain about the tens of thousands of Rands that had to be paid for bond and transfer fees. She hadn’t expected this expense, and it created serious drama in her life.
However, there is good news here too! At Tradewinds, bond and transfer fees are included, saving Ben up to R65 000! Also, this is an investment property, earning income to cover expenses, whereas a primary residence is costing you money in addition to your bond payments.
With gross rental yields up to 13.41%, this is an investment that really makes sense.
Bond logistics for Ben’s property investment purchase
Ben needs to secure a bond for R679,000, and he groans to himself that this is where the paperwork headaches start. Then he finds out that he can get a top Bond Orginator’s services through IGrow Home Loans completely free of charge. IGrow Home Loans are highly successful at applying to multiple banks and financial institutions simultaneously, so Ben only has to complete one set of paperwork, and then they will secure him the best rate possible. A good interest rate and loan terms will save him many thousands of Rands over the term of his investment, making it even more profitable.
What about the hassle of managing the tenants and looking after routine wear and tear maintenance?
Ben isn’t financially free just yet – he still has a full-time job. So how is he going to manage rent collecting, checking utilities and rates are being paid, and all the maintenance hassle of property ownership? This is where IGrow Rentals steps in. The best news is that they are super affordable and have a great track record for thorough tenant credit and employment checks, rent collection, and trusted property maintenance services, all managed through an app.
Even better news is that there is currently a 50% rental management discount for the first three years on R679,000 & R799,000 units at Tradewinds, so Ben gets these services for an even better price!
From one property to another
Now that Ben has got started on his property investment journey, and owns a buy-to-let investment property he has a magical thing called ‘equity,’ which is where he can leverage the property he now owns to invest in further properties and build a portfolio over the next few years that will get him the financial freedom he craves to be able to support his travel and mountain biking dreams!
“The consistent income you earn from a rental property may help you pay off your loan sooner, while the property itself should appreciate in value over time.
And once the income from your property exceeds your expenses, you can start to allocate the difference to your next property investment. This could be a lump-sum deposit on a new property or contributions to cover a second home loan.” (Source)
It is easy for him to work with his IGrow Wealth consultant to get this strategy right and IGrow will keep on sourcing great investment properties like Tradewinds and giving investors like Ben first pick of these prime opportunities.
What about tax and all that?
IGrow have you covered with IGrow Chartered Accountants, who streamline income tax submissions in conjunction with IGrow Rentals and who have extensive experience in managing property investment tax efficiently. As Ben builds his property portfolio, he will receive advice on structures like companies and trusts at the right times to ensure his wealth is protected from excessive taxes and from creditors in times of unexpected financial stress.
How can I start Investing?
If you plan to invest R1,500 to R2,000 monthly, you require a secure monthly income and wise budgeting. For example, Ben earns R30,000 a month and this allows him to set aside 5-7% of his salary towards property investment and continue paying for other expenses.
IGrow offers personalised financing options helping young investors like Ben buy their first investment property and start building a property portfolio as time goes on. With our guidance, and property investment tips for beginners, you can purchase your first investment property without having even saved up for a deposit.
Investment property tips beginners use to achieve success
1. Start Small, but dream big!
Start early by investing in a property you can afford, and retire rich! Beginner investor apartments and townhouses sell like hotcakes and have high rental demand. You don’t have to hunt around for some crazy fixer-upper deal in an expensive neighbourhood to get into property investment. This shows how attainable retiring younger is when you look at things from a young investor’s perspective and the success of those who went before you.
2. Spot properties in high-growth locations
Location helps maximise returns. IGrow helps you find properties in locations that offer high rental demand and the opportunity for long-term appreciation goals. IGrow’s property experts can help you find prime locations for property purchases throughout South Africa.
3. Leveraging Financing
Through IGrow Home Loans, the team will negotiate competitive home loan rates that help you purchase properties with limited upfront financial backing. Leveraging speeds up your route to creating a profitable property portfolio.
4. Focus on Buy-to-Let Properties
Buy-to-let properties form a firm foundation for property investment success. They give the investor a monthly rental income, helping them cover bond repayments and generate income while building equity.
IGrow makes financing easier
IGrow’s bond originators have helped many young investors finance their first property.
We simplify matters through:
1. Budget assessment: we figure out how much money you can set aside monthly.
2. Helping you choose the right loan: IGrow links you up with competitive
home loan opportunities, including joint home loan applications for couples and friends or family members. (View our recent blog post on joint home loans: Joint Home Loans: Unlocking the Doors to Your Property Investment Dreams).
3. Property sourcing: IGrow Wealth Investments help you find the perfect buy-to-let property offering high rental demand. We make sure the rental income takes care of your bond repayments long-term and then provides income, as well as equity through property ownership.
4. Ensuring you earn right away: use rental income to pay for your bond repayments.
Early retirement is within reach, it’s no mere dream! You can really smash your financial goals if you use strategies such as leveraging OPM and OPK. If you follow these smart property investment tips and leverage IGrow’s expertise, you can grow your property portfolio. These tips for building an investment property portfolio will take you to Destination: Freedom! faster than you ever imagined!
Key Takeaways
In using the most effective property investment tips in South Africa today, young investors will invest wisely and take the necessary steps toward retiring at age 45, or maybe even
younger. For novice investors, the landscape of the property world can seem insurmountable. However, if you make use of these investment property tips beginners have used with IGrow in the past, success will be yours!
The road to financial independence in using property investment needs strategic planning, expert guidance, and dedication by a team such as IGrow. By taking these property investment tips for South Africa into account, you will have a prosperous future within your reach and can gain the financial freedom you deserve.
