Building a property portfolio involves strategic planning and expert advice. In South Africa, investors can use the buy-to-let investment model to secure financial freedom. What many don’t realise, is that the game is not to buy one property with as high a cash deposit as possible and pay it off quickly (that is fine for your primary residence, but not a great move for a property investor). Smart investors scale up and use leverage to build a whole portfolio of investment properties to create a real wealth-generating engine!
Even novice investors can quickly grow a property investment portfolio. This requires them to adopt a winning mindset, as well as surround themselves with a support network of experts, which is what IGrow has been set up to provide.
At IGrow Wealth Investments, we support smart, streamlined long-term wealth generation through our group of companies. We offer prime investment properties, with investment strategists, tax and accounting experts, legal and trusts experts, and rental management services, as well as registered financial planners, all under one roof.
What is IGrow’s core philosophy in property investing?
“The IGrow philosophy is rooted in buying profit-driven properties in a high-demand suburbs, securing good rental returns, supported by the right financial leverage, and holding onto the properties for long-term capital appreciation.” – IGrow Property Investment Specialist
The monthly rental income streams you receive from the properties in your property portfolio first pay off monthly expenses for a year or two, and later generate a secure passive income for years while appreciating as capital assets and building equity.
IGrow helps our investors build property portfolios designed for expansion, offering excellent rental yield. In certain developments, the units are already tenanted, so you earn from day 1. Our experts offer ongoing personalised support from your allocated investment strategist, and financial as well as property investment educational tools, on IGrow’s website (such as IGrow’s Explainer videos). This is to boost your property market knowledge and to alert you to great investment opportunities as they arise, such as the exceptional opportunities at The Aura in Gauteng, and Sunset VIllage West in Kraaifontein, Cape Town.
Building a rental property portfolio
To begin with, building a rental property portfolio involves choosing the right location and property type.
IGrow’s team, with 2 decades of experience, researches properties carefully before negotiating great deals for investors, often well below market value. These ideal buy-to-let properties are in suburbs that have good infrastructure and stability, so tenants love to live there. They’re close to good schools and tertiary institutions, employment hubs, medical facilities, shopping centres, and recreation options, and are in areas experiencing developmental growth.
IGrow Wealth Investments focuses on good quality existing, off-plan and modern newly-built security complexes that offer ideal high-demand accommodation for investors to rent out to their tenants.
The IGrow property investment journey: step-by-step
IGrow’s property investment strategists help with property portfolio structuring, conduct financial assessments to assist their clients with strategies, or make any strategy adjustment recommendations. Next, comes financing via our Home Loans Department, where the IGrow bond origination team applies to multiple banks on your behalf for the most favourable home loan interest rate and loan terms.
Choosing to place your property assets in trusts to protect them from risks is handled by IGrow Trusts. We recommend setting up your properties in a trust that will safeguard your assets and save you from unnecessary risks, with the aid of IGrow’s trust specialists. Read more about the inner workings and benefits of putting your properties into a trust system in one of our blogs: Why Trusts Are Essential for Property Investors.
IGrow Tax and Accounting Services handles annual tax submissions and creates companies for portfolios, so that if you own multiple properties, you have the tax benefits and protections of both a company and a trust guarding your assets.
We also have a team of registered financial planners in place at IGrow to handle your financial planning, retirement strategy and insurance needs.
IGrow Rentals sources, and conducts thorough vetting of tenants, and handles your tenant and property maintenance on your behalf. This allows you to attend to other issues and enjoy your investment with more free time on your hands, and ensures excellent occupancy and rental collection. They are also coordinated with your accountants at IGrow to assist with annual tax submissions.
With IGrow’s expert team in your corner, scaling your property portfolio is easy!
Investment property portfolio: diversification for long-term security
Diversifying your investment property portfolio is the key to success! The IGrow team encourages their investors to buy in multiple suburbs and in the form of different property types to reduce risk and increase overall rental income output.
For example, you could potentially buy a studio flat suited to students and staff near a university, like these modern apartments in Mowbray, a 2-bedroom unit near business hubs, ideally for working professionals, and a family home in a secure estate. This is an example of a well-diversified portfolio.
“To succeed in rental property investment, it’s essential to balance the risks and rewards. Conducting thorough market research, understanding local rental demand, and carefully evaluating properties are critical steps in making informed investment decisions. Diversifying investments across different properties or locations can also mitigate risks.” (Source)
Diversifying can also mean buying multiple apartments in one development, but in different sizes and types of units. For example, a 2-bedroom ground-floor apartment with a private garden, which will be popular with a family or someone with a pet, and a bedsit on the 3rd floor suited to a young professional or student. In particular, if you are looking for properties eligible for Section 13(sex) tax – more on this later – buying multiple units in one development or area can be a winning strategy for turbo-charging your property portfolio.
IGrow Wealth Investments offers you exclusive access to prime units within secure estates across South Africa. If you are looking for optimal rental output and capital appreciation, we’ll help you navigate the property market to meet your financial goals.
Managing the expansion of your property portfolio with IGrow’s expert oversight
Expansion of your investment property portfolio can get complicated. That is why we advise that you make use of our full-service property management offering. Our IGrow Rentals team helps you with vetting tenants, lease agreements, rent collection, facilitation of all property maintenance and ensuring your property’s success! They are also fully integrated with IGrow’s investment strategists, trust and accounting companies so your tax submissions and investment goal planning are seamless and hassle-free.
This means you can focus on property portfolio expansion while we take care of the daily nitty-gritty of running and maintaining a well-oiled buy-to-let property portfolio. We will also ensure your tenants’ contentment and happiness in their rental unit is a top priority. We keep in communication with them to take care of their needs on your behalf.
Section 13 Sex Tax Act benefits property portfolio holders of 5 or more residential properties
In case you haven’t heard of this tax act yet, it is worth understanding the tax savings associated with it. It will apply to you if you have a portfolio or aim to create one of 5 + residential units.
Jacques Fouché, the Founder and CEO of IGrow Wealth Investments, breaks down who the Section 13 Sex Tax Act applies to, according to rules laid out by SARS in his handy Section 13 Tax Act explanation PDF:
- The taxpayer must own at least 5 residential units. A residential unit refers to a building or self-contained apartment, mainly used for residential accommodation with the exclusion of structures used for business purposes, for example hotels.
- All units must be situated in South Africa.
- Residential units must be new and unused. (For example, buyers of flats that had previously been occupied would not qualify for this incentive.)
- The units must be used solely for the purpose of a trade (i.e. residential letting). This prevents housing claims for personal use.(Source)
If you are looking into buying additional units in one of IGrow’s latest security complexes. Or if you already own 5 residential units that you rent out, the Section 13 Sex Tax Act is worth capitalising on. As an owner of 5 + residential units IGrow Tax and Accounting will advise you on whether you qualify and how to apply for these deductions.
How do you calculate the Section 13 Sex Act Tax deduction?
This is calculated by taking your property cost and subtracting the land value.
For example, if you buy a R2 million rental property, and you apply the Section 13 Tax Act, you can claim a yearly depreciation deduction of up to 5% of the property value (after subtracting land costs). If you account for the accumulated savings over 20 years, this 5% annual deduction comes to R1 million in tax-deductible expenses. This is a major saving overall. (Source)
As an owner of 5 + residential units IGrow Tax and Accounting can help you apply for the Section 13 Sex Tax Act deductions on your various properties. Please note, you will need the expert advice of IGrow Tax and Accounting Services to claim these benefits, as they are pretty technical, and there are different rules for companies and individual income tax payers. Nonetheless, the benefits are huge!
Read more about the benefits of the Section 13 tax act in one of our blogs: Section 13 Tax Incentives for IGrow Property Investors.
IGrow’s building portfolio managers offer you hands-on assistance
Having a building portfolio manager available, or, as we call our team, rental managers (within the IGrow Rentals comapny under IGrow Wealth Investments) at your disposal, ensures property portfolio success!
Our rental management team keeps your properties in tip-top shape! We ensure you see consistent returns through well-managed rental collection, continued tenant satisfaction, regular property inspections, and quick response to maintenance issues.
“Effective property management is key to maximising rewards and minimising risks. Whether managing properties personally or hiring a professional management company, maintaining high standards for tenant selection, property maintenance, and financial management is crucial.” (Source)
What makes partnering with IGrow worthwhile?
At IGrow, our rental managers handle tenant issues and general property management.
IGrow tracks property market trends nation-wide, including suburb growth and tenant demand to help you make wise, data-driven investment moves. Our property portfolio managers use personalised reports and strategic guidance to help your portfolio align with your performance goals.
In partnering with IGrow, you gain more than just a property portfolio. You gain invaluable property insight, long-term, tailored strategic plans and the ongoing support of IGrow’s expert group of companies.
Conclusion
Growing and setting up your property portfolio, backed by IGrow, will ensure success and excellent ROI. Our expert team helps you transition from your first rental property investment to a blossoming investment property portfolio.
With IGrow’s experience and expertise, our premium investment opportunities, full in-house services and dedicated property management team, you won’t walk the property investment path alone!
IGrow Wealth Investments supports wise, well-thought-out property investment moves. We recommend holding onto your properties for long-term appreciation, and we support you in scaling your portfolio. IGrow is your expert partner, helping you to build a rental property portfolio that reaps rewards.
Our expert tax team will help you apply for Section 13 Sex Tax Act deductions if you own or plan to own 5+ residential units in your portfolio. Through this, you will achieve major tax savings, gain long-term wealth and financial freedom, as well as secure passive income.
Speak to a property portfolio strategist today and begin investing. We can’t wait to watch you build a successful property portfolio!
