IGrow Rental Property Investments Tick All the Boxes!
The debate continues… “Should you rent or buy in South Africa?”
Renting a home or apartment offers flexibility, and less upfront costs, while buying a property offers you long-term financial advantages, particularly in the buy-to-let market. At IGrow, our team centres our wealth-building philosophies on rental property investment. We guide our clients to purchase rental units that offer passive income and the perks of long-term appreciation in capital value.
This post delves into the pros and cons of renting versus buying. We will illustrate why investing in property through IGrow Wealth Investments is the right move to secure your financial future.
The financial reasons for buying property
According to a recent BusinessTech article, buying a home is a more lucrative option than renting, in South Africa. Properties appreciate with time, so that rental property owners can create equity and keep their monthly bond repayments stable. (Source)
In this article, the example they used looked into a two-bedroom apartment in Broadacres, Johannesburg, priced at R953,000. If the buyer financed their purchase with a 100% home loan at the prime lending rate ( 11% over 20 years- the average loan term), the monthly bond repayment would be around R9,837. In comparison, renting out a similar apartment would cost approximately R9,150 a month. Each year, annual rental increases would slowly make rental expenditure more expensive than a fixed bond repayment. (Source)
Over the 20-year loan term, rental costs rise annually. However, rental property owners benefit from property appreciation, their rental income going up each year, and stable expenses. (Source)
“At the same time, property appreciation worked in the buyer’s favour, as home values historically increased at an average annual rate of 8.13%, according to FNB’s House Price Index since 2001.”
Malcolm Liberia, BusinessTech.co.za
The perks of buying property via IGrow Wealth Investments
Buying a buy-to-let property via IGrow means investors can receive a passive income and enjoy the perks of long-term capital appreciation and wealth accumulation.
This is why buying via IGrow is a wise choice:
- The property appreciates: rental units appreciate, with time, securing long-term capital growth and property appreciation.
- You can enjoy a sound monthly rental income: as a property investor in rental properties, you secure a sound monthly rental income.
- There are certain tax benefits: as a property investor, you will be able to benefit from various tax deductions on expenses, as well as interest on your Home Loan.
- You will be building your financial security: which is different to renting, where rental costs rise unpredictably. Owning a rental property gives you a secure monthly income and financial future.
- You can leverage financing options: If you have opted for a home loan, you will use the bank’s money to accumulate wealth, and at the same time, your rental income pays off the loan.
Pros and cons of purchasing buy-to-let properties
A buy-to-let investment property is a surefire way to secure your financial freedom! As a property investor, if you want to accumulate wealth and create a passive income stream for yourself, investing in a buy-to-let property is an excellent idea.
IGrow Wealth Investments’ team specialises in selecting high-return rental properties. Throughout the property acquisition process, our property investment strategists provide expert guidance and advice for property investors.
| The Pros and Cons of Investing in Buy-to-Let Property |
| PROS | CONS |
|---|---|
| Wealth Building: property appreciates over time. | High Upfront Costs: deposit & transfer fees are sometimes required. |
| Passive Income is generated: earn a monthly rental income to cover your bond repayments. | Tenant Risks: late payments or vacancies can impact the rental income stream. |
| Tax Benefits: claim deductions on interest, property management fees, and depreciation. | Maintenance Responsibilities: owners have to handle upkeep and repairs unless they enlist property management services such as IGrow’s service saving them time and stress. |
| Leverage & Growth: your property can be refinanced to buy more property assets. | Market Risks: property value and demand fluctuate over time. |
While there are initial costs involved, your property value appreciates and a steady rental income offers major long-term benefits. With the expert support and guidance from IGrow Rentals, investors can avoid tenant risks such as vacancies or late payments and maximise their return on investment.
The pros and cons of renting a property
Many South Africans choose renting as an attractive option, especially those unable to take out a home loan at first.
The key advantages and disadvantages of renting are shown here:
| THE PROS AND CONS OF RENTING |
| PROS | CONS |
|---|---|
| Flexibility: it’s easier to move house without the commitment tied to a home loan. | No wealth accumulation: paying rent doesn’t build equity or capital growth. |
| There are lower upfront costs: you need to pay a deposit, but no bond registration or transfer fees (when applicable). | Annual increases: rent prices rise every year. |
| Minimal maintenance is required: the landlord handles structural repairs and most general maintenance. | You have limited control: you can’t renovate or customise your property, and you are responsible for some maintenance costs if you break things. |
| You have access to live in prime locations: you can live in areas where buying is not possible due to high purchase prices. | No fixed monthly bond repayment: your rent can increase without warning. |
Renting a home is a great choice for people who prioritise the flexibility to move home easily, lower initial costs, and have fewer responsibilities. Yet, renting does not offer you the chance to build your wealth as rental property ownership can. Your rent increases yearly, and in the long term, you may find yourself paying more to rent somewhere than you would in bond repayments, which are financing your personal property investment.
Renting via IGrow Rentals
If you prefer the idea of renting, IGrow Rentals provides high-quality rental units throughout South Africa.
Renting via IGrow presents certain advantages:
- You are covered by a professional property management team: we make sure your rental home’s maintenance is taken care of and we offer tenant support with a handy app.
- Quality rental units are on offer: our properties are situated in prime locations with modern amenities, and many are within secure complexes within close proximity to major highways, public transport, schools, tertiary institutions, medical facilities, shopping centres and recreational activities.
- Transparent Lease Agreements: there are no hidden costs or unexpected increases beyond the market norm.
- There is potential for future Investment: Many tenants tend to transition into property ownership, from initially renting through IGrow Wealth Investments.
Renting with IGrow Rentals, is a wonderful choice for those people who aren’t ready to buy, just yet, but still want a secure, well-managed and maintained place to call home.
Purchasing buy-to-let properties: the best of both worlds!
As a property investor, aiming to capitalise on the South African rental market, buy-to-let properties offer the perfect balance of property ownership and rental income.
Buy-to-let property investment offers you the ability to:
- Earn a monthly rental income: your tenants pay rent, covering your bond repayments and this also generates a profit.
- Gain from capital growth: as your property appreciates over time, so too, does your net worth.
- Build a property portfolio: in purchasing several rental properties, you can reach an early retirement and financial freedom, up to 10-15 years earlier than most. (View our recent blog post: A Beginner’s Guide to Financial Freedom Through Property Investment. This blog post shows you how an everyday South African can retire 10-15 years earlier than planned with the aid of IGrow’s property investment specialist and rental agent team.)
- Leverage tenant demand: the high demand in South Africa for rental properties makes sure you experience a consistent market as a rental property investor.
Conclusion: The winning formula is buying a property as an investment!
Even though renting may be a short-term need for some people, buying a property stands out as the best strategy for long-term financial growth and security. IGrow Wealth Investments helps investors generate wealth by carefully choosing your investment property so that it will appreciate and generate a sound rental income for years to come.
Whether you’re in the market to buy a rental property or find your perfect rental home, IGrow has a solution for you. If you are going to rent or buy in partnership with IGrow Rentals and IGrow Wealth Investments, you will receive expert guidance on your rental or purchase journey.
If you are ready to start your property investment journey, contact an IGrow Investment specialist today! Or if you want to look at available IGrow rental properties, contact our Rental Agents now!
