June is Youth Month in South Africa; it’s the month during which we celebrate the potential of our youth, highlight their issues, and drive hope for the future.
At Idwala Property Group, we understand that times are still tough for our youth, particularly if you’re a young adult who wants to start a new and independent life.
Make no mistake, owning property as a young adult can be extremely challenging. However, it can also be extremely rewarding and, if you make informed choices, being a homeowner doesn’t have to be an unachievable dream.
Because it is Youth Month, we decided to offer some free expert advice and a few investment tips for ambitious young adults.
Have Your Finances In Order
Before you can buy a home, you need to have your finances in order. It’s not just about what you can afford, but what you can pay up-front.
Start by looking at your spending to see if you are ready to handle the costs. Then, put together a budget and set aside a certain amount to save every month. Having a deposit will significantly improve the chances of your home loan being approved. You’ll likely also be eligible for a lower instalment. The bigger your deposit, the lower your monthly premium.
Remember, as a buyer, you’ll be reliant on financial institutions and their approval. A small savings account can go a long way to making a good impression.
Rent To Own
Why pay for someone else’s property when you could be paying for your own future home? Entering into a lease with an option to buy is an excellent way to becoming a property owner, particularly as a young adult.
For example, say you have a five-year rent-to-own agreement. You’ll be able to use the time to fix up your credit score to apply for a loan once the five years are over. Another option is to save up money over those five years so that you can make a sizeable down payment on the property.
Pay Your Monthly Instalments by Renting Out Rooms
Let’s say that you’ve already been approved for a loan and that you’re a proud new homeowner. Unfortunately, many hidden costs come with a home, ranging from property tax to maintenance costs.
If you’re lucky enough to own your own home but struggle to make ends meet, you can always rent out rooms to help lighten the financial load. If you live in an area with decent tourist attractions, universities, or business demand, the money you get from renting out a room can help you cover a decent portion of your monthly instalment.
Bonus Tips for Young Property Investors
If you decide to make money through property investments, you must be prepared to be in it for the long haul. Here are a few investment tips for young investors this Youth Month.
Opt For Flats Over Houses
Smaller properties like flats generate a better return on investment (ROI) than houses. If you can buy a property and your budget can stretch that far, choose to buy a flat rather than a large home. For example, having a 2-bedroom, 2-bathroom flat in a safe area close to amenities and business districts can offer greater flexibility and makes the property attractive to a broader range of tenants. That way, you’ll be less likely to sit with an empty, revenue-devouring property.
Invest In a Familiar Area
Any real estate investor will tell you the most critical factor to consider before buying a property is location, location, location. Investing in a property that’s hundreds of kilometres away from civilisation, businesses, and essential amenities won’t line up many eager tenants.
If you’re just starting as a property investor, you’re likely not an expert in the area. It might be difficult to judge whether the location or prices are good or not. It would be much easier to spot a bargain in your neighbourhood or familiar area. It’ll also be easier to keep an eye on your tenants if you live nearby.
Have An Investment Partner
Another way to get you started on the journey of property investment is to have a partner. If you have a friend or colleague, you can always discuss the possibility to invest in property together.
Should you decide to go for the latter, it’s important to make sure that you’re 100% aligned and on the same page. Be sure to discuss what you want to do, discuss all scenarios, and have a solid legal agreement in place.
Conclusion
WE want to remind our young people that buying a home is a long-term investment. Before you commit, ensure that you weigh the pros and cons and are ready for the responsibilities that come with being a homeowner.
With great debt comes great responsibility, so have your finances in order and decide whether you want to buy once-off or rent to own. You can also rent out rooms if you need a little help covering your monthly instalments.
Most importantly, remember to be patient. Don’t put yourself in a position where you need to sell your belongings, or worse, your home, because of financial overextension.