Why Invest in Property?
Property has two income streams, namely: 1. Capital growth: In history, the value of property has doubled every 5 years. Though we are in a sideways growth pattern at the moment, the 5 years preceding 2007 had a year to year growth which was far above average. For the value of property to double every 5 years, an average growth of 15% p.a. should be maintained. Though we do not experience this average in the market since late 2008, it should be kept in mind that property is a medium to long term investment and we are very confident that the average will be maintained in the medium to longer term. 2. Rental Income: The income yield from the investment property that we source at present, range from 8 – 11%. The income yield is sustained and improved with annual rent escalation. Such escalation will always track inflationary patters. When interest rates decrease inflation will be reduced and more tenants will be able to purchase their own property. This will result in annual rent escalation to be low. In an opposite situation when interest rates and inflation increase, rent escalation will tend to follow the same pattern. An average of 8% rent escalation is experienced in the present (End 2010) market. From the above it is clear that Property Investments has a self sustaining pattern of maintaining and even increasing investment capital, combined with an income stream that keeps up with inflation. Should we experience an optimized situation with 15% growth combined with an 11% rental yield, it will relate to a 26% growth and be annually increased by rent escalation. In a slow market, with for instance a 10% growth and 8% yield is experienced, the annual return will still be an impressive 18%. Why InCommercial Property Services? We source new properties from developers and distressed sellers that are discounted and typically selling for below R500 000. In many cases these properties will already have a full lease in place. All you have to do is cover the small shortfall between rental income and bond repayments for the first year or two until such time as annual rental escalations result in a surplus. At this point, your tenant is paying your property for you and you are in a position to make a further investment. Even with conservative figures for both property growth and annual rental escalations we will show you how it really is possible to purchase up to 15 units over a period of 15 years. Why invest in my own Property? Have you noticed in the media what has happened to property investment companies and syndication schemes in the present economical times? ..............Why? These businesses went bankrupt because the companies held no equity in their developments themselves. They typically sourced capital from investors to apply it to property developments and even bonded the remaining balance of their assets to the banks. When the economy was showing strong growth, these companies made very nice profits for themselves from the equity of their investors. When the economy turned down, the equity in these property investments were diminished and the first to loose their capital were the investors. When you invest in your own property, you are in control of your investment. Your equity (capital Investment) is in your own property and the surety (property title) is registered in your own name. You cannot loose because you are part of an investment pool where the fund or syndication has lost its equity. How many people do you know who are wealthy from having invested in annuities or cash deposits?
and then…. How many wealthy people do you know that don’t own property?  |
InCommercial Property Services, Wealthkey8
