'People,' commented the 18th Century essayist, Samuel Johnson, 'need to be reminded more often than they need to be instructed,' '“ and this is nowhere more true than in simple investment matters, says Tony Clarke, MD of Rawson Properties.
'Throughout our media liaison efforts,' he said, 'we have hammered home the message that investing in property is a wise move '“ and yet almost daily I still get people asking whether right now property is a good proposition.
'Let us make it absolutely clear: our view, by which we will stand, is that property investment is always a good move and now is an ideal time to buy property, provided you are not looking for a quick return'
The reason for this, said Clarke, is that those who 'go searching' will find that many undeveloped erven are attracting offers of no more than 33% of their current market value while improved properties are often being bid for at 60% or less of their market value.
'I am quite willing to predict these prices will never be seen again,' said Clarke, 'and those who fail to capitalise on them will regret it later'
Further good reasons for going into property, other than its current prices, said Clarke, are that
' countrywide, the rental pool is growing exponentially as a result of the shortage of home loan approvals and as so few new developments are coming on stream, the shortage of accommodation will push rents up year by year.
' the ability to claim tax benefits. All renovation, levy and legal costs can be claimed for on property investments, especially when buying property in other countries and it is often possible to gear the purchase negatively and deduct the tax from other income.
' the ability to limit your outlay and reduce your risk. This is easier on property than on most other asset purchases. It is usually also simple to take over or dispose of a share in a property provided the new shareholder is approved by those who have already invested.
' the skills required for this type of investment are not difficult to acquire and boil down to getting to know the property markets performance in one or two limited areas '“ and learning how to check on the credit-worthiness of tenants.
' as a corollary to the above, there will seldom be any grey areas in the investors understanding of the purchase and how it should perform. Certain investors, sometimes disillusioned with the excuses and misleading statements made by fund managers, have, said Clarke, found the basic simplicity and transparency of property a big relief.
'It is particularly reassuring to know that a property cannot go bankrupt in the way some investment funds have done,' he said. 'If you do not overcapitalise, maintain the property well and regularly check on the tenants behaviour, a reasonable capital appreciation can be expected'
All these good reasons for channelling a proportion of ones assets or income into property, added Clarke, however pale into insignificance in relation to its prime advantage which is that it is one of the few asset classes for which banks will advance a long term loan, thereby enabling the investor to make his money on the banks funding but to enjoy capital appreciation on the total sum. Furthermore, once the first one or two bonds are partially paid off, they can serve as surety for further property purchases.
'A recent global survey involving 5 000 High Net Worth Individuals (the asset cut-off was put at $100 million) showed that these people placed property at the top of their investment list,' said Clarke. 'Thirty five percent of their assets are in property, the next highest asset class being stocks and shares with 19% of their total wealth. Property has helped create more dollar billionaires than any other investment asset.
'My advice then, in todays market is: get off your Sunday afternoon recliner, drive around your preferred district, see what is for sale '“ and make a move, with or without partners. Now is the time to buy'
For further information contact Tony Clarke on 021 658 7100 or email tony@rawsonproperties.com.
