Comparing rental investment products

For property investors certain markets promise a higher probability of secure rental returns than others, according to Adrian Goslett, regional director and chief executive of RE/MAX of Southern Africa.

“Student accommodation, lock-up-and-go sectional titles in central business districts, and holiday markets are just a few of these kinds of options knowledgeable property investors have available to them.

“Each of these markets have their own pros and cons. Ultimately, it is up to the investor to decide upon which of these markets is best suited to their needs,” Goslett says.

To help investors decide which market is more appealing to their purchasing criteria, Goslett explains the various pros and cons of each market:

Holiday markets are best for those who are flexible regarding the lease term, and offer great investment potential for those who would like to tap into the foreign market. Properties in sought-after tourist spots are less affected by the volatility of the rand and offer the potential for higher returns than any other market. However, as with any investment, the higher the return, the higher the risk. During off-peak seasons, properties in these markets have a much higher potential to stand vacant for long periods.

Demand for student accommodation will always be high, but tenant turnover rate is high. What’s more, it is advisable to hire somebody to manage the property on your behalf to ensure that the property is well-maintained, as the risk for damage and neglect increases when leasing to students.

There will always be a market for working professionals who are looking for easy access to the CBD. Investors will need to keep a close eye on the market and the economy to ensure that their rates are fair, as affordability is often the main reason why properties remain vacant in these kinds of suburbs. For comparative advice, a real estate professional can provide insight into any potential new developments which could affect the pricing of rentals in the immediate surrounds.

Goslett believes property is one of the surest ways to generate high and stable returns. “While stock markets fluctuate daily, property markets remain relatively stable over time and appreciate in value each year. The question should never be whether you should invest in property, but rather where you should invest in property. And, most often the answer to this question can be found simply by consulting with a reputable real estate professional who can point you in the right direction,” Goslett concludes.