Iden­ti­fy­ing niches: grow­ing prop­erty and wealth

Weekend Argus (Saturday Edition) - - PROPERTY -

MANY peo­ple who al­ready own more than one prop­erty mis­tak­enly over­look key prin­ci­ples of wealth cre­ation that could po­ten­tially un­lock their abil­ity to grow their prop­erty port­fo­lios.

Praven Sub­bra­money, chief ex­ec­u­tive of Pri­vate Bank Lend­ing at FNB, says the abil­ity to build wealth through mul­ti­ple prop­er­ties should not be de­ter­mined by how deep your pock­ets are, but rather by iden­ti­fy­ing niches in the mar­ket and max­imis­ing as­sets and ex­per­tise that you al­ready have.

“Wealth cre­ation is a process and can­not be achieved overnight. So the first step is hav­ing a clearly de­fined, long-term strat­egy and ob­jec­tives that will un­der­pin your ven­ture,” says Sub­bra­money.

Here he un­packs some of the im­por­tant fac­tors to con­sider when build­ing wealth through mul­ti­ple prop­er­ties:

Area of spe­cial­i­sa­tion: it is vi­tal to iden­tify the types of prop­er­ties and mar­ket you want to tar­get. If you are in the busi­ness of leas­ing to stu­dents, it makes sense to ac­quire multi-ten­ant prop­er­ties close to uni­ver­si­ties and col­leges, whereas if you fo­cus on ren­o­vat­ing and re­selling for a profit, find­ing dis­tressed stand-alone prop­er­ties which are sold be­low their mar­ket value may be ideal.

Mar­ket trends: re­search un­der­pins your suc­cess in this sec­tor. Un­der­stand­ing where to buy, when to buy, how much to of­fer for a prop­erty and know­ing the right time to sell an un­der-per­form­ing as­set will de­ter­mine your suc­cess.

Start small and work your way up: the big­gest mistake that peo­ple make when start­ing out is over-stretch­ing them­selves fi­nan­cially by go­ing for prop­er­ties that are be­yond their reach.

Start in­vest­ing in more af­ford­able prop­erty and build your way up.

Max­imis­ing as­sets: lev­er­ag­ing the ex­ist­ing eq­uity in the prop­er­ties that you cur­rently own can help you take ad­van­tage of vi­able op­por­tu­ni­ties.

Lenders are also able to pro­vide you with a range of so­lu­tions tai­lored for your needs, with a com­pet­i­tive mix of rates, flex­i­bil­ity around re­pay­ment op­tions as well as cap­i­tal ac­cess.

For ex­am­ple, you can al­ways re­fi­nance your cur­rent prop­erty and use the eq­uity to take ad­van­tage of new op­por­tu­ni­ties or use a com­bi­na­tion of se­cu­ri­ties that you own to raise a loan.

Cash flow man­age­ment: Cash flow is the lifeblood of your prop­erty port­fo­lio.

Mon­i­tor­ing your cash flow can help you iden­tify prop­er­ties in your port­fo­lio that are over and un­der-per­form­ing.

Take ad­van­tage of tech­nol­ogy: in­no­va­tive dig­i­tal tools can give you ac­cess to valu­able in­for­ma­tion about a prop­erty, in­stantly at a click of a but­ton.

Use the right pro­fes­sion­als: while this may not be es­sen­tial when start­ing out, you should con­sider in­vest­ing in a team of pro­fes­sion­als as your port­fo­lio grows. De­pend­ing on the type of port­fo­lio you are pur­su­ing, you need a list of qual­i­fied ex­perts.

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