Identifying niches: growing property and wealth

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.