Buy-to-let property investment can be a great way to generate passive income and build wealth over time. However, it is important to choose the right location for your investment property.
Best Areas to Invest in Buy to Let Property
In our opinion the best cities in South Africa for property investment are:
These cities are the largest and most economically developed in South Africa and with careful investment is possible to do well in any of them. However they all have their pros and cons.
For example, Cape Town is predominantly influenced by the tourism and government sectors and is a very fashionable city internationally. These factors command very high property prices. However the local property market is very closely linked to the tourism industry. From time to time, Cape Town receives very poor press and the tourism industry goes into a slump and down go property prices.
Likewise Durban, and Pretoria are somewhat specialised cities. Durban is highly impacted by the sugar industry and the harbour, while Pretoria is predominantly influenced by the farming and administrative government sector.
I believe that in South Africa, Gauteng is the best place to invest in buy-to-let property. Gauteng is the economic hub of South Africa, and it is home to a large and growing population. Pretoria, Johannesburg and Sandton contain the headquarters of most economic and administrative activity, which makes for a robust property market with high tenant demand. There are times when other cities like Cape Town and Durban do better, but in the long term, Gauteng poses the least risk and a high average growth.
Within Gauteng, the northern suburbs of Johannesburg, Midrand and Sandton offer the best areas for buy-to-let property investment. These areas are home to many businesses and corporations, entertainment venues and facilities, and host a wealthy population. This means that there is a strong demand for rental properties in these areas, and landlords can command high rents.. A interested in your success and who has ample experience and local area knowledge
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Why invest in buy-to-let property in Gauteng?
There are several reasons why investing in buy-to-let property in Gauteng is a good idea.
First, Gauteng is the economic hub of South Africa. It is home to the Johannesburg Stock Exchange, the largest stock exchange in Africa. Gauteng is also home to the headquarters of most major South African industries and Pretoria is the administrative capital. This economic activity attracts large numbers of people to Gauteng looking for employment and opportunity, which drives up demand for rental properties.
Second, Gauteng has a large and growing population. The population of Gauteng is estimated to be around 15 million people, and it is growing at a rate of around 2% per year. This population growth is also driving up demand for rental properties.
Third, Gauteng has a good infrastructure. Gauteng is home to a network of highways, railways, and airports. This makes it easy for people to get around Gauteng, and it also makes it attractive to businesses.
Within Gauteng, the Eastern suburbs of Pretoria, the northern suburbs of Johannesburg are best suited for investment as they are close to the economic action and also home to a number of good schools and universities. This makes the area attractive to families with children.
My personal experience
I have lived and worked in the property industry in the Johannesburg Northern suburbs for more than 30 years and therefore have extensive “local area property knowledge. I believe the Best Areas to Invest in Buy to Let Property is in this Johannesburg Northern Suburbs are. This means that in addition to the generic benefits of this area, I have been able to “cherry pick” certain high performing suburbs and then zoom in even further and cherry pick great properties within those suburbs.
Additional Property Investment thoughts
In addition to the reasons mentioned above, there are a few other things to keep in mind when considering the Best Areas to Invest in Buy to Let Property :
Capital growth: Property prices in the northern suburbs of Johannesburg and Sandton have historically grown faster than the overall property market in South Africa. This means that you can potentially make a good profit on your investment over the long term.
Buy to Let Tax benefits are not limited to Gauteng, but worth considering. There are a number of tax benefits available to buy-to-let investors in South Africa. For example, you can deduct all your expenses incurred in the furtherance of your “property investment business”, such as interest on your mortgage, levies, utilities, agency fees, repairs and maintenance, from your taxable income.
Liquidity: Property is a relatively liquid asset, meaning that you can sell it relatively easily if you need to. Another option is to re-finance your property after you have built up some equity due to the capital growth. This is important if you need to access your investment capital for any reason.
Of course, no investment is without risk. Some of the risks associated with buy-to-let property investment include:
Vacancies: There is always the risk that your property may be vacant for a period of time. This means that you will not be generating any rental income during this time.
Property hijacking: This is a very real concern which is almost completely mitigated if you invest in well run complexes with good security and access controls.
Interest rates: As the interest rates rise and fall, your monthly mortgage payments will increase or decrease. This will influence your rental income
Tenant damage: There is always the risk that your tenants may damage your property. This could lead to expensive repairs.
Our Property Investment Advice
Do your research: Robert Kiyosaki advocates physically looking at 30 to 50 properties before making your first purchase.
Don’t trust your average estate agent. Estate agents are trained to sell properties, not offer investment advice. You simply cannot trust an estate agent who simply wants to sell you the property he or she has on their books.
Educate yourself. There are many property training courses (free and paid) available. We offer many hours of free buy to let training [click here to get yours!]
Make sure you know what a Good Deal looks like before you buy
Get peer advice: Join a property investment club.Get a property investment coachcoach or coaching organisation