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Ideas

How The Property Market Will Look After COVID-19

By | Ideas, Invest

IS IT STILL WORTH INVESTING IN PROPERTY IN THESE UNCERTAIN TIMES?

In our previous article, Your Property Plan Of Action During The Lockdown, we considered the current lockdown situation and how you should prepare yourself. Now we’d like to discuss the future.

For those who think everything is going to go back to normal after COVID-19 and the lockdown are unfortunately in for a nasty surprise. Things will never be the same again! We will feel the repercussions for a long time after this crisis; not just psychologically, but economically.

South Africa already had challenges to grow the economy before this crisis. Now, we don’t only have to grow the economy; we have to recover from this. Moody’s has also downgraded South Africa to sub-investment grade. However, it’s not all doom and gloom.

The people of South Africa are more united now than they have been for a long time, and our leaders are addressing the issues of the day. I believe this will continue even after the crisis.

Many economists across the globe regard the South African rand as one of the most undervalued currencies in the world. Therefore, we could see a significant strengthening of the rand once things stabilise.

But how does all of this affect the property market and property as an investment in South Africa?

The Reserve Bank’s decision to cut interest rates with 100 basis points was well received as this reduces bonds and thus shortfalls (or increases surpluses) significantly. Most economists expect further decreases in interest rates in the short-term to stimulate the economy, given that inflation remains intact.

There are currently significantly more sellers than buyers in the market as we were already in a buyer’s market where buyers had negotiation power. The economic repercussions of COVID-19 will push us further into a buyer’s market. Many people will have to sell their properties due to job losses, salary cuts or their businesses suffering. This will create opportunities for investors to acquire assets at very low prices and will extend the buyer’s market for quite some time.

Read Here’s Why I Am Buying As Many Properties As I Can (While Others Are Selling) to learn why you should acquire property aggressively in a buyer’s market.

However, always ensure you have cash on hand. Do whatever you can to improve your current cash situation and cash flow without jeopardising your credibility. If your cash flow is not healthy enough, you can use the bond payment relief that banks are currently offering. Things may get rough in the short-term and rent collection and occupancy may become more challenging.

If you want to learn how to get as much cash in your access bond as possible, read our article, Start Using Your Access Bond Today. We explained how you can keep cash in your access bond to save interest yet have the funds accessible. This may come in handy during these uncertain times.

In summary, yes these are tough and uncertain times, but it still is worth investing in property!

 

Success is Like a Snowball…

By | Ideas, Invest

HERE IS WHAT I LEARNED FROM WARREN BUFFET’S BIOGRAPHY

Have you ever read a book that changed your life?

I recently completed Warren Buffet’s biography, The Snowball: Warren Buffet and the Business of Life. And I can truly add this book to the list of best books I’ve ever read.

By making great investments over his lifetime, Warren Buffet has created a snowball that has become so big and unstoppable. Although he mostly invests in stocks, and I primarily invest in property, I learned so many principles from him that I can apply to my strategies.

One thing he emphasises over and over in the book is not to undermine independent thinking and not to mind others’ opinions too much. In other words, listen to others but think for yourself.

“You can’t do well in investing unless you think independently. And the truth is, you are neither right nor wrong because people agree with you. You’re right because your facts and reasoning are right. In the end, that’s what counts,” Buffet states in the book.

This is something I’m applying to my property portfolio. There are a lot of opinions out there, but I’ve decided to start looking at the facts. Success is like a snowball. And people’s opinions are the debris on the mountain that only serves to slow the snowball down. Facts allow you to grow your snowball and pick up momentum.

I often say to those around me that I am where I am in life, because of WHO I am. And If I want to change where I am, I need to look inwardly and change WHO I am by developing myself. And it seems like I am on the same page as Warren Buffet because this is what he says towards the end of the book:

“You’ve got to be the kind of person that the snow wants to attach itself to. You’ve got to be your own wet snow in effect. You’d better be picking up snow as you go along, because you’re not going to be getting back up to the top of the hill again. That’s the way life works.”

What are you doing to grow your snowball?

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