DIY financial investing: Commo

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DIY financial investing: Common sense property

It need not be complicated.

DIY financial investing: Commo

Pixabay

“Oh! Common sense is not common!” exclaimed a student of mine years ago when he suddenly grasped the idea of calculus. Because very often it is necessary to step back and realise that difficult problems often have simple straightforward answers. In this regard investing is no different from mathematics.

In Home sweet home, Buy-to-let and calculating rental yield as well as in Bonds and freedom, we looked at the more technical aspects of property ownership. While these technical calculations lie at the heart of the investment, there are a host of simple common sense ideas which can make a big difference.

So I would like to end the discussion on property investments by simply listing a few simple things to keep in mind.

  1. First-time buyers are often embarrassed to negotiate aggressively when buying property. It is quite acceptable to offer someone 10 or 20% less than what they ask. And a good strategy is to consider a few places and to make low offers on all of them, then settle for the best deal.
  2. When buying your own home, consider how far it is from your work. An enormous amount of time and money can be saved if you get a place from where you can walk, cycle or use public transport. A place close to a park or beach might also mean that you need a smaller property and that you have the opportunity for exercise without having to join a gym.
  3. The eye of the master fattens the calf, the saying goes. And in Afrikaans, ver van jou goed – naby jou skade. (Far from your things – close to your loss.) Get a buy-to-let property which is close to where you live, and inspect it regularly. If you live in an apartment, then why not buy a second unit in the same block and rent it out. And even consider being a trustee for the block to better keep watch over the property.
  4. For a buy to let property you might use an estate agent to manage the tenant, but you can also manage it yourself. Through social media, we all have many connections, and the challenge of getting a reliable tenant can often be overcome by rather renting to a trusted friend or family member.
  5. A wealthy family member or parent might have money in the bank. Consider borrowing it from them at a better interest rate than what they get, while paying less than what the bank would charge you. But only do this when you are sure that you see eye to eye and even then have a written agreement so that there is no confusion about the interest rate and how and when the deal comes to an end.

Next week we shift our focus away from property, to investing in the stock market.

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