uMaStandi’s five essential tips for successful property investment

With 2024 already underway, it is an ideal time for property investors to consider giving attention to investing in townships.

Lusanda Netshitenzhe, the CEO of TUHF21, explains that there are many opportunities for densification and bringing in mixed-use developments to these areas. This is made considerably more accessible by uMaStandi, a commercial mortgage financier that assists township property developers to become property entrepreneurs and build their property portfolio.

Even so, first time and new property developers may be unsure about where to start. To enable them to successfully develop their first property and make a significant difference to unlock the potential of townships, Netshitenzhe offers five essential tips on the best ways to get started. 

#1 Invest in your yourself

Gaining knowledge of property matters is essential, so that you have a grasp of the fundamentals of property development. These include understanding construction, how to appoint contractors, and the types of construction contracts to enter into. It is also important to learn a bit about property design and how to successfully navigate the town planning processes. You don’t have to become an expert, but having a working knowledge of these matters will set you up for success.

#2 Develop basic property management skills

The most important part of property investment is having a firm grasp of property management. While construction of a property may only take six months to a year, effective property management is needed for the lifetime of the investment. If you finance the property through uMaStandi, you should anticipate having a 10 to 15-year relationship – at least.

It is essential therefore that you develop property management skills and learn how to vet your tenants, and what types of leases to enter into. Even if you employ a property managing agent, you need to ensure that your property is maintained and that your tenants are treated well.

Contrary to popular opinion, property is not a passive investment, it requires a hands-on approach and any funder will expect you to mind your property as you would any business.

#3 Build and leverage basic financial literacy

As with any entrepreneurial activity, basic financial literacy is a must have. Applying that to property investment, you need to understand basic concepts such as the time value of money, which means the R20 000 you have today doesn’t have the same value tomorrow.

This comes into play when you need to buy building materials, for example, or save money for equity to finance your investment, at least in part. Therefore, it is important that you know how to use your money most wisely today, so that you can take advantage of opportunities and avoid the rising costs – and risks – that inflation would otherwise bring if you were to only invest that same R20 000 later.

#4 Define your strategy

Another significant tip that all property investors should take cognisance of is to have a clearly defined strategy for going to market. This can be crafted by asking yourself some questions:

  • What kind of property are you going to invest in? Residential, retail, commercial?
  • What kind of tenants are you looking to cater to? Students? Young Professionals? Families?

Knowing the above will enable you to clarify what kind of product you intend to bring to market, whether these are bachelor units, one bedroom, or two-bedroom units, for example.

Additionally, you must define what kind of investment you are developing for, whether it is a long-term property that you let for the long-term, or a property that you renovate and immediately sell? uMaStandi funds for the former but not the latter approach.

#5 Know your market

As with bringing any product to market, you must know something about the nature of supply and demand. For property investment, this means knowing who wants to live in the area you are planning to invest in, and what kind of rent they would be prepared to pay.

Then, identify existing suppliers. Who are your competitors in the area? What types of units are they offering? And how can you differentiate yourself?

In property development, location is paramount. If you are aiming to develop in Soweto, for example, you need to narrow it down to which suburb and street, so that we can assist you in best catering to the residential trends in that particular node. 

Along with these five tips, all property developers and entrepreneurs are best served by finding the right funding partner – and building up their network within the industry. Doing so can immeasurably smooth the property development endeavour and help one become a successful entrepreneur more easily.

That is why, along with funding, uMaStandi offers non-financial support as well, from training and tailored mentorship to networking opportunities that enable you to compare notes with others on this journey. 

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