Understanding and mastering the property ladder

The phrase "climbing the property ladder" is often raised in conversation but it can seem like both a challenging prospect and a familiar-but-vague concept. Jawitz Properties provides an in-depth explanation of climbing the property ladder, practical tips on how to start and everything in between that you need to know about climbing the ladder over time.

Defining the property ladder

The phrase "property ladder" comes from the UK's property market, but the idea has become well-known worldwide. It describes the process of building wealth over time through progressive real estate investments. Traditionally, the first "step" onto the ladder is buying a one or two-bedroom apartment (essentially known as your starter home). The second step involves selling that apartment and investing in a small two or three-bedroom house, often in a sectional title complex. The third step is buying a bigger standalone family home and the final step involves purchasing a smaller home for retirement.

Strategies for getting onto "the ladder"

If you're not yet on the ladder, the first step is to save up a deposit so that you can buy your first property. For many people, this may be an apartment, but it could also be a sectional title or a freestanding house, depending on your needs and your budget. Having a deposit to put down will not only help you get a home loan to buy the property of your dreams, but it will also mean that your monthly instalments are lower. Finding the right first property can be stressful, but the good news is that wherever you are in South Africa, there's a Jawitz Properties property practitioner who can help you through every stage of the process.

The first step in any decision to climb onto the property ladder is to speak to a bond originator and get pre-approved for a home loan. This will give you a clear idea of how much money you will be able to borrow to get started on the property ladder.

Taking the next step

As you move up the property ladder, your options expand. For example, buying a bigger home with a granny flat means that you could potentially rent out part of your property to a tenant. Rental income is likely to mean that you can either afford to buy a bigger property or that you will be able to work towards paying off your home loan sooner than you would otherwise have been able to.

If the first property you bought has appreciated significantly in value, you will be able to use the proceeds of selling that property to invest in your next step on the property ladder. That's why choosing the correct property to invest in is so important. An experienced property practitioner will be able to assist you with keeping your finger on the pulse of the current property market. They will guide you towards the right property in an area where property values are optimal or even increasing.

Branching out

Over time, as your wealth grows, your real estate investments don't need to be limited to the property that you and your family call home. Ooba, a well-known bond originator, aptly describes buy-to-let properties as "the bread and butter of property investment". Buying a property and letting it out has a two-fold benefit: on the one hand, you add an asset to your portfolio in the long term. On the other hand, your tenant will help you pay for that asset in the short to medium term.

Whether you're looking to take your first step on the property ladder or the next one, the Jawitz Properties team is here to help. Get in touch for guidance backed by decades of experience.