Create wealth almost out of thin air

Property investments are by nature the type of commitment that tends to be long-term and, in most instances, demands we anticipate how this will benefit us over many years into the future. Some property investments are even made as inter-generational decisions, where we purchase a property now for our children to inherit or benefit from.

The wonderful thing about the property market is that it is supported and encouraged by a very well developed and efficient mortgage market. This makes it unbelievablly good as a mechanism to build wealth over time by using somebody else's money to finance the investments, at least partially. Not all debt is bad. Good debt is the leverage you use such as mortgage finance to grow a property portfolio or get into your first property or even debt to finance your own business that can generate cash.

The level of debt used to the value of the property is something that should always be carefully considered to ensure that even if interest rates were to rise significantly, you would still be able to service the debt.

Over the past 25 years, I have witnessed great fortunes made through property investments and scary implosions of wealth where developers or investors have over-leveraged the properties. For many years when Zimbali was first developing and where we were actively developing new homes, we used the simple rule of buying the land with cash or equity and only raising mortgage finance to develop the top structure. This is a good rule of thumb to follow and if you can't afford the purchase the land for cash there is a very good chance you may be over-leveraging the development. This applies if you are building your own home on a single residential site or if you are planning a large multi-unit development. Mortgage finance is therefore good, but in the right proportion.

The beauty of property ownership is that it creates the opportunity for homeowners to add their value and flair to an otherwise bland building and thereby transform the brick and mortar into a magnificent home and instantly desirable living environment.

Architectural and interior design is of utmost importance in establishing value. This is where very few people should try and DIY this aspect and should find skilled people to assist them with the process and choice of materials and finishes. If you get this right, then you create wealth almost out of thin air.

The next secret to maintaining and building value in a property is continual cleaning and maintenance - never neglect doing this. A meticulously kept and maintained home is immediately recognized by estate agents and prospective buyers and adds significant value to a similar property that may have suffered neglect.

The time to invest is now. The North Coast will remain a vibrant actively traded property market for a long time and will keep on delivering healthy returns for developers and homeowners.