Steinhoff - Another one for Property Bashers?
The recent demise of Steinhoff, a darling amongst the listed equity pundits and investment advisers, adds to a growing list of spectacular corporate failures and the self- confessed shortcomings of a company like KPMG who should be on the investing community’s side by ensuring “the fact and not the fiction” once again reaffirms that careful and calculated investments in property is and always will be the cornerstone of wealth creation and, importantly, where this wealth is always held firmly in the control and protection of the actual owner themselves and not with an independent third party.
A carefully selected residential property investment gives you a fixed and bankable monthly income stream that grows every year and is unlike an investment in shares in a listed company that may or may not earn dividends depending on the decisions of a few that you have no control over and, a carefully selected residential property investment will realise bankable and steady capital growth over the years and is unlike an investment in shares in a listed company which is massively prone to price fluctuations at any time and whose price is susceptible to the actions of its board and directives of some of its shareholders that you have no control over as in Steinhoff and also recently, African Bank.
Even purchasing your own primary residence, if done correctly, is an investment as it will give you a capital growth over the years. But now consider this – it’s an investment and you physically live in it too! You make your memories in it, you use it as your base and as a springboard to take over the world, it’s a nest for your family and a safe-haven for your children and importantly, you even use it for those important weekend braais. You certainly cannot physically do all this “in” an actual share certificate, can you? Those property bashes will then say but actually a primary residence cannot be a good investment as the actual cost of the investment include maintenance costs, rates & taxes or levies, insurances etc. Really? as if these guys who have only share certificates in their hands have got no living and accommodation expenses at all you see.
So, once you have made the decision we would like to offer you some advice on the purchase of residential property as an investment:
Hindsight, especially in property investments. is always the perfect science but in summary, we believe that a mixed investment portfolio is the way to go but being property people, we strongly believe that you should have a bias towards property over equity because ultimately, you have control over it and your investment does not depend on the decisions of a CEO and his board that you have never met, have no control over and who may mischievously be interested in their own lot only.
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