Property investment 101 

Published in June 2025

More South Africans are thinking beyond owning only one home and starting to build property portfolios that provide both capital growth and rental income. “Whether you’re a first-time investor or adding to your existing assets, it’s important to know how to manage multiple bonds strategically and how to identify opportunities for investment,” says Bradd Bendall, BetterBond’s National Head of Sales. 

Lightstone estimates that there are over 716 000 multiple-property owners in South Africa, collectively holding more than 460 000 investment properties. Interestingly, 60% of these investors own three properties, while 10% hold six or more. “It’s not just high-net-worth individuals leading the charge; more middle-income earners are entering the market by leveraging smart bond structuring and strategic purchases,” notes Bendall. 

The latest Absa Homeowner Index for the first quarter of 2025 shows that investment sentiment remains robust at 85%, its highest level on record since the index launched in 2016. “Many young professionals and families are choosing to diversify their holdings across regions and property types,” says Bendall. 

Managing multiple bonds

Multiple bonds will affect your financial profile, so it’s important to manage your bonds wisely. “If you live in one property and rent out another, it’s advisable to pay your primary residence off first. This reduces your monthly liabilities and boosts your ability to qualify for a third or fourth bond.”

Alternatively, investors with multiple properties often take the ‘snowball’ approach: paying off the smallest bond first to free up cash flow and reduce their debt-to-income ratio – which banks consider when granting new loans. 

Bendall offers the following investment playbook:

“There’s no legal limit to how many bonds you can have. Your ability to secure loans depends entirely on your credit score, your income and the performance of your current properties,” says Bendall. “Note too that any rental income you earn from a property will be added to your taxable income. However, you can also deduct allowable expenses, such as electricity, levies and water, from this income. This will lower your tax obligation.”

For those with an extensive portfolio – owning at least five new, unused residential units only for rent – it is possible to claim 55% of the cost (purchase price or market value) as a tax-deductible base over 20 years, in terms of Section 13Sex of the Income Tax Act, adds Bendall. 

There are also tax implications when you sell a property other than your primary home. Capital Gains Tax (CGT) applies, meaning that 40% of the capital gain is added to taxable income, which is then taxed at your marginal rate. 

Where to invest?

A well-balanced property portfolio includes a mix of locations and residential options. One approach is to spread investments across metros and smaller towns, explains Bendall. “Consider semigration hotspots such as the Garden Route or parts of the Eastern Cape, which are seeing growing demand and stable rental yields. Look at various property options depending on your budget and the return-on-investment potential.” 

Apartments in urban centres of Cape Town and Gauteng offer consistent rental returns, while townhouses and homes in lifestyle estates are increasingly popular with families and retirees. Bendall adds that sectional title units are often easier to manage and have lower maintenance costs, making them ideal for out-of-town investors. According to Lightstone, 28.6% of property investors with multiple properties favour sectional title homes, while 67.6% own full-title properties – often in different provinces.

Rental income

One of the main appeals of owning multiple properties is the possibility of a passive income. Rental yields average between 6% and 9% in Gauteng and the Western Cape, depending on location and property condition. Observatory in Cape Town is an example of a high-yield area. The 98% occupancy rate at Peak Studios, a student housing development in Observatory near Cape Town’s city centre, underscores the ongoing demand for this type of accommodation in this area.

As always, it’s important to budget. Include all costs – levies, rates, taxes, insurance and potential vacancies – in your calculations. Work with a bond originator to compare affordability and potential return on investment, advises Bendall. “South Africa’s property market is ripe for investors who are prepared to plan carefully, borrow responsibly and diversify smartly. With the right approach, owning multiple homes isn’t just possible – it can be a rewarding path to long-term wealth,” he concludes.