How to Invest in Property on a Budget?

Investing in property can seem like an intimidating venture when you don’t have a huge stash of cash. Starting out in property investment doesn’t require millions or special connections. The market is more accessible than it seems, especially if you start small and know where to look.

You can still invest in property, even without millions to your name. In this article, we’ll explore several budget-friendly property investment routes you can pursue.

Whether it’s fractional property ownership, collectively saving with other people, or starting out with just one apartment, these practical, lower-cost methods will help you get your foot in the door.

1. Invest in Property with EasyProperties

EasyProperties has disrupted the traditional investment model by making it accessible for people to own a “piece” of listed property. Their platform allows fractional property ownership, meaning you don’t need to buy the whole building or even an entire apartment. You can invest from as little as R1.

On EasyProperties, users can buy shares in a building or development and receive rental income or capital gains based on their percentage. This is great if you want to dip your toes into the property sector without taking on major risk or debt.

2. Join or Start a Property Investment Stokvel

Stokvels aren’t just for groceries or funerals. Property stokvels are a property investment alternative. They work by pooling resources to purchase land, rental homes, or fund developments. You can start your own with friends or join an existing one.

The basic idea is to contribute a set amount monthly with a group. Over time, that pool is used for investing in property, and members benefit from shared returns.

It’s important to do your due diligence and always check for registration with the National Stokvel Association of South Africa (NASASA) and ask for financials before joining.

3. Turn a Backroom into a Business

For entrepreneurs in townships, one of the ways to break into property is the backroom rental model. Thousands of South Africans are turning unused spaces like a garage, a backyard shack, or building a small structure into rental units that earn anywhere from R1 500 to R4 500 per month.

The best part about starting a backroom rental business is that you don’t have to purchase new land; all you need is to improve what you already own. It’s particularly valuable in communities with high rental demand, such as near taxi ranks, schools, or industrial zones.

If done right, this approach can finance itself. Funding a backroom business can be tricky, so if you’ve taken a small loan to build a backroom behind your family home, the room can repay itself through the profit you make.

4. Buy One Apartment and Rent It Out

Buying an apartment is an achievable accomplishment through planning, a bit of saving, and building a healthy credit score. When you’re starting out, you can buy a small apartment. Let’s say you purchase something around R400,000, and rent it out. Properties in this bracket exist in many areas in South Africa.

When you’re saving for an apartment, keep in mind that there are once-off costs like transfer fees, registration costs, and bond initiation fees.

Let’s look at an estimate of the real cost for a R400 000 apartment:

Monthly bond repayment (assuming 11,75% over 20 years): ± R4 300
Levies and rates: ± R800
Total: Around R5 100/month

To break even or earn a profit, your rent should be at least R5,500–R6,000. That means the area needs demand and decent tenant turnover. You can also use platforms like Private Property or Property24 to compare rental rates in areas you’re considering.

NB: These figures are estimates. Actual monthly bond repayments, levies, and rates can vary. Interest rates fluctuate, and levies and rates are determined by the municipality and the specific complex.

5. Apply for First Home Finance (formerly FLISP)

If you’re a first-time buyer earning between R3,500 and R22,000 monthly, you might qualify for First Home Finance. This is a government-backed initiative from the National Housing Finance Corporation (NHFC) that helps cover the upfront costs of buying a home.

This is not a loan, it’s a grant that can be used for:

• Paying a deposit
• Reducing your home loan
• Paying transfer/legal fees

The maximum grant amount is R130 000, depending on your income bracket. You can apply through your bank or via the NHFC directly.

Property Investment Is Not Just for the Rich

Property is one of the most powerful wealth-building tools in South Africa, but it’s not just for the wealthy. The market has changed.

Thinking outside the conventional lines of property investment has created new pathways for entrepreneurs to build financial legacies with far less upfront capital. From backrooms to fractional investing, what matters now is starting.