MOST IMPORTANT LESSONS LEARNT FROM INVESTMENT EXPERIENCE
JACO GROBBELAAR
MOST IMPORTANT LESSONS LEARNT FROM INVESTMENT EXPERIENCE
We have built a substantial residential property portfolio over the last 15 years . His advice to anyone who wants to do the same is this :
1 . Have the correct structures in place If you intend to own more than one property in the future , do not buy a property in your name . Ensure you have the correct structure ( e . g ., a Holdings Trust and Company ) in place BEFORE submitting your first OTP .
2 . Buy property at a discount You make your money when you buy . If you buy a discounted property , you make an immediate unrealised profit that you can access in the future . There are many reasons why property sellers have to sell a property below market value .
Property is one of the asset classes where there is the possibility of buying at a discount , i . e ., below market value . This can be because of financial distress , death , divorce , downsizing / upsizing , immigration , poor presentation of the property , uninformed sellers , etc .
3 . Build your financing capability If you want to finance a property , you need a good credit record . Although it is noble to have no personal debt , it is a disadvantage when you want to finance a property . You need credit to get credit .
Property is the asset class that you can leverage most . This is because banks are willing to finance 100 %+ of the asset and the downside risk ( properties depreciating in value ) is extremely low .
4 . Have cash reserves Cash is king , and you need cash reserves for the transfer fees and bond registration costs when buying a property . Also , ensure you have some cash reserves available after acquiring the property in case of an emergency .
5 . Build a strong investment team “ In a multitude of counsellors , there is safety .” The rich surround themselves with experts . If you want to do something great , you are not going to do it alone , including building your property investment portfolio .
SA Real Estate Investor Magazine MAY / JUNE 2023 26