Real Estate Investor Magazine South Africa February 2016 | Page 57

MY STORY My Property Investment Journey BY DREW HOOK D aniel Swanepoel, owner of the Ds Dance Studio knew from a young age From a young age That he wasn’t an ‘office and tie kind of guy but still wanted assets and passive income’. DS read the Rich Dad Poor Dad book and fell in love with idea of passive income. The idea that you put down 2k, 5k or 10k deposit on a townhouse and the bank covers the rest of the loan. A tenant basically covers the expenses. All the while your asset increases in value! So for a 5k deposit, if the place went up 10% per annum and it cost 250k, you would make 25k, besides rental income. At age 22 Daniel invested in Summercons lifestyle properties. ‘I loved the idea that a tenant could pay the rent covering the bond until I could one day move in to my 2 bed loft with upstairs roof garden’. His mother stood surety on the property and the unit was bough off plan, ensuring there were no transfer duties or bond cost. ‘By the time they were built, the value had gone up. That first unit-the bond is now paid up and the unit is worth 900k.’ Three separate property deals stand out for Daniel, in terms of the significance and experience gained, the first being a two-bedroom loft in Sunninighill. As it was from the developer there were no transfer duties, and being one of his first investments the opportunity to invest without spending too much appealed greatly. The interest rate was in the 20’s, but according to Daniel ‘I still thought property was the way to go’. The second deal is what he refers to as ‘Then Eagle Canyon deal’. After 5 years the property is still in a negative cash flow. However, because of the escalation in the value of the unit, he would stand to make a far greater return on selling the unit than any of the others he has owned for a greater period. And lastly, his current dealings in the US property market, including Dallas, Florida and Virginia. ‘No bank www.reimag.co.za in SA will look at me as I’m ‘ overexposed’. However the USA is open to 60% to 65% mortgages with guaranteed rental returns for 3 years.’ The US holds a great number of opportunities for foreign investors, and Daniel is optimistic about the future prospects. ‘If anything, my achievement would be that I have a stable portfolio of local and international properties that I can one day comfortably retire on.’ Daniels Investment Tips Never get emotionally attached to a unit Yes you need a vested interest in the value of the unit, but it is essentially a tool to your wealth creation- a business. Thus if a tenant leaves the place in a mess or they skip without paying rent, just see it as part of the bigger picture of your property journey. It’s tax deductible anyway and you can get rent insurance if you are really concerned. Have yourself a reliable fix it up guy that can sort out all your issues. Try not to sell Let the property build up positive cash flow, as well as capital appreciation. Only now after 17 years am I selling a few properties. And that is only to purchase units in the USA that are a Rand hedge and will make a better income for me long term. Don’t dip into your investments Only ever touch that money to fix units and to buy more properties. Then only do that after the property is cash flow positive with some good appreciation (this is in case things go wrong.) Create a legacy not a future garage sale. Do you have an interesting property investment story to tell? Let us know at [email protected] FEBRUARY 2016 SA Real Estate Investor 55