Real Estate Investor Magazine South Africa June 2013 | Page 8

INBOX Managing Your Property Q Gordon Mackay The Streetwise Millionaire www.gordonmackay.co.za Aidan Motseng Asks: With all the properties you have bought and invested in, did you manage them yourself or did you delegate to proficient companies and surround yourself with qualified professionals? A Gordon Mackay Answers: “Nobody cares more about your money than you do,” never, ever forget this statement. In other words you need to take total responsibility for your own money and have total control. I have always managed my own properties until I reached a stage where I needed help as the workload was too much. I then employed people whom I trained to use my systems. I also continually improve on my systems to make them more efficient and effective. I have my finger on the pulse at all times and have total control. By delegating to other companies you lose a certain amount of control plus you still need to double-check them. It has taken me many years to find the right people who are street wise to handle my other affairs such as estate agents, attorneys, accountants, service providers etc. I highly recommend you self-manage and create systems for everything, so it is easy to have total control. A lso, always keep improving on your systems. A PTY LTD Company Q Michael Dryden Finserve Trust & Accounting www.finserve-trusts.com Scott Cundill Asks: If I create a PTY LTD company, and sign an agreement that the property belongs to the PTY until it’s formally transferred, and agree to sell the property to the company at a price that covers no less than all the costs, including the full bond, is this legal? A Michael Dryden Answers: I certainly would advise that the respective investors own their shares in a trust as this minimises (or eliminates) the impact on the Pty Ltd should an investor be declared insolvent or be sued for some reason. The trust will also fulfill other advantages to the investor such as risk mitigation and estate planning. The only issue is in terms of the amount, it seems the property will not be sold at its market value. If the amount is less than the actual market value at the date of sale, then the difference could be recognised as a donation and taxable at 20%. SARS might also deem the sale to be at market value and therefore additional Transfer Duty / VAT / Capital Gains Tax will be payable (with penalties and interest). If the amount is above the market value of the property, then the investors could deem the transaction as fraudulent. I do not think that it is possible to transfer the risks and ownership of the property to the company without doing an actual transfer. The Property Market Q Samuel Seeff Seeff www.seeff.com Faye Ann Roberts Asks: What are the biggest challenges facing the propert y market right now? As someone looking to invest in residential property, what should I be thinking about or know before I consider investing? A Samuel Seeff Answers: The biggest challenge facing the real estate market is the ability of consumers to secure mortgage finance. Given that about 90% of home buyers require bonds, this has had a significant impact on the market since the introduction of the National Credit Act (NCA) in 2007. The banks’ appetite for mortgage risk despite the security on offer in bricks and mortar certainly is bearing heavily on the market. Since about 2010, mortgage bond levels have remained flat at just over 174,000 bonds annually, still about 48% below the over 330,000 granted in 2008. While the banks’ ability to grant mortgage finance is compounded by the high household debt levels and lack of consumer liquidity, we believe there is room for some relaxation of the tight credit criteria. We see for example that growing numbers of consumers are self-employed or in small businesses and getting a bond is difficult, arduous and onerous for the consumer. The golden rule of property investment has always been location, location, location and this is as true for the South African market as for the biggest global markets. Do you have a property question you would like answered by our experts? If so, post it on ASK THE EXPERTS on www.reimag.co.za or email [email protected] 6 June 2013 SA Real Estate Investor www.reimag.co.za