Real Estate Investor Magazine South Africa March 2013

FEATURES so excited about property investment when you read some of the stories. • “I bought our second property for R119 000 and sold it for R720 000 14 years later, during which period we enjoyed living there, paying off the bond in a few years, which allowed us to invest in our first rental property.” • “We bought a two-bedroom townhouse with a double garage in a security complex directly from the developer – with all costs included for R200 000 in 2001. It was recently valuated at R690 000.” • “In 2008, I bought a property in Bezuidenhout Valley, Johannesburg with a R250 000 cash deposit and an agreement to pay the remaining R400 000 of the purchase price of R 650 000 in instalments over five years, which meant no bond was required. However, the owner needed R200 000 urgently, but could not obtain finance. So I took out a personal loan of R100 000 and offered her another R100 000 which I “Good debt, our entrants agree, is the kind of debt that allows them to acquire assets that will not only appreciate in value, but will also generate ongoing income.” had available in cash. The owner was happy to accept the R200 000 in cash as full and final payment for the property, which meant I acquired a property worth R800 000 for R450 000, while helping someone in dire need. I am collecting R23 000 a month rental from this property every month.” • “We are comfortably on our way to owning 15 properties within the next five years.” • “Today I own 16 sixteen rental properties, of which only two are bonded, as well as a paid up main residence.” • “I bought a vacant stand for R100 000 and sold it a year later for R1.5 million. I also bought a retail complex with flats on the first floor for a minimal amount, fixed it and today it is worth more than R5 million.” www.reimag.co.za • “The value of our property portfolio is rapidly catching up with the value of our business.” Other investments Most of the investors focus on their property portfolios, for obvious reasons, considering their experiences detailed above. However, a few are also invested in, for example, listed property on the JSE. The majority of the investors mentioned their disappointment with the performance of other investments. “When we started out at first, I took advice from a financial adviser - not an independent financial planner - who did not have our best interests, but rather his commission earnings, at heart,” noted one of the entrants. “I realised this after 10 years and it cost us about R800 000 to R1 million in lost capital growth. I rectified the situation by taking complete ownership of the situation by conducting our own investments and since then I turned around the losses into excess of what we lost.” This experience is echoed by other entrants, one of which commented: “ We bought insurance annuities and invested in five-year plans, which all had a negative growth. We lost quite some money on insurance.” Ethics All of the entrants placed emphasis on ethical investment. This ethical approach ranges from paying taxes and complying with legislation in terms of managing tenants to dealing only with legitimate and legally registered organisations and making fair offers on properties, based on due diligence, even if the seller is distressed and desperate. As one entrant put it so succinctly “what goes around will come around”. Philanthropy Another common trait among the entrants was philanthropy. The majority of entrants are not only supporting their children, but also care for their elderly parents. Many are supporting extended family members as well as their domestic workers and their families. They are also involved in community work, support numerous charities and help other entrepreneurs to establish businesses. They are passionate about teaching their children and others in the community about the power of property investment as a means of creating wealth. Entrepreneurial flair Many of our investors are entrepreneurs, not only as owners of small businesses, but also, even while working in the corporate environment, as owners of income-generating property portfolios. As one entrant says: “You need to be creative in this game, you always need to come up with ideas as to how you can maximize your income”. This inspiring story illustrates: “I have a semihouse in Johannesburg which I rented out to two families, collecting R3 500 per month from each, which covered the bond of R6 500. Then I did some research and discovered that most people in the area need rooms. So I decided to renovate and created beautiful rooms with bathrooms and arranged alternative accommodation for the existing tenants. Now I am collecting R19 000 a month in rental! By being creative I have managed to accommodate more people, I have employed two full-time caretakers for and provided work opportunities March 2013 SA Real Estate INVESTOR 17

Real Estate Investor Magazine South Africa March 2013 | Page 19