Real Estate Investor Magazine South Africa May 2018 | Page 34

URBAN
Inner City Investing
How to make it big
I
nner city investment is tempting to many property inves-
tors. We reached out to TUHF to find out what it takes
to make a success as a start-up property investor. Over the
past 15 years, they’ve financed nearly 33 000 units of inner city
property, scattered in all eight metros of South Africa. Their
work enables real estate investors from all walks of life to pur-
chase, refurbish, or convert property and, with a little luck, get
started on a long and successful property investment journey.
1. Selecting an inner city area
First, consider where you would like to invest: weigh up exist-
ing and planned infrastructure, especially access to transport
including bus stops, stations and highways. Also bear in mind
which neighbourhoods offer amenities like schools, shopping
and healthcare. Last but not least, make sure you know where
the UDZ (Urban Development Zone) boundaries are to see if
the area you are considering qualifies for tax deductions.
2. Identifying specific opportunity
Now it’s time to identify an exact property. You can get a feel
for the market by attending auctions, scouting online proper-
ty websites or talking to local estate agents. The best way to
identify opportunities is to walk the streets of the area you are
interested in. Talk to the people around and find out what op-
portunities are available. Don’t be in a rush to get going, make
sure you are making an informed decision before you commit
anything to paper.
3. The essentials of the site
Once you’ve pinpointed a suitable property, identify the owner
or agent and request more information regarding that build-
ing or site. Make sure you are familiar with the zoning of the
property as well as the standing of the property’s accounts with
local municipality. In doing so, you’ll be positioned to find out
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MAY/JUNE 2018 SA Real Estate Investor Magazine
the worth of the property and the amount of capital needed to
acquire the space.
4. Partner up
Now comes the point at which you would need to apply for
finance if you are not self-funding the project. In TUHF’s case,
a minimum of 20% equity of the total project cost is required.
If you’re unable to come up with the full amount, they do offer
a possible solution through the Intuthuko Equity Fund.
Before deciding to go ahead, you’re going to need a feasibil-
ity document. Here, you’ll consider rental averages and oper-
ating costs in the area, review construction costs and purchase
costs. It makes sense to speak to the experts to ensure you get
accurate information and guidance.
5. Bond registration, transfer and construc-
tion
Considering all goes well with your finance application, the
property will be transferred into your name.
Once all compliance requirements, including plan approv-
als, have been met, construction can commence. It’s import-
ant to have partners to assist in decision-making concerning
building contractors and identifying credible and qualified
service providers.
6. Rent up
Once the refurbishment of your property has been completed
and you have received your occupation certificate, it’s time for
rent up and ensuring any final construction snags are taken
care of. Make sure you have proper credit and background
checks in place before you allow a tenant to move in and en-
sure you have strict payment controls in place for collecting
monthly rent.