Real Estate Investor Magazine South Africa September 2014 | Page 26

SMART MOVES

BY GAWIE VENTER

Buying Below
Market Value

“When there’s blood in the streets”

B

uying property - or any other commodity when the market is down, remains one of the
surest ways to obtain value and ensure you make
money on your investment.
Against the stream
Baron Rothschild, the 18th century British nobleman
and member of the Rothschild banking family, is
credited with saying: “The time to buy is when there’s
blood in the streets”. He should know. He made a
fortune buying in the panic that followed the Battle
of Waterloo against Napoleon. This is “against the
stream” investing - a strongly-held belief that the worse
things seem in the market, the better the opportunities
are for profit.
Most people only want to include in their portfolios
what others believe to be winners. But, as Warren
Buffett warned: “You pay a very high price in the stock
market for a cheery consensus”. In other words, if
everyone agrees with your investment decision today,
it might not be a good one.
Finding the winners
We all know that we make our money when we buy.
As such, buying below market value remains the main
priority for every investor wanting to obtain long-term
and even immediate value from property. Knowing
where to look, with whom to partner and how to
negotiate is vital to securing the right deals.
It is not a matter of whether these deals are out there,
but rather how to find them. The best way to access
these deals is to partner with those already finding
them. These deals do not come easy and require teams
of people sifting through thousands of reports to find
that one piece of gold. By partnering with the right
people with the right systems, you gain an advantage
by tapping into an existing system with a proven track
record - the only way to measure success in Rands and
cents. Always verify a potential partner’s track record

26

September 2014 SA Real Estate Investor

by looking at the deals concluded and determine if this
performance is sustainable.
Be very selective with whom you partner. Ensure
you select a partner that will create synergy with what
you want to achieve. Apart from checking a potential
partner’s track record, also check whether you will
enjoy working with them. To see how we choose our
partners, watch our latest video on the new website
www.propertytalk.tv.
The real work
Finding below market value deals is just the beginning:
thereafter the real work begins. These deals often
involve a significant amount of admin (read very hard
work) as, generally, the legal and physical side of these
deals do not come “clean”. The value lies in “cleaning
up” these properties, both physically by renovating
them and, more importantly, on the legal or human
side, which is the hardest part as it involves dealing
with the most complex of all of God’s creations...
humans.
The human factor
These properties often come with an owner or tenant
that’s not leaving, legal orders, or a mess of legal jumble
for attorneys to sort out. However, the human factor
remains the most important factor in finding value
in a property, as properties are only worth something
if humans are interested in occupying them. The
highest value can be extracted from a property if the
deal is negotiated correctly to ensure all parties give
something yet gain a fair amount more. Valuing every
person involved in a transaction creates the ultimate
value.

RESOURCES

Below Market Value Properties
www.reimag.co.za