Article By: Evan Pickworth
Mon, 21 Jul 2008 08:06
The rates of growth in diesel, petrol and food inflation should start coming down towards the end of the year, says chief economist from Econometrix Dr Azar Jammine.
"Remember, inflation does not measure whether prices are rising, but the rate at which they are increasing," he explains.
"And the rate of growth in food is coming down and may have peaked. The same for diesel and petrol. In fact, for rates to grow oil has to rise to $250/barrel or more, which is unlikely. Even oil at $140/150 will cause inflation rates on petrol and diesel to come down significantly," says Jammine.
He says he expects a peak in CPIX at 12.5 percent/13 percent and for it to then move back below six percent beyond 2011.
He adds that interest rates will probably increase by another 100 basis points, stay strong for a year and then come down marginally after that.
"The central bank is hopefully looking forward – we get a sense they are – and will anticipate rates coming down and therefore start cutting."
Jammine does note, however, that inflation expectations will continue to rise as underlying inflation creeps higher.
"Underlying inflation was at 4.5 percent or so for some time, but it has started to escalate with the real damage caused by Eskom's request for a 60 percent price increase on the back of higher oil and steel prices. That sent inflation expectations sky-high," concluded Jammine.
South Africa's central bank is set to make its next rates decision on 14 August.
I-Net Bridge
Monday, July 21, 2008
Sunday, July 20, 2008
Facebook is SA firms' best friend
Jul 16 2008 4:35PM
Jessica Hall
Johannesburg - South African companies are taking advantage of social networking website Facebook as a cheaper and more efficient way of marketing their businesses.
"Facebook opens a social networking platform that allows companies to engage on a more personal level at a fraction of the cost," says Mike Stopforth, the CEO of online reputation management company Cerebra which works with companies like SA's biggest retail bank, Absa, on their Facebook presence.
Facebook has become a very popular platform for South Africans with online access; Facebook says there are 683 943 users registered on its South Africa network grouping.
According to international internet information company Alexa, the South Africa network is the sixth largest among country networks on Facebook.
It also reported that Facebook is the second-most visited site in South Africa.
Local internet advocacy group MyBroadband says that the average duration of a Facebook session for South African employees with internet access is 30 minutes.
Given the site's rise in popularity among online users, it is only fitting that companies are finding it easier to reach their target markets through this digital medium.
Kate Elphick, the director of Digital Bridges, a company which helps businesses build work tools and practices using the most recent (web 2.0) technologies, says that Facebook allows companies "to select exactly what markets they are aiming for in a cost-effective way. It is a strategic approach to networking socially".
Quest Flexible Staffing Solutions is first among local recruitment companies to tap into Facebook.
In April this year, it launched a Facebook application that allows the public to assess personality types and establish a line of contact between the applicant and agency.
Quest's managing executive, Margot Errington, says the launch of Quest's Facebook application is in line with the company's strategy of using innovative recruitment methods to attract skilled applicants from specific communities.
Errington says that companies first need to assess their needs before deciding to use Facebook as part of their marketing strategies. It depends on their intentions," she says. "The Facebook environment is not a space for business - it is a social space designed for empowerment."
Companies also need to be mindful of their tone and balance, says Errington: "They need to maintain professionalism and connect with people on a personal level.
The Facebook environment allows us to offer an alternative, more informal, less intimidating format whereby job seekers can investigate their opinions and sign up for employment."
As advertisers grapple with positioning companies online, social networking has emerged as a tool to help firms reach audiences more effectively, says Errington: "Typical banner advertising on Facebook has proven to be less effective than advertising on the internet at large, but branded applications are one of the most engaging ways to connect with an audience."
- Fin24.com
Jessica Hall
Johannesburg - South African companies are taking advantage of social networking website Facebook as a cheaper and more efficient way of marketing their businesses.
"Facebook opens a social networking platform that allows companies to engage on a more personal level at a fraction of the cost," says Mike Stopforth, the CEO of online reputation management company Cerebra which works with companies like SA's biggest retail bank, Absa, on their Facebook presence.
Facebook has become a very popular platform for South Africans with online access; Facebook says there are 683 943 users registered on its South Africa network grouping.
According to international internet information company Alexa, the South Africa network is the sixth largest among country networks on Facebook.
It also reported that Facebook is the second-most visited site in South Africa.
Local internet advocacy group MyBroadband says that the average duration of a Facebook session for South African employees with internet access is 30 minutes.
Given the site's rise in popularity among online users, it is only fitting that companies are finding it easier to reach their target markets through this digital medium.
Kate Elphick, the director of Digital Bridges, a company which helps businesses build work tools and practices using the most recent (web 2.0) technologies, says that Facebook allows companies "to select exactly what markets they are aiming for in a cost-effective way. It is a strategic approach to networking socially".
Quest Flexible Staffing Solutions is first among local recruitment companies to tap into Facebook.
In April this year, it launched a Facebook application that allows the public to assess personality types and establish a line of contact between the applicant and agency.
Quest's managing executive, Margot Errington, says the launch of Quest's Facebook application is in line with the company's strategy of using innovative recruitment methods to attract skilled applicants from specific communities.
Errington says that companies first need to assess their needs before deciding to use Facebook as part of their marketing strategies. It depends on their intentions," she says. "The Facebook environment is not a space for business - it is a social space designed for empowerment."
Companies also need to be mindful of their tone and balance, says Errington: "They need to maintain professionalism and connect with people on a personal level.
The Facebook environment allows us to offer an alternative, more informal, less intimidating format whereby job seekers can investigate their opinions and sign up for employment."
As advertisers grapple with positioning companies online, social networking has emerged as a tool to help firms reach audiences more effectively, says Errington: "Typical banner advertising on Facebook has proven to be less effective than advertising on the internet at large, but branded applications are one of the most engaging ways to connect with an audience."
- Fin24.com
Rate hike becoming "unlikely"
Johannesburg - The acute slowdown in the economy coupled with the high base effect for many commodity and food prices as well as the re-weighting of the inflation index in 2009 makes a rate hike in August increasingly unlikely, say fund managers Stanlib.
They add that if there is a hike it would be only 50 basis points and the last in the rate hiking cycle.
"The market is very much pricing-in at least one further rate hike, with many analysts still talking about two further hikes," conclude the investment specialists.
- I-Net Bridge
http://www.fin24.com/articles/default/display_article.aspx?ArticleId=1518-25_2357736
They add that if there is a hike it would be only 50 basis points and the last in the rate hiking cycle.
"The market is very much pricing-in at least one further rate hike, with many analysts still talking about two further hikes," conclude the investment specialists.
- I-Net Bridge
http://www.fin24.com/articles/default/display_article.aspx?ArticleId=1518-25_2357736
Good luck
By Coert Coetzee
Sometimes I end my seminar with the words, “Good Luck!”
A few years ago after I had closed this way, someone came to me and complained about the words “Good Luck”. This person said that there is no such thing as good luck, that life is what you make of it and that these words were very inappropriate in light of the fact that my seminar would change people’s lives anyway. I listened to him and chose to say nothing, because I agreed and I disagreed, but that wasn’t the time and place to explain my point of view. The time has arrived now though, because the circumstances at the moment are the best we’ve had in many years for achieving success with property.
I read that Gary Player once said, “The more you practise the luckier you get.” These are wise words, because they support the notion that one creates one’s own luck. Everyone who comes to my seminar gets exactly the same advice; some use it to create millions and others are still sitting and waiting for their luck to turn. The unlucky ones then say that the successful ones were just lucky. This is true though, and the lucky ones will continue to get even luckier, while the unlucky ones become even more unlucky. You create your own world, so create a lucky one!
How can we do this? Most of you already know how, but for the sake of the unlucky ones I’m going to throw some light on the subject today. The next 10 points will put you on the path to everlasting luck:
Be early
As the saying goes, “The early bird catches the worm.” This isn’t just about getting up early and going to bed early; it’s about being first to take advantage of an opportunity – before the “unlucky” birds!
Make an impression
You have just one chance to make an impression on people, so use it. First impressions are lasting impressions. Remember that! Unhappy people usually make a negative impression.
Don’t underestimate the impact of a handshake. When you shake someone’s hand, make sure it’s a sturdy handshake, and always look the other person square in the eyes.
Be positive
Unlucky people usually look and sound negative. Teach yourself to look positive. No matter how unlucky you’re feeling, never say it and never show it. Put on your biggest smile and radiate positivity. Even if you’re bluffing, it doesn’t matter. If you always look and act happy, luck will come to you. Guaranteed!
Look for information
An idiot that looks happy just becomes a lucky idiot. Make it one of your goals to learn something new every day. Do courses and attend seminars. Read books; and if you don’t like reading, listen to audio books. If you ever see me with an iPod on an aeroplane, don’t think that it’s only music that I’m listening to!
Avoid negative people and strugglers
Avoid negative people like the plague. Cut them out of your life. Even get rid of your negative spouse! Our country has good divorce attorneys.
I surround myself only with positive people. We continually lift one another up. My wife Vanessa and I have been together for 20 years already, and ours is quite possibly the most positive and most fantastic marriage in the world.
Visualise your goal
Goals that cannot be dreamed about or visualised are not practical, or simply aren’t worth the effort. Goals that are exciting and achievable are goals that you can dream about. If you can dream it you can do it!
Take stock regularly
If you get unhappy because you think you’re not successful, it is because you don’t know that you are successful. Count your blessings and count them often, from the smallest to the biggest, and your gratitude and luck will know no limits.
Be prepared to change or adapt
The world is changing continually, and it’s not going to wait for us. What didn’t work today might work tomorrow and what worked yesterday might not work anymore today. If you continually take in information and so stay in touch with the changing world you will instinctively know when to change and how to change. Be prepared to listen to your instincts.
Give your tithe
Vanessa taught me that the first 10% of everything that we receive doesn’t belong to us. It belongs to God. So this is the amount that always appears right at the top of our budget. We did not make an agreement with God and we don’t expect anything in return, but strangely enough, the more we give Him, the more He gives us. Give it a try.
Be happy!
We are all just human, and when the storms of crime, interest rates, and so on are raging around us, it’s sometimes difficult to stay positive. To still look happy and feel lucky on top of that can be even more difficult. But I have found that the more problems you have, the more you need to be reminded of your good luck. So do these things and do them often. Do them every day, every moment if you can.
Luck and contentment are not things that happen only to other people.
(Coert Coetzee is the Founder of the TREOC Group consisting out of different companies and trusts. He is an experienced Business Owner and Property Investor and shares his experience and secrets of many years.)
Sometimes I end my seminar with the words, “Good Luck!”
A few years ago after I had closed this way, someone came to me and complained about the words “Good Luck”. This person said that there is no such thing as good luck, that life is what you make of it and that these words were very inappropriate in light of the fact that my seminar would change people’s lives anyway. I listened to him and chose to say nothing, because I agreed and I disagreed, but that wasn’t the time and place to explain my point of view. The time has arrived now though, because the circumstances at the moment are the best we’ve had in many years for achieving success with property.
I read that Gary Player once said, “The more you practise the luckier you get.” These are wise words, because they support the notion that one creates one’s own luck. Everyone who comes to my seminar gets exactly the same advice; some use it to create millions and others are still sitting and waiting for their luck to turn. The unlucky ones then say that the successful ones were just lucky. This is true though, and the lucky ones will continue to get even luckier, while the unlucky ones become even more unlucky. You create your own world, so create a lucky one!
How can we do this? Most of you already know how, but for the sake of the unlucky ones I’m going to throw some light on the subject today. The next 10 points will put you on the path to everlasting luck:
Be early
As the saying goes, “The early bird catches the worm.” This isn’t just about getting up early and going to bed early; it’s about being first to take advantage of an opportunity – before the “unlucky” birds!
Make an impression
You have just one chance to make an impression on people, so use it. First impressions are lasting impressions. Remember that! Unhappy people usually make a negative impression.
Don’t underestimate the impact of a handshake. When you shake someone’s hand, make sure it’s a sturdy handshake, and always look the other person square in the eyes.
Be positive
Unlucky people usually look and sound negative. Teach yourself to look positive. No matter how unlucky you’re feeling, never say it and never show it. Put on your biggest smile and radiate positivity. Even if you’re bluffing, it doesn’t matter. If you always look and act happy, luck will come to you. Guaranteed!
Look for information
An idiot that looks happy just becomes a lucky idiot. Make it one of your goals to learn something new every day. Do courses and attend seminars. Read books; and if you don’t like reading, listen to audio books. If you ever see me with an iPod on an aeroplane, don’t think that it’s only music that I’m listening to!
Avoid negative people and strugglers
Avoid negative people like the plague. Cut them out of your life. Even get rid of your negative spouse! Our country has good divorce attorneys.
I surround myself only with positive people. We continually lift one another up. My wife Vanessa and I have been together for 20 years already, and ours is quite possibly the most positive and most fantastic marriage in the world.
Visualise your goal
Goals that cannot be dreamed about or visualised are not practical, or simply aren’t worth the effort. Goals that are exciting and achievable are goals that you can dream about. If you can dream it you can do it!
Take stock regularly
If you get unhappy because you think you’re not successful, it is because you don’t know that you are successful. Count your blessings and count them often, from the smallest to the biggest, and your gratitude and luck will know no limits.
Be prepared to change or adapt
The world is changing continually, and it’s not going to wait for us. What didn’t work today might work tomorrow and what worked yesterday might not work anymore today. If you continually take in information and so stay in touch with the changing world you will instinctively know when to change and how to change. Be prepared to listen to your instincts.
Give your tithe
Vanessa taught me that the first 10% of everything that we receive doesn’t belong to us. It belongs to God. So this is the amount that always appears right at the top of our budget. We did not make an agreement with God and we don’t expect anything in return, but strangely enough, the more we give Him, the more He gives us. Give it a try.
Be happy!
We are all just human, and when the storms of crime, interest rates, and so on are raging around us, it’s sometimes difficult to stay positive. To still look happy and feel lucky on top of that can be even more difficult. But I have found that the more problems you have, the more you need to be reminded of your good luck. So do these things and do them often. Do them every day, every moment if you can.
Luck and contentment are not things that happen only to other people.
(Coert Coetzee is the Founder of the TREOC Group consisting out of different companies and trusts. He is an experienced Business Owner and Property Investor and shares his experience and secrets of many years.)
Wednesday, July 16, 2008
Buyers turning to existing homes
The scales have tipped in favour of those looking to purchase property, and buyers looking for good returns and value will find opportunities aplenty in established homes.
So says Carlos Moreira, principal of the new Homenet Olympic branches in Alberton and Rosettenville, who has 18 years of real estate experience in Johannesburg's southern suburbs.
He says prevailing market conditions are making life difficult for developers. High land and material costs as well as a shortage of skills have resulted in many planned developments being put on hold or in unit prices being increased to try to make ends meet.
"As a result, we are witnessing a buyer shift towards established homes as they offer greater value for money. It is practically impossible for developers to build quality homes for under R1m. Comparatively, buyers can obtain an existing three-bedroom sectional title unit in Rosettenville for R450 000. A similar full title home can be bought in Alberton for around R1m.
"Most of those buying existing homes in our areas are first-time buyers and we encourage them to go in this direction as such homes represent great investment opportunities. Semi-detached houses in the 'Old South' of Johannesburg for example can be bought for between R700 000 and R800 000, refurbished and resold for over R1m.
"Alternatively, buyers can live in one half and lease the other for around R3500 a month to assist with the bond."
Meanwhile, he says, the time is ripe for entry-level and middle-income homeowners to upgrade. "Properties at the top end of the market in areas such as Glenvista and Oakdene have stagnated to some extent with many sellers dropping their prices, which means real bargains for those looking to move up in the world."
http://www.myproperty.co.za/news/201332/Buyers_turning_to_existing_homes.html
So says Carlos Moreira, principal of the new Homenet Olympic branches in Alberton and Rosettenville, who has 18 years of real estate experience in Johannesburg's southern suburbs.
He says prevailing market conditions are making life difficult for developers. High land and material costs as well as a shortage of skills have resulted in many planned developments being put on hold or in unit prices being increased to try to make ends meet.
"As a result, we are witnessing a buyer shift towards established homes as they offer greater value for money. It is practically impossible for developers to build quality homes for under R1m. Comparatively, buyers can obtain an existing three-bedroom sectional title unit in Rosettenville for R450 000. A similar full title home can be bought in Alberton for around R1m.
"Most of those buying existing homes in our areas are first-time buyers and we encourage them to go in this direction as such homes represent great investment opportunities. Semi-detached houses in the 'Old South' of Johannesburg for example can be bought for between R700 000 and R800 000, refurbished and resold for over R1m.
"Alternatively, buyers can live in one half and lease the other for around R3500 a month to assist with the bond."
Meanwhile, he says, the time is ripe for entry-level and middle-income homeowners to upgrade. "Properties at the top end of the market in areas such as Glenvista and Oakdene have stagnated to some extent with many sellers dropping their prices, which means real bargains for those looking to move up in the world."
http://www.myproperty.co.za/news/201332/Buyers_turning_to_existing_homes.html
Thursday, July 10, 2008
bondapply.com is 1 year old!!
On 1 July 2007 I jumped in and started this baby.
Well, a year has past, and I am still here!
I chose not to listen to warnings of the new credit act, rising interest rates, and the doom and gloom that was predicted.
Still standing!
Thanks to all of you who are making the journey such a joy.
A lot of us know we have what it takes--the looks, the education, the talent, the credentials. But in certain areas, we're paralyzed. We're not being stopped by something on the outside, but by something on the inside.
—Excerpted from A Return to Love: Reflections on the Principles of A Course in Miracles, oprah.com
I have expanded my services to include:
I deal with Standard Bank, ABSA, Barclays, Nedbank, FNB, Prop24, Integer, SA Home Loans, Sanlam
I do switches to and from all banks, shop around for best interest rates and save clients money
Debt consolidation and removal from ITC & Experian
Personal loans
Bridging finance
Commercial bonds with Business Partners, Imperial, Standard Bank, ABSA
Vania van Dalen
www.bondapply.com
vania@bondapply.com
Monday, July 7, 2008
Shedding light on housing statistics - by Keith Wakefield
There is a lot of negative sentiment at the moment about house prices fuelled by information that is often out of context or misinterpreted.
Simply put the average house price is that of the majority of properties changing hands. Reports that the average house price has come down means that a greater number of cheaper properties are being sold. The reverse is also true. So when the average house price rises it means a greater number of more expensive properties are changing hands.
It should also be understood that the data used by banks to produce house price indices is sourced from the number and value of mortgages being processed by the institution, and this does lead to differences in reporting these prices.
Standard Bank points out that measuring house prices is complicated because data usually comes from the properties sold during a period rather than a well-designed representative sample of houses sold.
Standard Bank’s average house is currently priced at R520 000 and it states 50% of the houses country-wide are priced at more than this and 50% at less.
Another aspect to understand is the difference between actual house prices and house price growth, which has been reported as dropping for some months.
ABSA bases its sample on houses it has mortgaged between 80 and 400 square metres priced up to R2, 7 million. If one had bought this middle segment house in December 2006 when it was reported that nominal house price growth had declined to 13, 5% you would have paid R857 400.
In May this average house price was reported at R960 000, when house price growth had dropped to a nominal 4, 3% in the middle segment of the market.
So, despite declining house price growth this average house has, in 15 months, still increased in price by almost R100 000. This may sound ridiculous but I use this as an example to show that a lot of panic is being created unnecessarily
I need to emphasise that property is a long-term investment. You cannot buy one month and expect to sell for thousands more the next. The stories one hears of speculators buying and selling a property for huge profits in the space of a few months were indicative of the abnormal market conditions of 2002 to 2005.
If you have owned your property for some years, and kept it in good condition, you are more likely to sell it for more than you bought and have enough to upgrade.
Ultimately market value of property is determined by what a willing buyer is prepared to pay. Therefore it would be better to rely on a comparative market analysis of similar property in your area than be unduly influenced by figures that are of a very general nature.
http://www.myproperty.co.za/news/198652/Shedding_light_on_housing_statistics_-_by_Keith_Wakefield.html
Saturday, July 5, 2008
Motivation
There is no limit to what you can imagine.
And with commitment, with effort,
what you can imagine you can become.
Put your mind to work for you.
Believe that you can do it.
The world will tell you that you can't.
Yet, in your belief you'll find the strength, you'll find the ability, to do it anyway.
And with commitment, with effort,
what you can imagine you can become.
Put your mind to work for you.
Believe that you can do it.
The world will tell you that you can't.
Yet, in your belief you'll find the strength, you'll find the ability, to do it anyway.
Fractional Ownership - the new solution to having a "huisie by die see"?
Industry Comment by Theuns Hanekom - SAMO
I am sure many of you still remember the “good old days” when many
families could still afford both their primary residence as well as a holiday
home at their favourite holiday destination. And as Koos Kombuis sings:
“…almal wil ‘n huisie by die see hê…” But, with the sharp rise in property
prices over the past 5 years or so, especially those in coastal towns, as well as
the latest increase in interest rates, it might seem to many of us, that the
closest we will ever come to owning a “huisie by die see”, will be if we join
Koos Kombuis in singing his well-known song.
That is, of course, until you discover the concept of Fractional Ownership.
Many of the leading estate agencies such as Pam Golding Properties and Seeff
Properties offer Fractional Ownership packages at many of the leading golf,
coastal and game resorts. Although fractional ownership has been around for
quite a few years in South Africa, there are still a lot of misconceptions about
what it is exactly, how it differs from timeshare, and whether or not it is a
sustainable concept.
Fractional Ownership, or Property Syndication as it is also known, is a manner
in which more than one individual or legal entity, acquires ownership of an
asset, and more specifically the ownership of fixed property through a legal
entity. Simply put, a company will own the fixed property, and a limited
number of shareholders will, through their shareholding in the company,
become the owners of the fixed property. The shareholders are the owners of
the property and will therefore be jointly responsible (according to their
shareholding in the company) for all costs relating to the property, including
the purchase price of the property and all maintenance costs. In return, the
shareholders will own a share in the property and therefore will be entitled to
use the property according to the rules and regulations contained in their
shareholders’ agreement. Therefore, if you own 8% in the company, you will
be entitled to 4 weeks use per year, or if you own 12% in the company, you
are entitled to 6 weeks per year.
There are a number of benefits to Fractional Ownership. Firstly, if you were
to buy a second property on your own, you would have to pay the full
purchase price yourself. And let’s face it; you can only go on holiday for a so
many days in a year. You would therefore be paying for a full year’s use, but
only use it for about 4 weeks per year. With Fractional Ownership, you will
pay only for the value of your 8% share in the property, and still be able to
use it for 4 weeks’ holiday per year. Through minimal capital outlay, you get
the maximum return. Secondly, as you are investing in fixed property, you
get capital growth. Thirdly, the maintenance and cost thereof is shared by all
the shareholders. In most instances a maintenance company is appointed to
look after the maintenance of the property, allowing the owners carefree use
of the property. Another benefit is that you may sell your share in the
company at a price proportionate to the value of the property.
Although this might sound very similar to time-share, there are some major
differences. With time-share, you only buy “time” or “use” of a specific
property. You don’t own the property or shares in the property holding
company as with Fractional Ownership. And as the value of the property
increases, so does the value of your investment, which is not necessarily the
case with time-share.
Another drawback of time-share is that there are usually contract terms,
which need to expire before you may sell your share, but with Fractional
Ownership you may sell your shares whenever you want to.
Although time-share has over the years created a lot of negative sentiment,
prospective Fractional Ownership buyers can take some comfort in the fact
that the fractional ownership industry is a regulated industry. SAAFI (South
African Association of Fractional Intermediaries) was formed about 18 months
ago with specific regulations to which its members must adhere. The
advantages of such an industry body is that it will ensure the long terms
sustainability of fractional ownership, as a fractional ownership project will be
bound by the regulations for the entire existence of the project.
Of course there are other concerns with Fractional ownership. How will I sell
my investment if I want to? Will I get the weeks I want? What about my
fractional partners? And so on. All of these are reasonable questions that
have been dealt with in a number of ways by fractional ownership
developments. Fractional ownership will not be for everyone but it makes
sense for my family and me and might suit you or your clients.
I believe Fractional Ownership is well worth having a look at and who knows,
maybe having a “huisie by die see” might be more realistic than you think!
I am sure many of you still remember the “good old days” when many
families could still afford both their primary residence as well as a holiday
home at their favourite holiday destination. And as Koos Kombuis sings:
“…almal wil ‘n huisie by die see hê…” But, with the sharp rise in property
prices over the past 5 years or so, especially those in coastal towns, as well as
the latest increase in interest rates, it might seem to many of us, that the
closest we will ever come to owning a “huisie by die see”, will be if we join
Koos Kombuis in singing his well-known song.
That is, of course, until you discover the concept of Fractional Ownership.
Many of the leading estate agencies such as Pam Golding Properties and Seeff
Properties offer Fractional Ownership packages at many of the leading golf,
coastal and game resorts. Although fractional ownership has been around for
quite a few years in South Africa, there are still a lot of misconceptions about
what it is exactly, how it differs from timeshare, and whether or not it is a
sustainable concept.
Fractional Ownership, or Property Syndication as it is also known, is a manner
in which more than one individual or legal entity, acquires ownership of an
asset, and more specifically the ownership of fixed property through a legal
entity. Simply put, a company will own the fixed property, and a limited
number of shareholders will, through their shareholding in the company,
become the owners of the fixed property. The shareholders are the owners of
the property and will therefore be jointly responsible (according to their
shareholding in the company) for all costs relating to the property, including
the purchase price of the property and all maintenance costs. In return, the
shareholders will own a share in the property and therefore will be entitled to
use the property according to the rules and regulations contained in their
shareholders’ agreement. Therefore, if you own 8% in the company, you will
be entitled to 4 weeks use per year, or if you own 12% in the company, you
are entitled to 6 weeks per year.
There are a number of benefits to Fractional Ownership. Firstly, if you were
to buy a second property on your own, you would have to pay the full
purchase price yourself. And let’s face it; you can only go on holiday for a so
many days in a year. You would therefore be paying for a full year’s use, but
only use it for about 4 weeks per year. With Fractional Ownership, you will
pay only for the value of your 8% share in the property, and still be able to
use it for 4 weeks’ holiday per year. Through minimal capital outlay, you get
the maximum return. Secondly, as you are investing in fixed property, you
get capital growth. Thirdly, the maintenance and cost thereof is shared by all
the shareholders. In most instances a maintenance company is appointed to
look after the maintenance of the property, allowing the owners carefree use
of the property. Another benefit is that you may sell your share in the
company at a price proportionate to the value of the property.
Although this might sound very similar to time-share, there are some major
differences. With time-share, you only buy “time” or “use” of a specific
property. You don’t own the property or shares in the property holding
company as with Fractional Ownership. And as the value of the property
increases, so does the value of your investment, which is not necessarily the
case with time-share.
Another drawback of time-share is that there are usually contract terms,
which need to expire before you may sell your share, but with Fractional
Ownership you may sell your shares whenever you want to.
Although time-share has over the years created a lot of negative sentiment,
prospective Fractional Ownership buyers can take some comfort in the fact
that the fractional ownership industry is a regulated industry. SAAFI (South
African Association of Fractional Intermediaries) was formed about 18 months
ago with specific regulations to which its members must adhere. The
advantages of such an industry body is that it will ensure the long terms
sustainability of fractional ownership, as a fractional ownership project will be
bound by the regulations for the entire existence of the project.
Of course there are other concerns with Fractional ownership. How will I sell
my investment if I want to? Will I get the weeks I want? What about my
fractional partners? And so on. All of these are reasonable questions that
have been dealt with in a number of ways by fractional ownership
developments. Fractional ownership will not be for everyone but it makes
sense for my family and me and might suit you or your clients.
I believe Fractional Ownership is well worth having a look at and who knows,
maybe having a “huisie by die see” might be more realistic than you think!
Auctions and Rates
by Coert Coetzee
(Coert Coetzee is the Founder of the TREOC Group consisting out of different companies and trusts. He is an experienced Business Owner and Property Investor and shares his experience and secrets of many years.) www.treoc.com
Edition no. 159
Auctions and Rates
By Coert Coetzee
Rate Abuse
Interest rates are usually used to combat inflation, and although I don’t always agree with this, it does make a certain amount of sense. The Reserve Bank’s thinking is that high levels of debt lead to high inflation. So, pushing the interest rate up discourages people from making debt. But what the Reserve Bank loses sight of entirely is that there are two kinds of debt: good debt and bad debt.
Good debt is, for example, the bond you have on a property. I call this good debt because the house’s value increases while your debt stays the same. By the time the bond is registered, the house is already worth more than the debt. In contrast with this, bad debt includes the debt you have on credit cards, retail accounts and even cars, because the value of a car immediately drops to about 20% less than the debt after you buy it, and it’s the same with clothes and other consumer goods. This is the type of debt that makes you poorer, while good debt makes you richer.
So if the government were to one day exclude interest on bonds or unhook them from the prime rate, I would agree 100% that interest rate increases are the answer to runaway inflation. So normally I’m half for it and half against it, but what’s happening at the moment is completely wrong as far as I’m concerned. Inflation is not being driven by debt. The current inflation is being driven by the high oil price. Now I ask you, how on earth is a higher interest rate going to bring the petrol-price-driven inflation under control? I think it will have the opposite effect. It’s like trying to put a fire out using petrol.
Whatever the case, as ordinary people we have no say in these matters; the interest rate has gone up again this week by half a percentage point, and is now sitting at 15.5%. So let’s rather look at how we can cope with the higher bond repayments:
Don’t ignore the problem. It won’t go away on its own – not quickly, in any case.
Extend the term of your bond to 30 years. It will cost nothing. Just speak to the bank.
Talk to your letting agent and where possible, increase the rental.
If you are still struggling, talk to your bank and try to get a payment holiday. It might be possible to get up to three months.
If the problem is still too big, let Clive Bydawell at Treoc Property Exchange know that you are looking for a buyer. We have plenty of buyers, but remember that they’re very choosy now. But if you are prepared to sell at a price equal to the outstanding bond, you’ll immediately be rid of the problem and your reputation will be safe. As soon as the market turns, you can buy again, but then you should do so according to the Treoc Way.
If you aren’t prepared to sell the property at a lower price, or aren’t successful with this, and you can’t pay the bank, then you have only one option and that is to go and see an attorney in order to make the liquidation process as painless as possible because the banks are not going to feel sorry for you.
I have a number of trusts with properties in them. I made provision long ago for these high interest rates, and so I have no problem with the extra expenses caused by the rates. Although I’m prepared, there are limits to even my ability to pay if the rates stay high for too long. For example, I can carry a rate of 25% for two years with my current cash provisions. After that I’ll have problems too. Even if the worst happens though, I’ll never lose all my properties, because my properties are grouped in different trusts. I won’t lose my assets either, like my private residence or my vehicles, because they are debt-free and not in the same trusts as my properties with bonds. That’s just one of the elements of the Treoc Way. There are a lot more, and the Treoc Way is the reason that I and thousands of our other club members are so excited about the current market conditions. For us this is a time to buy.
I’ve noticed that all the American writers and “gurus” are now selling their American ideas and methods in South Africa. Last month I attended the seminar of a well-known American property guru in Cape Town, and I was shocked at how little he knows about South Africa’s laws and properties, and yet he actually wants to come and teach us how to buy property in our own country. And this while his methods don’t even work in his own country! If his methods worked in his own country, why would he come here to barter his information for pathetic rands, when he could be making dollars? The only conclusion I can draw is that things are looking miserable in America, very miserable!
Someone at the seminar asked this guru why he is interested in property in South Africa. His answer was that he wants to diversify his portfolio. The following words come from one of America’s true, successful gurus. Warren Buffett says: “Diversification is a protection against ignorance. Diversification is not required if a person knows what they are doing.”
It’s auction time
Interest rates are climbing, and that means different things to different people: to some it means misery and to others opportunity. Quite simply, it’s a question of whether you are prepared for it or not. A good property investor is one who can make money in any cycle of the property market, because a good property investor is prepared. During the good times we prepare for the bad times that will inevitably come, because the property market works in cycles. That’s why there is a party on the way for prepared investors. It’s our first party since 2002, when interest rates peaked at 17%. True property investors know that we are now moving into a buyers’ market, the first one since 2002.
It’s a pity that there always have to be victims, and my heart bleeds for you, but unfortunately that’s just the way it is. The only thing I can do is help you get rid of your bonds as painlessly as possible.
My investors’ club and I have been preparing ourselves for six years already for the favourable market conditions we are now glimpsing, and so we’re going to take advantage of them, whether we feel sorry for the poor people who have to sell or not. Over the past six years I’ve repeatedly promised my readers and Treoc investors that I will write a special article about auctions when it is auction time again. That time has now arrived: it’s time to expand our portfolios.
Properties that are repossessed by the banks will eventually be sold at a sale-in-execution auction. The sheriff of the court arranges these auctions. Find out from your nearest magistrate who the sheriff is in the area in which you are interested in buying, and visit the sheriff’s office. Find out how often they hold auctions and whether you can get an auction list from them. On this list they should indicate the addresses and outstanding bond amounts of the properties that are for sale. You can then go and look at the houses before the day of the auction and start doing your sums.
Remember, it is risky to buy on auction, because you could be looking at a problem property. For this reason you should do your homework thoroughly. Keep the following points in mind:
A house that ends up on an auction could not be sold on the open market. If this is purely due to oversupply, then it’s understandable and not a problem, but if it’s for any other reason, you should find out what that reason is.
Someone who hasn’t paid his bond repayments has usually not been paying his electricity and levies either. So there will almost certainly be an arrear amount, and that amount is the buyer’s responsibility. Be warned that it can be a very large amount.
If you buy at an auction you need cash. The sheriff usually requires a deposit of around 10% of the purchase price, and then his commission is usually around 7%. So you will need 17% of the purchase price when you go to an auction; these amounts are payable in cash or with a guaranteed cheque immediately after the auction.
At the fall of the hammer the house becomes your responsibility. You take immediate occupation, and you can let the house out straight away if you want.
If it’s an own-title house, you must arrange short-term insurance on the structure that same day, because if squatters accidentally burn the house down that night, it will be your loss.
Arrange with the sheriff to give you 30 days to secure bond approval. The registration of the bond can take another three or four months on top of that, and during that time the sheriff will be the financier. He asks a much higher interest rate for that period, far higher than the banks, so you don’t want him involved for too long.
The bank will also be at the auction and will always bid against you up to the outstanding bond amount. Then they’ll be satisfied, and if no other investors are bidding against you, the bid will settle on you.
Don’t get involved in a bidding war. Decide beforehand what your maximum bid will be and when it goes higher than that, stop. Just let the other guy buy it, and don’t feel regret. There will be plenty more opportunities.
Also remember that problem cases usually offer the best opportunities, because most people are afraid of problems and won’t bid against you.
As you can see, it is a bit dangerous to buy on auctions. Therefore it is better to buy the properties before they end up on auction and that is what we prefer to do. Contact Clive Bydawell if you are a Platinum members and if you are interested in pre-repossessed bargains.
RICH MIND ... RICH MAN
My new book “Rich Mind ... Rich Man” is ready. I have decided not to publish this book in the conventional way, as I did with my previous book “Let there be Light on Wealth Creation”. This book will be available in e-format and it will be entirely free, because my goal with the books and articles that I write is to share my knowledge with people and not to make money for myself. I have enough money thanks to my unique ability for making money from property and business. And in fact, it’s precisely this money-making knowledge that I am going to share with you.
But, staying true to my way of doing things “differently”, “Rich Mind ... Rich Man” won’t follow the normal e-book route. I’m going to publish the book chapter by chapter on my personal website www.lightminded.com. I’ll publish a new chapter each week. The reason for this is that I want each chapter to sink in and be properly contemplated and digested. Also, on the Lightminded website you’ll be able to comment on each chapter if you want to. These comments will be preserved and in turn they’ll become material for my next book, because there’s no knowledge greater than collective knowledge. “Rich Mind ... Rich Man” and the way in which I’m going to publish it will therefore become the research project for the next book at the same time.
The proceeds from my previous book, which was published in the usual way at a price and with a publisher, go in full to my and Vanessa’s charity organisation, the Treoc Foundation, an Article 21 company. Although “Rich Mind ... Rich Man” is free, if you feel you want to you are welcome to make a donation of any amount to the Foundation at:
ABSA Bank
Branch Code 632 005
Savings Account No. 9157 822 665
Please take part in this project and help me to let the sun shine on as many people as possible. Click on the link below to visit my book right away.
(Coert Coetzee is the Founder of the TREOC Group consisting out of different companies and trusts. He is an experienced Business Owner and Property Investor and shares his experience and secrets of many years.) www.treoc.com
Edition no. 159
Auctions and Rates
By Coert Coetzee
Rate Abuse
Interest rates are usually used to combat inflation, and although I don’t always agree with this, it does make a certain amount of sense. The Reserve Bank’s thinking is that high levels of debt lead to high inflation. So, pushing the interest rate up discourages people from making debt. But what the Reserve Bank loses sight of entirely is that there are two kinds of debt: good debt and bad debt.
Good debt is, for example, the bond you have on a property. I call this good debt because the house’s value increases while your debt stays the same. By the time the bond is registered, the house is already worth more than the debt. In contrast with this, bad debt includes the debt you have on credit cards, retail accounts and even cars, because the value of a car immediately drops to about 20% less than the debt after you buy it, and it’s the same with clothes and other consumer goods. This is the type of debt that makes you poorer, while good debt makes you richer.
So if the government were to one day exclude interest on bonds or unhook them from the prime rate, I would agree 100% that interest rate increases are the answer to runaway inflation. So normally I’m half for it and half against it, but what’s happening at the moment is completely wrong as far as I’m concerned. Inflation is not being driven by debt. The current inflation is being driven by the high oil price. Now I ask you, how on earth is a higher interest rate going to bring the petrol-price-driven inflation under control? I think it will have the opposite effect. It’s like trying to put a fire out using petrol.
Whatever the case, as ordinary people we have no say in these matters; the interest rate has gone up again this week by half a percentage point, and is now sitting at 15.5%. So let’s rather look at how we can cope with the higher bond repayments:
Don’t ignore the problem. It won’t go away on its own – not quickly, in any case.
Extend the term of your bond to 30 years. It will cost nothing. Just speak to the bank.
Talk to your letting agent and where possible, increase the rental.
If you are still struggling, talk to your bank and try to get a payment holiday. It might be possible to get up to three months.
If the problem is still too big, let Clive Bydawell at Treoc Property Exchange know that you are looking for a buyer. We have plenty of buyers, but remember that they’re very choosy now. But if you are prepared to sell at a price equal to the outstanding bond, you’ll immediately be rid of the problem and your reputation will be safe. As soon as the market turns, you can buy again, but then you should do so according to the Treoc Way.
If you aren’t prepared to sell the property at a lower price, or aren’t successful with this, and you can’t pay the bank, then you have only one option and that is to go and see an attorney in order to make the liquidation process as painless as possible because the banks are not going to feel sorry for you.
I have a number of trusts with properties in them. I made provision long ago for these high interest rates, and so I have no problem with the extra expenses caused by the rates. Although I’m prepared, there are limits to even my ability to pay if the rates stay high for too long. For example, I can carry a rate of 25% for two years with my current cash provisions. After that I’ll have problems too. Even if the worst happens though, I’ll never lose all my properties, because my properties are grouped in different trusts. I won’t lose my assets either, like my private residence or my vehicles, because they are debt-free and not in the same trusts as my properties with bonds. That’s just one of the elements of the Treoc Way. There are a lot more, and the Treoc Way is the reason that I and thousands of our other club members are so excited about the current market conditions. For us this is a time to buy.
I’ve noticed that all the American writers and “gurus” are now selling their American ideas and methods in South Africa. Last month I attended the seminar of a well-known American property guru in Cape Town, and I was shocked at how little he knows about South Africa’s laws and properties, and yet he actually wants to come and teach us how to buy property in our own country. And this while his methods don’t even work in his own country! If his methods worked in his own country, why would he come here to barter his information for pathetic rands, when he could be making dollars? The only conclusion I can draw is that things are looking miserable in America, very miserable!
Someone at the seminar asked this guru why he is interested in property in South Africa. His answer was that he wants to diversify his portfolio. The following words come from one of America’s true, successful gurus. Warren Buffett says: “Diversification is a protection against ignorance. Diversification is not required if a person knows what they are doing.”
It’s auction time
Interest rates are climbing, and that means different things to different people: to some it means misery and to others opportunity. Quite simply, it’s a question of whether you are prepared for it or not. A good property investor is one who can make money in any cycle of the property market, because a good property investor is prepared. During the good times we prepare for the bad times that will inevitably come, because the property market works in cycles. That’s why there is a party on the way for prepared investors. It’s our first party since 2002, when interest rates peaked at 17%. True property investors know that we are now moving into a buyers’ market, the first one since 2002.
It’s a pity that there always have to be victims, and my heart bleeds for you, but unfortunately that’s just the way it is. The only thing I can do is help you get rid of your bonds as painlessly as possible.
My investors’ club and I have been preparing ourselves for six years already for the favourable market conditions we are now glimpsing, and so we’re going to take advantage of them, whether we feel sorry for the poor people who have to sell or not. Over the past six years I’ve repeatedly promised my readers and Treoc investors that I will write a special article about auctions when it is auction time again. That time has now arrived: it’s time to expand our portfolios.
Properties that are repossessed by the banks will eventually be sold at a sale-in-execution auction. The sheriff of the court arranges these auctions. Find out from your nearest magistrate who the sheriff is in the area in which you are interested in buying, and visit the sheriff’s office. Find out how often they hold auctions and whether you can get an auction list from them. On this list they should indicate the addresses and outstanding bond amounts of the properties that are for sale. You can then go and look at the houses before the day of the auction and start doing your sums.
Remember, it is risky to buy on auction, because you could be looking at a problem property. For this reason you should do your homework thoroughly. Keep the following points in mind:
A house that ends up on an auction could not be sold on the open market. If this is purely due to oversupply, then it’s understandable and not a problem, but if it’s for any other reason, you should find out what that reason is.
Someone who hasn’t paid his bond repayments has usually not been paying his electricity and levies either. So there will almost certainly be an arrear amount, and that amount is the buyer’s responsibility. Be warned that it can be a very large amount.
If you buy at an auction you need cash. The sheriff usually requires a deposit of around 10% of the purchase price, and then his commission is usually around 7%. So you will need 17% of the purchase price when you go to an auction; these amounts are payable in cash or with a guaranteed cheque immediately after the auction.
At the fall of the hammer the house becomes your responsibility. You take immediate occupation, and you can let the house out straight away if you want.
If it’s an own-title house, you must arrange short-term insurance on the structure that same day, because if squatters accidentally burn the house down that night, it will be your loss.
Arrange with the sheriff to give you 30 days to secure bond approval. The registration of the bond can take another three or four months on top of that, and during that time the sheriff will be the financier. He asks a much higher interest rate for that period, far higher than the banks, so you don’t want him involved for too long.
The bank will also be at the auction and will always bid against you up to the outstanding bond amount. Then they’ll be satisfied, and if no other investors are bidding against you, the bid will settle on you.
Don’t get involved in a bidding war. Decide beforehand what your maximum bid will be and when it goes higher than that, stop. Just let the other guy buy it, and don’t feel regret. There will be plenty more opportunities.
Also remember that problem cases usually offer the best opportunities, because most people are afraid of problems and won’t bid against you.
As you can see, it is a bit dangerous to buy on auctions. Therefore it is better to buy the properties before they end up on auction and that is what we prefer to do. Contact Clive Bydawell if you are a Platinum members and if you are interested in pre-repossessed bargains.
RICH MIND ... RICH MAN
My new book “Rich Mind ... Rich Man” is ready. I have decided not to publish this book in the conventional way, as I did with my previous book “Let there be Light on Wealth Creation”. This book will be available in e-format and it will be entirely free, because my goal with the books and articles that I write is to share my knowledge with people and not to make money for myself. I have enough money thanks to my unique ability for making money from property and business. And in fact, it’s precisely this money-making knowledge that I am going to share with you.
But, staying true to my way of doing things “differently”, “Rich Mind ... Rich Man” won’t follow the normal e-book route. I’m going to publish the book chapter by chapter on my personal website www.lightminded.com. I’ll publish a new chapter each week. The reason for this is that I want each chapter to sink in and be properly contemplated and digested. Also, on the Lightminded website you’ll be able to comment on each chapter if you want to. These comments will be preserved and in turn they’ll become material for my next book, because there’s no knowledge greater than collective knowledge. “Rich Mind ... Rich Man” and the way in which I’m going to publish it will therefore become the research project for the next book at the same time.
The proceeds from my previous book, which was published in the usual way at a price and with a publisher, go in full to my and Vanessa’s charity organisation, the Treoc Foundation, an Article 21 company. Although “Rich Mind ... Rich Man” is free, if you feel you want to you are welcome to make a donation of any amount to the Foundation at:
ABSA Bank
Branch Code 632 005
Savings Account No. 9157 822 665
Please take part in this project and help me to let the sun shine on as many people as possible. Click on the link below to visit my book right away.
Exciting Times
by Coert Coetzee
(Coert Coetzee is the Founder of the TREOC Group consisting out of different companies and trusts. He is an experienced Business Owner and Property Investor and shares his experience and secrets of many years.)
Edition no. 161 www.treoc.com
Exciting Times
By Coert Coetzee
During a recent seminar in Polokwane someone asked me what I think will happen with the economy if the current conditions continue. The short answer I gave this person was that it would benefit the Treoc investors, and I briefly expanded on why I think so. During a seminar there unfortunately isn’t time to go into the details of why I don’t have a problem with the current conditions. It’s not a question that can be answered briefly, and so I’ve decided to expand on it a bit more in this article.
Let’s first look at what the conditions are in which we apparently find ourselves at the moment:
The interest rate is sitting at 15.5%, which is the highest it’s been since 2002, when it peaked at 17%.
Petrol prices are higher than ever.
Inflation is sky-high.
Property prices have doubled in the past five years, but growth is currently sitting at less than 10% per year.
Salaries have not grown at nearly the same rate as houses in the past five years, and so fewer ordinary people can qualify for bonds.
Rental is currently showing an excellent 15% growth per year, but unfortunately the rent/value ratios are still low. This makes property unattractive for uninformed investors.
The country is suffering electricity shortages.
The credit act has neutralised a lot of potential property buyers, because expenses now count against you when it comes to affordability.
For the uninformed layman the factors mentioned above make the situation look very bleak indeed, but for the informed investor these factors indicate the most promising conditions in four years. Despite the hundreds of seminars we’ve presented, the majority of so-called property investors in South Africa are still not educated investors and don’t understand why the above-mentioned factors count in an investor’s favour. Let me give you the reasons:
All these “negative” factors contribute to more people thinking that they cannot afford their own properties.
Fewer tenants buy property due to the reasons above – and, of course, I never invite my tenants to the seminar. So they stay tenants for longer than they want to.
New tenants keep entering the market, because the middle-class is still growing at a phenomenal rate. The result of this is that the demand for rentals is outstripping supply – and that’s why rental is currently growing by 15% or more.
Fewer people are buying, because few people have the knowledge of an educated investor. This is causing prices to drop, creating a perfect buyers’ market for the informed investors. These are the best buying conditions since 2002!
The electricity shortage has put a damper on new property developments, causing supply to drop. When the market turns (as it has been doing for centuries already) and demand rises, we are going to have an enormous housing shortage, which will then cause the prices of houses to go through the roof.
Because of the credit act that was implemented last year, expenses in your personal capacity are now taken into consideration when you try to qualify for a bond. This has made millions of people “unfinanceable”. But if you buy using the correct vehicle – like a double-trust structure – you can qualify for more bonds than ever before. Serious investors all work with the right structures, and we are having a party right now!
But the market is changing, and one of the unique characteristics of successful investors is their ability to adjust to a changing market. A good investor must be able to read the market. At Treoc we invest mainly in entry-level properties, and here the petrol price plays a big role. Our type of tenant always likes to live as close as possible to their place of work, but now with the rising petrol price that’s becoming even more of an issue. So buy close to train stations or taxi ranks if you want to have an uninterrupted flow of tenants wanting to rent your property.
Something else to remember if you invest in my type of property is to buy close to primary schools, because a lot of our tenants have children at school. It’s ideal for them if the children can walk to school and back. Otherwise transport has to be arranged for the children, which costs money.
The ideal location for my type of property is therefore close to schools and places of work, or if that’s not possible, near public transport.
Enjoy the market; it’s a buyer’s paradise.
Happy House Hunting!
(Coert Coetzee is the Founder of the TREOC Group consisting out of different companies and trusts. He is an experienced Business Owner and Property Investor and shares his experience and secrets of many years.)
Edition no. 161 www.treoc.com
Exciting Times
By Coert Coetzee
During a recent seminar in Polokwane someone asked me what I think will happen with the economy if the current conditions continue. The short answer I gave this person was that it would benefit the Treoc investors, and I briefly expanded on why I think so. During a seminar there unfortunately isn’t time to go into the details of why I don’t have a problem with the current conditions. It’s not a question that can be answered briefly, and so I’ve decided to expand on it a bit more in this article.
Let’s first look at what the conditions are in which we apparently find ourselves at the moment:
The interest rate is sitting at 15.5%, which is the highest it’s been since 2002, when it peaked at 17%.
Petrol prices are higher than ever.
Inflation is sky-high.
Property prices have doubled in the past five years, but growth is currently sitting at less than 10% per year.
Salaries have not grown at nearly the same rate as houses in the past five years, and so fewer ordinary people can qualify for bonds.
Rental is currently showing an excellent 15% growth per year, but unfortunately the rent/value ratios are still low. This makes property unattractive for uninformed investors.
The country is suffering electricity shortages.
The credit act has neutralised a lot of potential property buyers, because expenses now count against you when it comes to affordability.
For the uninformed layman the factors mentioned above make the situation look very bleak indeed, but for the informed investor these factors indicate the most promising conditions in four years. Despite the hundreds of seminars we’ve presented, the majority of so-called property investors in South Africa are still not educated investors and don’t understand why the above-mentioned factors count in an investor’s favour. Let me give you the reasons:
All these “negative” factors contribute to more people thinking that they cannot afford their own properties.
Fewer tenants buy property due to the reasons above – and, of course, I never invite my tenants to the seminar. So they stay tenants for longer than they want to.
New tenants keep entering the market, because the middle-class is still growing at a phenomenal rate. The result of this is that the demand for rentals is outstripping supply – and that’s why rental is currently growing by 15% or more.
Fewer people are buying, because few people have the knowledge of an educated investor. This is causing prices to drop, creating a perfect buyers’ market for the informed investors. These are the best buying conditions since 2002!
The electricity shortage has put a damper on new property developments, causing supply to drop. When the market turns (as it has been doing for centuries already) and demand rises, we are going to have an enormous housing shortage, which will then cause the prices of houses to go through the roof.
Because of the credit act that was implemented last year, expenses in your personal capacity are now taken into consideration when you try to qualify for a bond. This has made millions of people “unfinanceable”. But if you buy using the correct vehicle – like a double-trust structure – you can qualify for more bonds than ever before. Serious investors all work with the right structures, and we are having a party right now!
But the market is changing, and one of the unique characteristics of successful investors is their ability to adjust to a changing market. A good investor must be able to read the market. At Treoc we invest mainly in entry-level properties, and here the petrol price plays a big role. Our type of tenant always likes to live as close as possible to their place of work, but now with the rising petrol price that’s becoming even more of an issue. So buy close to train stations or taxi ranks if you want to have an uninterrupted flow of tenants wanting to rent your property.
Something else to remember if you invest in my type of property is to buy close to primary schools, because a lot of our tenants have children at school. It’s ideal for them if the children can walk to school and back. Otherwise transport has to be arranged for the children, which costs money.
The ideal location for my type of property is therefore close to schools and places of work, or if that’s not possible, near public transport.
Enjoy the market; it’s a buyer’s paradise.
Happy House Hunting!
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