Questions about the market
By Coert Coetzee www.treoc.com
I recently answered the following two questions:
Question
I've read that various experts are predicting an upturn in the property market for 2009. But I can't see how this can be possible if the National Credit Act keeps preventing people from getting bonds. In my opinion the credit act is actually the main reason for the market performing so poorly, and not the high interest rates as everyone thinks. What is your opinion?
Answer
Your reasoning is very good, and if people keep on buying in the conventional way they’ll continue to have problems, even if the interest rates come down considerably next year. I agree that the credit act implemented in June 2007 is actually the big fly in the property market's ointment. Since its implementation almost all role players in the property industry have been struggling to make a living. As far as I know the Treoc Group is the only role player that is not being affected by the credit act, and the reason for this is the structures that we use for property purchases. We operate exclusively with the specialised double trust structure.
Treoc’s double trust structure consists of two levels of trusts with unique trust clauses that are actually the reason for the success. We spend a few hours presenting on this topic at our seminars, and it’s impossible to cover it fully in this question-and-answer column, but it comes down to the fact that we legally and continually separate our expenses from our income, in the same way we’ve always separated our assets from our liabilities. We never place these things in the same entity, and so since June 2007, when the National Credit Act was implemented, Treoc investors have been qualifying for far more bonds than ever before. One entity holds the income and the other one deals with the expense, and the two have nothing to do with one another. One does not belong to the other. By the way, trusts are entirely exempt from the National Credit Act!
Question
Buyers’ market, buyers’ market, buyers’ market! I am reading and hearing it ad nauseam these days, but at the same time I’ve read that property sales in the country have dropped by almost 50%. Who should one believe?
Answer
Yes, this is one of the curiosities of the world. When a clothing store or wine shop holds a sale everyone is there, because of course prices are low during a sale. So it benefits the buyers of those products to buy during those products’ “buyers' market”. This reaction and behaviour from buyers during a sale is normal, and one would imagine it would always be this way. But it is always only like this with consumer goods: when the prices of shares on the stock market are low, few people buy. People associate low prices on the stock market with collapse and they don't want to be a part of that. People associate high share prices with success and they would rather be a part of that. So most people rather buy shares when prices are high. But most people are not at all successful with shares. It makes you think...
The motto of the world's most successful share investor, Warren Buffett, is: "Be afraid when people are greedy and be greedy when people are afraid.” Buffett usually only buys when the price is low, and his big criterion is that the value must be higher than the price. This makes sense, doesn't it?
Get your mind right about these things. We all have the same opportunities, but only a small percentage of us are able to make use of it. I attended a powerful Robin Banks session in Durban last week and Robin explained how the same winds blows for all of us, but only a few of us know how to set our sails. Let Robin help you to permanently set your sails for opportunity. His next free Mind Power Session is at the Sheraton Hotel in Pretoria on 1st and 2nd October 2008 at 19h00. You can book with Teresa Araujo on 083 624-1017
In the South African property market property prices are currently lower than values. Everyone knows it, and yet they don't think it is a good time to buy property. A certain well-regarded property economist is even advising people to rather rent now than buy. Unbelievable!
Every day there are journalists telling people how badly the property market is doing. This sticks in the subconscious, and people buy nothing. They even become panic-stricken and try to sell their houses. Of course, what the property economist and the papers don't tell people is that property prices always work in cycles. What we have at the moment, we have had before. Even worse than now, in fact. In 1998, interest rates were at 25.5%. That was the best buyers' market in the history of South Africa, and that year I became a full-time property investor. It was a time of great panic and very few people bought property then. At some auctions I was the only buyer. It was a carnival! An entry-level house that cost less than R100,000 at that time is now worth more than R500,000.
I think it is safe to assume that no economist or journalist bought a house in South Africa in 1998, or in our current buyers' market. So decide for yourself who you would like to believe. Mr. Economist or Mr. Buffett?
Happy House Hunting!
Tuesday, September 30, 2008
Thursday, September 25, 2008
Positive on SA - John Mauldin
Positive on SA - John Mauldin
Interesting letter by John Mauldin, one of the US's top investment advisors - recently voted second only to Warren Buffet as an investment guru.
I start this week's letter somewhere over the Atlantic, halfway through an 11-hour flight from Frankfurt to
Dallas. It has been an altogether marvelous 11 days in South Africa, speaking to over 1,000 people at 12 venues, giving a half dozen media interviews, and meeting with many individuals.
This week, I want to give you some impressions of not only South Africa, but talk a little about emerging markets in general.
Finding Value in South Africa
I realized about halfway through my recent trip that it had been sometime since I was in an emerging-market country. I have been to over 50 countries over the past 20 years, but recently most of my travels have been to Europe and Canada, with the occasional vacation trip to Mexico.
As I observed South Africa, it was forcefully brought home to me that there is more to the emerging-market story than China, India, and Brazil. There are any number of countries that are seeing robust growth and contributing to the world economy. It was reported at Davos this year that for the first time the developing world has a larger share of world GDP than the developed world. Today, we focus on an emerging-market country that does not make as much news as it should.
As I mentioned above, the mood among those I talked with in South Africa in the early 1990s when I was traveling often to South Africa was quite pessimistic. The economy was not good, due to international economic sanctions stemming from worldwide protests over the policy of apartheid. Changes and elections were coming, and it was not clear what would happen.
I traveled for (mostly) business into 14 other sub-Saharan countries in Africa. With a few notable exceptions, most countries were not doing well and things had progressed from bad to worse over the previous 10-20 years. It was a tough time to try and do business, but it was a great education.
The contrast today is amazing. Before we get into some facts, let me give you a few impressions. First, there are construction cranes everywhere in the four cities I visited: Johannesburg, Pretoria, Durban, and Cape Town. Twelve years ago the thirty miles from Johannesburg to Pretoria was mostly agricultural land. Today it is one big city, with offices, malls, and homes lining the freeway. There was a significant number of rather nice new housing developments, many if not most being built on speculation all along the freeway.
Johannesburg is a world-class city, on a par with New York or London or any major city in terms of facilities, shops, infrastructure... and traffic. There were new shopping malls all over, and the stores were busy. The restaurants were excellent. The hotels I stayed in and spoke at were excellent and modern. The Sandton area is particularly pleasant.
Durban is a tropical jewel on the Indian Ocean. Again, there was construction everywhere - a green, verdant city of 1,000,000 people, with modern roads and great weather.
I have been to Sydney, Vancouver, and San Francisco. I love all of them. But for my money, Cape Town is the most beautiful city I have been to in the world. Amazing mountains, blue water harbors, white sand beaches, with wineries nestled in among the mountains and valleys. The Waterfront area, where I stayed, is fun and vibrant. Again, an amazing amount of construction everywhere, especially in the waterfront area, as investors from Dubai are pouring huge sums of money into creating a massive residential/business/ retail/restaurant development.
There are several similar, quite large developments going up in different parts of Cape Town. I ate dinner on Friday night at a restaurant called Baia at the Waterfront. I find I really love the better South African chardonnays. My friends know I am something of a chardonnay snob. I like the better California wineries. I was pleasantly surprised to find more than a few South African chards the equal of their US counterparts, but at a third to half the price for the same level of quality. (I should note that a decent chardonnay in London or Europe is twice the US price.)
The two of us had the best chardonnay in the restaurant and one of the better meals I have had in a long time, and the bill was less than $100.
The next day my partner Prieur du Plessis informed me that Baia was one of the most expensive restaurants in town. By way of comparison, you can easily spend 2-3 times that at a comparable restaurant in Dallas, and 4-5 times that in New York. Forget London.
I began to ask about the bills for food, drinks, and such for the rest of the trip. The country was uniformly about half what I would pay in Texas for the same quality. I stayed in a very nice five-star hotel (The Commodore) for six nights for less than $1,000, including several meals, laundry, and my bar tab. Their walk-up price was much higher, but clearly you can get deals, and it is tourist season at that. The service was terrific and uniformly delivered with smiles.
The exceptionally nice private game reserve (Itaga) we stayed at when I first arrived, trying to get over jet lag, was only a few hundred a night, including meals, wine, and game runs. In short, after having been to London and Europe for my last few overseas trips, South Africa seemed like a bargain.
And it was not just the people I spoke to that were optimistic. Grant Thornton (a large international accounting firm) did a survey in the 30 countries in which they do business. The four countries with the most optimism and confidence were India, Ireland, South Africa, and Mainland China. Why such confidence? I think there are several reasons. The economy has been growing at a reported almost 5% a year for the past several years, which is quite strong. They have had 32 consecutive quarters of positive growth. But the official figures may understate the reality by a significant amount. If you look at the VAT (value-added tax) receipts, as well as other tax figures, some economists estimate the economy may be growing by 7% or more. Why the difference?
There is a large "informal" economy in South Africa. While much of the income may not be reported, when something is bought and sold in the retail sectors, taxes are collected.
The stock market has grown by over 25%, 47%, and 41% for the last three years. Such a bull run is always a boost to confidence. But there are also some real fundamentals underlying the emerging-market Bull markets. South Africa has a strong commodity sector, with numerous commodities and not just gold. JP Morgan thinks that earnings growth for South African companies, even adjusting for some anomalies, will be 20% this year, which should mean another good year for their local markets.
This link between commodities and stock market prices is reflected not just in their stock market, but in emerging markets worldwide. Look at the close correlation for the last ten years between the prices of commodities and the emerging-market equity index. I think this rather clearly shows the link between the recent rise in commodity prices and emerging markets. It is more than just a China story.
Football as an Economic Driver The attention paid to football (or soccer in the United States) is rising to fever pitch in South Africa. And for good reason: they will host the World Cup in 2010. They expect some 300,000 fans to show up.
The government is using the occasion to spend some 400 billion Rand (a little over US $50 billion) on all sorts of infrastructure projects. They are doubling the size of the major airports, which had already been significantly improved.
Walking past the construction at the Johannesburg airport, you have to be impressed with the size of it. New roads and other forms of infrastructure are being added to prepare for the influx, but it will have the added effect of making the country more competitive, just as infrastructure in China has been a boost to that country, and a lack of infrastructure has limited India.
The World Cup will also be a boost to tourism, already one of the most important sectors of the economy. Cape Town is becoming an international destination for vacations and conferences. The growth in tourism has been strong, showing 20% growth last year from 2005. 2006 was a record year.
Interestingly, 75% of the traffic reported in the tourism growth is from Africa and the Middle East. While a lot of the people are vacationers, I think a goodly portion are businessmen and women from all over sub-Saharan Africa who look to South Africa as a deal-doing financial centre. South Africa has a quite strong, very competent, and growing financial services sector that is a magnet for entrepreneurs from all over Africa seeking to find capital. South Africa also has a strong entrepreneurial class which is the base for much of the new business and development, not just in South Africa but in all of Africa. The rest of the world rightly sees South Africa as the place to launch into the rest of Africa.
Are there problems in South Africa? Of course, and some of them are quite serious. But that is the case in nearly all (I cannot think of an exception) emerging-market economies. While the overall crime rate is dropping, it is still far too high. Some rather high-profile crimes of late have resulted in a strong outcry for serious change.
Corruption is an issue, but that is the case in almost every emerging-market country. The high levels of poverty are evident. Although employment is growing and more and more of the poor are being brought into the economy, there is still a lot of room for progress.
The telecommunications infrastructure is hampered by a lack of serious competition. Access to the internet is limited in many areas, and it is really slow where it does exist. This will improve in the coming years, but it is a serious handicap to business. There are power shortages and the need for more power-generation plants to keep up with the growth.
But all these areas are (mostly) going to improve. I see a lot of opportunity in South Africa in particular and Africa in general. Let's look at one area where there may be more than a little potential in the future.
I think there is deep long-term value in African (not just South African) farmland. Right now, given the nature of US and European subsidies to agriculture, it is hard for developing-world farmers to compete. But that will change in the next decade.
As I have written before, "Old Europe" the US and even Australia are going to come under intense government budgetary pressure due to the high levels of pension and medical costs they have promised their retiring boomers. Europe is particularly vulnerable. Quite simply, Europe cannot afford to keep the pension promises they have made and pay for any other normal government expenses without raising taxes. Except that they already have economy-stifling high taxes.
Budgets are going to have to be cut in other areas. At some point, sooner rather than later, agricultural subsidies are going to come under pressure, as politicians must decide where to find the money to pay for the promised pensions and health care. There are more voters who are older and on pensions than there are farmers. I can count votes, and it is not hard to predict the result. It will be with a lot of fighting, but in the medium run, the agricultural subsidies in Europe are going to have to go.
When the writing is clearly on the wall, Europe will start to negotiate on those subsidies, trying to get something for what they will have no choice but to give. Part of that will be to reduce US subsidies as well. Africa will become a breadbasket for much of Asia. With China pressed for water and much of its agricultural land being used for development, China will need to import more food. And as the rest of the world becomes more developed, there will be an increased demand for meat, which means an even bigger demand for feed grains for livestock. The growing use of ethanol is increasing demand for corn, absorbing more of the world's land use for energy corn rather than for food.
The simple fact is that as the world grows more prosperous we are going to need more grain and other foods. Where is the land we are going to need to feed the world There is an abundance in Africa, along with the needed water and labour.
And as African countries upgrade their infrastructure, it will improve the ability of farmers to get their grains to market at profitable levels.
There is much to like about emerging markets. That is where a great deal of the real potential growth in the coming decades will be. And South Africa will be one of the better stories. If you are not doing business there already, you should ask yourself, why not?
Home Again, Tulsa
I want to give special thanks to my South African partners Prieur du Plessis and Paul Stewart and the rest of the team at Plexus Asset Management. I have never been treated so well on a trip. They made all the hard work a pleasure, taking care of a thousand small details so I could focus on the tasks at hand. And they did arrange for some fun, relaxation, and great sightseeing. I am looking forward to going back soon. I was particularly impressed with South African Air. Very comfortable business-class seats, impeccable service, and great wines. I have trouble sleeping on planes, but I could actually sleep in these seats. But it still took over 40 hours to get to Johannesburg, rather than under 20, so I was exhausted when I got there. Jet lag this trip was as bad as I have ever had. Coming back has been easy. It is getting late and time to hit the send button. Have a great week and enjoy the ones you're with.
Your tired but happy analyst, John Mauldin-
Interesting letter by John Mauldin, one of the US's top investment advisors - recently voted second only to Warren Buffet as an investment guru.
I start this week's letter somewhere over the Atlantic, halfway through an 11-hour flight from Frankfurt to
Dallas. It has been an altogether marvelous 11 days in South Africa, speaking to over 1,000 people at 12 venues, giving a half dozen media interviews, and meeting with many individuals.
This week, I want to give you some impressions of not only South Africa, but talk a little about emerging markets in general.
Finding Value in South Africa
I realized about halfway through my recent trip that it had been sometime since I was in an emerging-market country. I have been to over 50 countries over the past 20 years, but recently most of my travels have been to Europe and Canada, with the occasional vacation trip to Mexico.
As I observed South Africa, it was forcefully brought home to me that there is more to the emerging-market story than China, India, and Brazil. There are any number of countries that are seeing robust growth and contributing to the world economy. It was reported at Davos this year that for the first time the developing world has a larger share of world GDP than the developed world. Today, we focus on an emerging-market country that does not make as much news as it should.
As I mentioned above, the mood among those I talked with in South Africa in the early 1990s when I was traveling often to South Africa was quite pessimistic. The economy was not good, due to international economic sanctions stemming from worldwide protests over the policy of apartheid. Changes and elections were coming, and it was not clear what would happen.
I traveled for (mostly) business into 14 other sub-Saharan countries in Africa. With a few notable exceptions, most countries were not doing well and things had progressed from bad to worse over the previous 10-20 years. It was a tough time to try and do business, but it was a great education.
The contrast today is amazing. Before we get into some facts, let me give you a few impressions. First, there are construction cranes everywhere in the four cities I visited: Johannesburg, Pretoria, Durban, and Cape Town. Twelve years ago the thirty miles from Johannesburg to Pretoria was mostly agricultural land. Today it is one big city, with offices, malls, and homes lining the freeway. There was a significant number of rather nice new housing developments, many if not most being built on speculation all along the freeway.
Johannesburg is a world-class city, on a par with New York or London or any major city in terms of facilities, shops, infrastructure... and traffic. There were new shopping malls all over, and the stores were busy. The restaurants were excellent. The hotels I stayed in and spoke at were excellent and modern. The Sandton area is particularly pleasant.
Durban is a tropical jewel on the Indian Ocean. Again, there was construction everywhere - a green, verdant city of 1,000,000 people, with modern roads and great weather.
I have been to Sydney, Vancouver, and San Francisco. I love all of them. But for my money, Cape Town is the most beautiful city I have been to in the world. Amazing mountains, blue water harbors, white sand beaches, with wineries nestled in among the mountains and valleys. The Waterfront area, where I stayed, is fun and vibrant. Again, an amazing amount of construction everywhere, especially in the waterfront area, as investors from Dubai are pouring huge sums of money into creating a massive residential/business/ retail/restaurant development.
There are several similar, quite large developments going up in different parts of Cape Town. I ate dinner on Friday night at a restaurant called Baia at the Waterfront. I find I really love the better South African chardonnays. My friends know I am something of a chardonnay snob. I like the better California wineries. I was pleasantly surprised to find more than a few South African chards the equal of their US counterparts, but at a third to half the price for the same level of quality. (I should note that a decent chardonnay in London or Europe is twice the US price.)
The two of us had the best chardonnay in the restaurant and one of the better meals I have had in a long time, and the bill was less than $100.
The next day my partner Prieur du Plessis informed me that Baia was one of the most expensive restaurants in town. By way of comparison, you can easily spend 2-3 times that at a comparable restaurant in Dallas, and 4-5 times that in New York. Forget London.
I began to ask about the bills for food, drinks, and such for the rest of the trip. The country was uniformly about half what I would pay in Texas for the same quality. I stayed in a very nice five-star hotel (The Commodore) for six nights for less than $1,000, including several meals, laundry, and my bar tab. Their walk-up price was much higher, but clearly you can get deals, and it is tourist season at that. The service was terrific and uniformly delivered with smiles.
The exceptionally nice private game reserve (Itaga) we stayed at when I first arrived, trying to get over jet lag, was only a few hundred a night, including meals, wine, and game runs. In short, after having been to London and Europe for my last few overseas trips, South Africa seemed like a bargain.
And it was not just the people I spoke to that were optimistic. Grant Thornton (a large international accounting firm) did a survey in the 30 countries in which they do business. The four countries with the most optimism and confidence were India, Ireland, South Africa, and Mainland China. Why such confidence? I think there are several reasons. The economy has been growing at a reported almost 5% a year for the past several years, which is quite strong. They have had 32 consecutive quarters of positive growth. But the official figures may understate the reality by a significant amount. If you look at the VAT (value-added tax) receipts, as well as other tax figures, some economists estimate the economy may be growing by 7% or more. Why the difference?
There is a large "informal" economy in South Africa. While much of the income may not be reported, when something is bought and sold in the retail sectors, taxes are collected.
The stock market has grown by over 25%, 47%, and 41% for the last three years. Such a bull run is always a boost to confidence. But there are also some real fundamentals underlying the emerging-market Bull markets. South Africa has a strong commodity sector, with numerous commodities and not just gold. JP Morgan thinks that earnings growth for South African companies, even adjusting for some anomalies, will be 20% this year, which should mean another good year for their local markets.
This link between commodities and stock market prices is reflected not just in their stock market, but in emerging markets worldwide. Look at the close correlation for the last ten years between the prices of commodities and the emerging-market equity index. I think this rather clearly shows the link between the recent rise in commodity prices and emerging markets. It is more than just a China story.
Football as an Economic Driver The attention paid to football (or soccer in the United States) is rising to fever pitch in South Africa. And for good reason: they will host the World Cup in 2010. They expect some 300,000 fans to show up.
The government is using the occasion to spend some 400 billion Rand (a little over US $50 billion) on all sorts of infrastructure projects. They are doubling the size of the major airports, which had already been significantly improved.
Walking past the construction at the Johannesburg airport, you have to be impressed with the size of it. New roads and other forms of infrastructure are being added to prepare for the influx, but it will have the added effect of making the country more competitive, just as infrastructure in China has been a boost to that country, and a lack of infrastructure has limited India.
The World Cup will also be a boost to tourism, already one of the most important sectors of the economy. Cape Town is becoming an international destination for vacations and conferences. The growth in tourism has been strong, showing 20% growth last year from 2005. 2006 was a record year.
Interestingly, 75% of the traffic reported in the tourism growth is from Africa and the Middle East. While a lot of the people are vacationers, I think a goodly portion are businessmen and women from all over sub-Saharan Africa who look to South Africa as a deal-doing financial centre. South Africa has a quite strong, very competent, and growing financial services sector that is a magnet for entrepreneurs from all over Africa seeking to find capital. South Africa also has a strong entrepreneurial class which is the base for much of the new business and development, not just in South Africa but in all of Africa. The rest of the world rightly sees South Africa as the place to launch into the rest of Africa.
Are there problems in South Africa? Of course, and some of them are quite serious. But that is the case in nearly all (I cannot think of an exception) emerging-market economies. While the overall crime rate is dropping, it is still far too high. Some rather high-profile crimes of late have resulted in a strong outcry for serious change.
Corruption is an issue, but that is the case in almost every emerging-market country. The high levels of poverty are evident. Although employment is growing and more and more of the poor are being brought into the economy, there is still a lot of room for progress.
The telecommunications infrastructure is hampered by a lack of serious competition. Access to the internet is limited in many areas, and it is really slow where it does exist. This will improve in the coming years, but it is a serious handicap to business. There are power shortages and the need for more power-generation plants to keep up with the growth.
But all these areas are (mostly) going to improve. I see a lot of opportunity in South Africa in particular and Africa in general. Let's look at one area where there may be more than a little potential in the future.
I think there is deep long-term value in African (not just South African) farmland. Right now, given the nature of US and European subsidies to agriculture, it is hard for developing-world farmers to compete. But that will change in the next decade.
As I have written before, "Old Europe" the US and even Australia are going to come under intense government budgetary pressure due to the high levels of pension and medical costs they have promised their retiring boomers. Europe is particularly vulnerable. Quite simply, Europe cannot afford to keep the pension promises they have made and pay for any other normal government expenses without raising taxes. Except that they already have economy-stifling high taxes.
Budgets are going to have to be cut in other areas. At some point, sooner rather than later, agricultural subsidies are going to come under pressure, as politicians must decide where to find the money to pay for the promised pensions and health care. There are more voters who are older and on pensions than there are farmers. I can count votes, and it is not hard to predict the result. It will be with a lot of fighting, but in the medium run, the agricultural subsidies in Europe are going to have to go.
When the writing is clearly on the wall, Europe will start to negotiate on those subsidies, trying to get something for what they will have no choice but to give. Part of that will be to reduce US subsidies as well. Africa will become a breadbasket for much of Asia. With China pressed for water and much of its agricultural land being used for development, China will need to import more food. And as the rest of the world becomes more developed, there will be an increased demand for meat, which means an even bigger demand for feed grains for livestock. The growing use of ethanol is increasing demand for corn, absorbing more of the world's land use for energy corn rather than for food.
The simple fact is that as the world grows more prosperous we are going to need more grain and other foods. Where is the land we are going to need to feed the world There is an abundance in Africa, along with the needed water and labour.
And as African countries upgrade their infrastructure, it will improve the ability of farmers to get their grains to market at profitable levels.
There is much to like about emerging markets. That is where a great deal of the real potential growth in the coming decades will be. And South Africa will be one of the better stories. If you are not doing business there already, you should ask yourself, why not?
Home Again, Tulsa
I want to give special thanks to my South African partners Prieur du Plessis and Paul Stewart and the rest of the team at Plexus Asset Management. I have never been treated so well on a trip. They made all the hard work a pleasure, taking care of a thousand small details so I could focus on the tasks at hand. And they did arrange for some fun, relaxation, and great sightseeing. I am looking forward to going back soon. I was particularly impressed with South African Air. Very comfortable business-class seats, impeccable service, and great wines. I have trouble sleeping on planes, but I could actually sleep in these seats. But it still took over 40 hours to get to Johannesburg, rather than under 20, so I was exhausted when I got there. Jet lag this trip was as bad as I have ever had. Coming back has been easy. It is getting late and time to hit the send button. Have a great week and enjoy the ones you're with.
Your tired but happy analyst, John Mauldin-
Save money rehabbing a house
Rehabbing a house can be a very expensive task that can easily get out of hand and over budget. Today more and more people are looking for ways to save money remodeling their home. I'd like to share some of my insight and experience on ways to save money when doing a rehab property or flip piece of real estate.
Here is my list of the top 10 ways to save money Rehabbing / Remodeling a house.
1. Be Your Own General Contractor - Being your own general contractor could save you substantial money. However, I don't recommend this approach to many people. You really do need some knowledge of the house remodeling industry before you try to take on this large of a task. You must have good negotiation skills, a sense for the construction trades, and an eye for design. If you're successful at being your own general contractor you could save as much as 5% to 10% on your construction project.
2. Buying the right piece of investment property - can save you money when you begin your remodel project. The type of house you select can be one of the best ways to save money when you invest in real estate. Buying old or out of date construction types can cost you a lot of money because of the investment necessary to bring the property up to code. Choosing a simple rectangular house with simple roof lines and standard windows compared to a complicated geometric house can save you lots of money. Choose nice siding, paint and landscaping instead of an unusual house design.
3. Sweat Equity - There's no better way to save money than to role up your sleeves and put some sweat equity into the project. Home Improvement and DIY are so popular today that most home owners have tackled a project or two trying to save money. You can take those skills and apply them to your remodel construction project. Most contractors will agree to let you do certain phases of the project if you discuss them before construction begins and identify those items in the contract. If you have certain skills that you feel comfortable with then discuss them with your contractors so you can save some money. I'll discuss some of the more popular tasks below.
4. Job Site Clean Up - Helping keep the site clean is one of the simplest ways I know how to save money when remodeling a house. Having a clean and orderly job site makes everyone work a little more efficient and careful. Having the sense of an organized job site will ensure your project gets finished sooner with few problems and that means less money from you. Even slight delays in the project can mean substantial interest payments and temporary housing costs.
5. Salvage Materials - Using salvage materials will help you save money and it's the Green Thing to do. Today there are salvage yards that specialize in recycling building materials. Things such as doors, windows, cabinets, plumbing and electrical fixtures are all available at very discounted prices. You'll be saving money while helping out the environment so it's certainly an idea worth considering.
6. Reduced Price Products - Buying floor models, remnants and slightly damaged products is one area that I've seen many of our real estate rehabbers save big money. Many building material stores sell discounted projects at huge summer time yard sales. When you're looking for fixtures make sure to consider about floor models, discontinued models and even damaged products.
7. Painting - Most people that consider themselves DIY'ers have no problem painting. If you paint your remodeling project inside and out you can save $2,000 to $10,000 easily. Painting your rehab house is a project the whole family can help out with. I've seen people that have a painting party with family and friends and paint an entire house in one weekend.
8. Flooring - Flooring is another project that I've seen customers save a substantial amount of money on. Most types of tile and wood flooring a re easy to install with very little tools. Even if you can't install the flooring yourself check out sales for discounted materials. You can often find discontinued material and use it to tile the basement or laundry areas.
9. Landscaping - Doing the landscaping yourself can save thousands of dollars. It takes very little skill to do and can save you a ton of money. Bring along friend and family to help. It makes for a great group project. Chances are you'll save money and do a better job in the process. You can easily plant your own trees, shrubs flowers to save money.
10. Keep It Simple - I have seen too many investors and flippers over build a rehab project and finish it exactly the way that they would want it. The problem is that no two families have the same taste. I have often driven past these homes months later to find the paint a different color, the landscaped ripped out, or even worse, everything is dead. Build the project to meet the standards of the neighborhood and make sure that everything is clean, operational, and that the home is ready to move in. NOTHING MORE. Give them a clean slate to start their new life with in the rehab home you've remodeled. You waste a lot of money on things that the new buyer may not like. It is better for you to save that money and offer it to the buyer as an incentive for buying or to help them with closing costs. It will end up making the deal close faster.
Doing any one of these items the next time you build a new house can save you money. The most important advice I can give you is to be speak with your builder openly about these ideas. Tell your builder you'd like to save some money by doing certain tasks yourself. Most builders will be open to this arrangement so long is it's discussed ahead of time and properly addressed in the contract.
Need to sell your investment properties?
As every property ‘guru’ worth their salt will tell you, property investors should never sell a property unless there are extreme and unusual circumstances. Here are some options investors should consider before thinking of selling their properties.
· As soon as there is a possibility of repayment problems or an indication of future difficulties, contact the bank
· Fix or cap the interest rate if you are unable to endure any future rate increases
· Renegotiate the bond rate – your bond originator could help you negotiate a better rate
· If your bank won’t assist with a lower rate, consider switching, but be sure you understand all the financial implications
· Extend the mortgage term from 20 to 30 years and reduce the monthly repayments
· Negotiate a payment holiday - suspension of payments for a period
· Negotiate reduced repayments for a specified period
· Negotiate special arrangements to pay the arrears over a stipulated periods
· Access the equity in your properties by refinancing it to cover your short-falls
· Consider taking on a private investment partner
· Make multiple bond repayments in a month. Mortgage interest charges are calculated on your daily outstanding balance, so if you divide your single repayment on the 30th into two payments made on the 15th and 30th days of each month, you can shave months and thousands of rands off your bond.
With all that said, we realise that some of our investors may find themselves extremely over-exposed at the moment, particularly with two more interest rate increases predicted for this year.
If you have exhausted all the other options, and you have no alternative left but to sell an investment property, send us the details of your property and we will list it on Property Bargain Finder for you, provided that it meets our stringent 10-point quality plan.
While the market conditions are tough and there is an oversupply of properties on offer through traditional estate agency channels, there are many Property Bargain Finder investors among those on our 60 000 strong database who are looking for good deals to expand their property portfolios at the moment, and Property Bargain Finder can help you reach those who are looking to buy properties.
Listing conditions will be negotiated once the property has been evaluated.
Tuesday, September 23, 2008
Development Coach
Get the first module free! Please download the first module of the Development Coach E-course for FREE on our website by clicking on this link http://www.developmentcoach.co.za/freemodule.php It is packed with some fascinating insights detailing why developing property is the ultimate wealth creation strategy!
If you have ever stood in front of a beautiful residential development with 6 or 20 or even 100 units, all filled with happy families, and wondered just how it happens and who pocketed all the money, you are definitely in the right place.
Development Coach is for future and current property developers who understand that developing a property can allow you to transform a relatively inexpensive piece of land into a multi-million rand development (and a spectacular return on your investment!) by simply adding your knowledge, skills, management ability and expertise.
Sorry! No magic ingredients!
Perhaps it is because you can achieve such high returns on your investment, in such a short period of time, that people believe there must be some insider secret or some mystery process behind property development.
Fortunately, I can vouch that this is entirely not true. There are some characteristics that are common among property developers, but most of these can be learnt or acquired.
How I made a million with just one development
I do not have a fancy degree, a rich dad or a silver spoon that I was born with. I am just an average guy that was willing to learn and apply the knowledge I gained to change my financial destiny. And now I am just an ordinary guy with a string of successful developments behind me, and a healthy bank account that can withstand all of my wife's monthly shopping sprees!
Now it is your turn
The fact that you have signed up for this newsletter indicates to me that you, too, are ready to change your destiny. If you were wondering if property development is for you, my short answer is YES! Anyone can learn the processes behind developing property. Anyone can find out how to get the finance, put a development team together, and start and complete a project. Development Coach just makes it so much easier than learning through the school of hard knocks!
In my experience, here are the characteristics that make a property developer successful:
a.. An entrepreneurial spirit
b.. Being market aware
c.. The ability to see opportunities
d.. The willingness to take calculated risks
e.. Being a doer - actually taking the first step, and then the next, to make it happen
f.. Effective time management and the ability to manage yourself
g.. Surrounding yourself with experts and delegating effectively to them
Are you an entrepreneur?
Let's just look at having an entrepreneurial spirit. It really encapsulates all the other characteristics. Entrepreneurs are always looking out for opportunities and spot them where others see only problems. They can find the positive in every situation, and can innovate solutions that will also make money.
Let's take the Eskom power crisis as an example. It will certainly affect the property development market and many developments will be delayed. But an entrepreneur will also see that these delays will serve to increase the demand for housing even more and recognise the opportunities this will bring.
Another example is the slump in the property market in 2008. House price inflation was down, interest rates were up and the National Credit Act made it more difficult for people to get home loans. Everyone talked about how badly property was performing and how hard it was to sell a property. Entrepreneurs will understand that this is, in fact, the bottom of the property cycle, and realise that the cycle is about to turn up again. They will know that the best time to buy is when the market is down and they will set themselves up to take advantage of this.
Just doing it
But mostly, entrepreneurs are doers. They don't just talk, dream or think - they go out and take advantage of the opportunities. And since it is estimated that 97% of people who have the knowledge to do something, will never actually apply what they know, there are endless opportunities for the 3% of entrepreneurs who are willing to take the risk and the first step.
You have already taken the first step! The next step is as simple as signing up for the rest of the modules. Set your entrepreneurial spirit free and be one of the 3% of people who actually do something with the knowledge they have. You already know that property development is the ultimate strategy for wealth creation - now is the time to turn this knowledge into real returns.
Here's to your property development success!
Pierre van Wyk & the Development Coach team
The Development Coach team
Tel: (011) 979 0315
Fax: 0866 55 08 62
Email: info@developmentcoach.co.za
30 Villa Valencia, Cnr Monument and Anemoon Str, Glen Marais, Kempton Park
PO Box 12316, Aston Manor, 1630
If you have ever stood in front of a beautiful residential development with 6 or 20 or even 100 units, all filled with happy families, and wondered just how it happens and who pocketed all the money, you are definitely in the right place.
Development Coach is for future and current property developers who understand that developing a property can allow you to transform a relatively inexpensive piece of land into a multi-million rand development (and a spectacular return on your investment!) by simply adding your knowledge, skills, management ability and expertise.
Sorry! No magic ingredients!
Perhaps it is because you can achieve such high returns on your investment, in such a short period of time, that people believe there must be some insider secret or some mystery process behind property development.
Fortunately, I can vouch that this is entirely not true. There are some characteristics that are common among property developers, but most of these can be learnt or acquired.
How I made a million with just one development
I do not have a fancy degree, a rich dad or a silver spoon that I was born with. I am just an average guy that was willing to learn and apply the knowledge I gained to change my financial destiny. And now I am just an ordinary guy with a string of successful developments behind me, and a healthy bank account that can withstand all of my wife's monthly shopping sprees!
Now it is your turn
The fact that you have signed up for this newsletter indicates to me that you, too, are ready to change your destiny. If you were wondering if property development is for you, my short answer is YES! Anyone can learn the processes behind developing property. Anyone can find out how to get the finance, put a development team together, and start and complete a project. Development Coach just makes it so much easier than learning through the school of hard knocks!
In my experience, here are the characteristics that make a property developer successful:
a.. An entrepreneurial spirit
b.. Being market aware
c.. The ability to see opportunities
d.. The willingness to take calculated risks
e.. Being a doer - actually taking the first step, and then the next, to make it happen
f.. Effective time management and the ability to manage yourself
g.. Surrounding yourself with experts and delegating effectively to them
Are you an entrepreneur?
Let's just look at having an entrepreneurial spirit. It really encapsulates all the other characteristics. Entrepreneurs are always looking out for opportunities and spot them where others see only problems. They can find the positive in every situation, and can innovate solutions that will also make money.
Let's take the Eskom power crisis as an example. It will certainly affect the property development market and many developments will be delayed. But an entrepreneur will also see that these delays will serve to increase the demand for housing even more and recognise the opportunities this will bring.
Another example is the slump in the property market in 2008. House price inflation was down, interest rates were up and the National Credit Act made it more difficult for people to get home loans. Everyone talked about how badly property was performing and how hard it was to sell a property. Entrepreneurs will understand that this is, in fact, the bottom of the property cycle, and realise that the cycle is about to turn up again. They will know that the best time to buy is when the market is down and they will set themselves up to take advantage of this.
Just doing it
But mostly, entrepreneurs are doers. They don't just talk, dream or think - they go out and take advantage of the opportunities. And since it is estimated that 97% of people who have the knowledge to do something, will never actually apply what they know, there are endless opportunities for the 3% of entrepreneurs who are willing to take the risk and the first step.
You have already taken the first step! The next step is as simple as signing up for the rest of the modules. Set your entrepreneurial spirit free and be one of the 3% of people who actually do something with the knowledge they have. You already know that property development is the ultimate strategy for wealth creation - now is the time to turn this knowledge into real returns.
Here's to your property development success!
Pierre van Wyk & the Development Coach team
The Development Coach team
Tel: (011) 979 0315
Fax: 0866 55 08 62
Email: info@developmentcoach.co.za
30 Villa Valencia, Cnr Monument and Anemoon Str, Glen Marais, Kempton Park
PO Box 12316, Aston Manor, 1630
New property training courses
Dear Investor,
We are delighted to announce the launch of two new training courses from Property Bargain Finder! Following the phenomenal response to our Development Coach course launched earlier this year, our Property Investment Coach course and our Property Ownership Coach course have just been launched.
There was a great demand from the industry and from our investors for training for property investors as well as a basic property ownership course. Our training courses now include:
Property Ownership Coach - Free!
This Property Ownership Course will introduce you to a new paradigm – becoming an Asset Owner instead of an Income Earner. We will share with you the basic fundamentals of successful property ownership, including success strategies to buy the right property, get the right finance, increase the value of your property, pay the bank less interest and how you can use the cash locked up in your property to, for example, start a business or buy more property.
And best of all, this exciting journey into smart property ownership is absolutely FREE!
Click here link to for more information www.propertybargainfinder.com
Property Investment Coach
This is an exciting, inspiring journey to creating wealth through investing in property, at the end of which you will have the know-how to retire young and wealthy, so you can have the life you deserve!
You can look forward to a thrilling, exciting journey through 13 training modules, each packed with practical information, top investment tips, inside info, how to’s, step-by-step guides, and much more to empower you to understand how property investment works, and how to start your own property investment portfolio.
Click here for more information and download the first Module for free! www.propertybargainfinder.com
Development Coach
An exciting, inspiring journey through the fascinating world of property development, at the end of which you will be able to start your own property development. Development Coach offers you a 25-module course completed over 24 months, giving you the real, practical information, tips and success strategies to develop a property. And, our course tracks the development of a real brick-and-mortar development, so you will get a feel for the timelines and the process flow of a real-life development project.
Click here to find out more and download the first Module for free! www.propertybargainfinder.com
We invite you to have a look at the new websites and register for the newsletters and online courses. Each course is a practical step-by-step guide to creating wealth through property. During the next few months we will be adding plenty of resources for our subscribers, so be sure to register and stay on the cutting edge of the property game.
There are also some very exciting new courses under development and we are currently in the process of obtaining SETA accreditation for our courses. Watch your inbox for more exciting news!
Warmest regards,
The Property Bargain Finder team
Tel: 086 72 77 052 or (011) 979 0315
Fax: (011) 979 0123
Email: vania@propertybargainfinder.co.za
30 Villa Valencia, Cnr Monument and Anemoon Str, Glen Marais, Kempton Park
PO Box 12316, Aston Manor, 1630
Usufructs, trusts, property transfers, etc
Property Bargain Finder is constantly looking for ways to add even more value to the Property Bargain Finder investors and to provide cutting edge services and products for our Property Bargain Finder Investor’s Club members.
In line with this, we are delighted to announce a new Property Bargain Finder service for our investors and Club Members: usufruct transfers.
Zita Hage, a qualified attorney, who specialises in usufruct conveyancing, is able to offer Property Bargain Finder investors and Club Members this essential service.
What is a ‘usufruct’?
Although the name sounds strange because it is a Latin term, the word ‘usufruct’ simply means ‘the use of the fruits’. Applied to property ownership, this simply refers to the right to use of the property for personal use or to receive the benefit of any rent from the property, as the case may be.
In practical terms, the rights to use the property can be separated from the title (ownership) of the property and this clever legal trick holds a solution for property owners wanting to transfer property registered in their names to their trust at a cost effective rate.
How this can help Property Bargain Finder investors and Club Members
Some of you may have faced the problem of how to deal with current properties already owned and registered in your personal names. You may want to transfer the ownership of the property to a trust, but not want to pay the full transfer fees all over again which can run in to tens of thousands of Rands.
This is where a usufruct could be useful. The effect of a usufruct is that the usage portion of the rights of ownership (the usufructuary rights) is separated from the title (dominium) to the property. The owner would therefore keep the usuage rights in his name (the usufruct) and transfer the title (ownership) to the property to the trust. As the ownership of a property which is encumbered by a usufruct is not worth much, the price tag for such ownership is negligible and it is this amount that transfer duty would be payable on.
However, since the ownership of the property is now held in the trust, investors enjoy the same asset protection they would have had if the full property rights and ownership were held by the trust as well as the estate planning benefits of having the capital growth accumulating in the trust rather than in their personal names.
Contact Vania on vania@propertybargainfinder.com - 0794855355 for more info.
Warm regards,
The Property Bargain Finder team
Web: www.propertybargainfinder.co.za
Monday, September 22, 2008
How to retire young & early
It is extremely exciting for me to be involved in, and to introduce to you, to one of the most liberating and positive new approaches in wealth creation.
We have all heard the very sad statistics that show that 95% of South Africans will retire without enough money to be financially independent, which means they will have to rely on their families, or worse, yet, the government to survive their retirement years.
The fact is that the traditional methods of saving for retirement simply don’t add up, and as the statistics show, they have an incredibly high failure rate.
The good news is that there is another way – a way that will not only ensure that ordinary South Africans can retire wealthy, but also so they can retire young!
This new approach to wealth creation has the objective to help normal people to retire younger and wealthier, so they can live the lives they deserve!
Even better news is that you don’t need a lump sum or extra cash every month to invest. You don’t need a degree or connections in the right places.
All you need is to change your paradigm from being an Income Earner to becoming an Asset Owner, and to allow Property Bargain Finder to show you the process of building wealth through property. www.propertybargainfinder.com.
This is a simple, but very effective and safe process that has created great wealth for many South Africans.
We will show you:
• how to buy a R1 million house for R29 000,
• how to pay off your bond in record time,
• how you can restructure your current affairs to create cash flow to buy even more properties,
• how to buy multiple properties, and
• how to maximise your passive income
• and how to minimise your risk by using the right structures
In short, how to retire young and early!
Simply email me on vania@propertybargainfinder.com, and I will invite you to attend a free seminar or a free personal consultation during which we will create your personal wealth creation strategy taking into account your current circumstances, whatever they may be.
There are no obligations or catches! Property Bargain Finder can assist you through the entire process or you can do it on your own.
Since I know that most of you will say:
o You lack of the knowledge and experience in choosing the right property
o Don’t have time to search through hundreds of websites, property listing magazines, and newspaper property sections
o Don’t have time to educate yourself on the finer points of successful property investment.
o And don’t have time or experience to manage a buy-to-let property
We have created a solution that makes it both easy and safe for you to create wealth. What we do offer is:
- We find the right investment properties for you
- We help you obtain the finance
- We assist you with the rental and management
- We provide preferential access to experts in tax, trusts, and financial planning
Property Bargain Finder is also the only property club that puts its money on the line – offering a guaranteed buyback on certain properties. This means if you are not completely satisfied, we will buy the property back from you at the price paid for it.
Our investors also benefit from our negotiation and bulk purchasing power, so you can enjoy cash back and pre-launch prices, and have access to launches of residential developments.
We also offer seminars and training courses, some of which are absolutely free, since we believe every South African has the right to know how they can create wealth through property.
We have three levels of Property Bargain Finder Investors Club memberships to ensure every South African can learn the basics of the Power of Property.
Our free membership includes a training course on basic Property Ownership principles, including how to buy the right property, how to beat the banks at their own game and how you can use your property to buy more property or start a business.
The Gold membership focuses on property investment and the Platinum package focuses on property development – from renovations to developing a townhouse complex.
This concept has been so successful that the AIDA property group has adopted our model to create their own AIDA Property Club, and Property Bargain Finder distributors have set up offices all over the country. www.aidapropertyclub.co.za
All you have to do is put aside an hour or two for us to show you how. Email vania@propertybargainfinder.com and take a step towards ensuring that you are not one of the 95% of South Africans that will retire without enough money to survive.
You can retire young and early and live the life you deserve!
vania@propertybargainfinder.com
Ideal Managers
Ideal Managers - www.treoc.com
By Coert Coetzee
Many of our members are business owners or hold senior positions at big companies. This week I would like to speak specifically to them, but property investors needn’t feel excluded, because as I always say at the seminar: a property portfolio is merely a business, and should be handled as such.
Until 1990 I worked for big corporate companies; marketing and risk management were the two departments in which I specialised. I held senior positions and frequently had to evaluate people for management positions in my departments. Through our risk management activities I was also involved in the management of hundreds of independent companies (our clients). Since 1990 I’ve been involved with my own companies, and because of my philosophy of working on my business rather than in my business, I have always been dependent on good managers. So over the years I have built up solid experience around what makes a good manager. During a presentation I did at one of Treoc Business Academy’s courses recently, someone asked me whether I could define a good manager.
It is very important that you appoint good managers, because this can mean the difference between success and failure. It’s the same as our property managers or letting agents: the wrong appointments cause a lot of problems.
Before I tell you the characteristics of a good manager, according to my experience, I’d first like to tell you what you shouldn’t do. The biggest mistake people make when they appoint a marketing manager, for example, is to make the best marketer the manager. I’m not saying that good marketers can’t be good managers as well, but don’t imagine that it is automatically going to be the case. In most cases it doesn’t work, and in the end you sit with bad management and bad sales.
In the same way, a good hairdresser does not automatically make a good salon manager, or a good bricklayer a good foreman. A good employee doesn’t automatically make a good business owner either. Most entrepreneurs or people who start their own businesses were good employees, and I think that’s one of the main reasons that as many as 80% of all new businesses are not successful. It also proves my point that good employees are not necessarily good managers, because that is why many new businesses fold: bad management!
I think we have a problematic subconscious belief that the best performer is obviously going to be the best candidate when we are looking for managers.
If the best performer is not necessarily the most suitable candidate, then who is? I look for the following characteristics:
Punctuality – someone who is late for work or an appointment is usually late with many other things too.
Honesty – everyone makes mistakes, but people who lie to cover up their mistakes lie about a lot of other things too.
Loyalty – people who are not loyal towards their partners, managers, employees, friends and clients are, without exception, not good managers. I have a saying: “My friends’ enemies are my enemies.” My experience has proven over and over through the years that anyone that does not support and live out the same principle will disappoint me at some time or another as a friend, partner or manager.
Self-motivated – employees that are self-motivated always impress me. Their output might not be the best, but they achieve it on their own. In contrast, the one with the best results might require my continual attention. You can see for yourself who manages and who is managed. Someone who has to be continually managed will certainly not be able to manage others.
Consistency – the dull guy in the corner’s output may not be the highest, but it is always good.
Organised – you can see this when you meet someone, or if you see his car or his office. Recently, upon a family member’s death, I visited the office of the executor of his estate. I had never seen that much chaos in an office in my life. And the service and product he provided looked like his office!
Outspoken – I like someone who can say their say (but I don’t like people with big mouths).
Humble – a good manager will always be humble without being obsequious, and will handle people with respect. Don’t confuse humility and respect with weakness. By the way, bullies never make good managers.
Calm – it always impresses me when people are able to handle crises with calmness.
Goal-orientated – I like people who know what they want and then work to achieve it.
As you can see, it’s quite a tall order and there’s no magic recipe for finding good managers. I have made a lot of mistakes in the past with appointments. I use psychometric testing before appointing a manager as well, and even that is not foolproof. Candidates sometimes hide character flaws so well that even psychologists cannot pick them up.
All that I would like to bring home with this article is that those with the best output do not necessarily make good managers, and that this is the most common mistake that is made when it comes to appointments.
The second most common mistake made by businesses with regard to appointments is that if they have made a mistake they can’t or don’t want to fix it. As soon as you see that it was a mistake, correct it. Do it immediately, do it according to legislation and do it with respect.
By Coert Coetzee
Many of our members are business owners or hold senior positions at big companies. This week I would like to speak specifically to them, but property investors needn’t feel excluded, because as I always say at the seminar: a property portfolio is merely a business, and should be handled as such.
Until 1990 I worked for big corporate companies; marketing and risk management were the two departments in which I specialised. I held senior positions and frequently had to evaluate people for management positions in my departments. Through our risk management activities I was also involved in the management of hundreds of independent companies (our clients). Since 1990 I’ve been involved with my own companies, and because of my philosophy of working on my business rather than in my business, I have always been dependent on good managers. So over the years I have built up solid experience around what makes a good manager. During a presentation I did at one of Treoc Business Academy’s courses recently, someone asked me whether I could define a good manager.
It is very important that you appoint good managers, because this can mean the difference between success and failure. It’s the same as our property managers or letting agents: the wrong appointments cause a lot of problems.
Before I tell you the characteristics of a good manager, according to my experience, I’d first like to tell you what you shouldn’t do. The biggest mistake people make when they appoint a marketing manager, for example, is to make the best marketer the manager. I’m not saying that good marketers can’t be good managers as well, but don’t imagine that it is automatically going to be the case. In most cases it doesn’t work, and in the end you sit with bad management and bad sales.
In the same way, a good hairdresser does not automatically make a good salon manager, or a good bricklayer a good foreman. A good employee doesn’t automatically make a good business owner either. Most entrepreneurs or people who start their own businesses were good employees, and I think that’s one of the main reasons that as many as 80% of all new businesses are not successful. It also proves my point that good employees are not necessarily good managers, because that is why many new businesses fold: bad management!
I think we have a problematic subconscious belief that the best performer is obviously going to be the best candidate when we are looking for managers.
If the best performer is not necessarily the most suitable candidate, then who is? I look for the following characteristics:
Punctuality – someone who is late for work or an appointment is usually late with many other things too.
Honesty – everyone makes mistakes, but people who lie to cover up their mistakes lie about a lot of other things too.
Loyalty – people who are not loyal towards their partners, managers, employees, friends and clients are, without exception, not good managers. I have a saying: “My friends’ enemies are my enemies.” My experience has proven over and over through the years that anyone that does not support and live out the same principle will disappoint me at some time or another as a friend, partner or manager.
Self-motivated – employees that are self-motivated always impress me. Their output might not be the best, but they achieve it on their own. In contrast, the one with the best results might require my continual attention. You can see for yourself who manages and who is managed. Someone who has to be continually managed will certainly not be able to manage others.
Consistency – the dull guy in the corner’s output may not be the highest, but it is always good.
Organised – you can see this when you meet someone, or if you see his car or his office. Recently, upon a family member’s death, I visited the office of the executor of his estate. I had never seen that much chaos in an office in my life. And the service and product he provided looked like his office!
Outspoken – I like someone who can say their say (but I don’t like people with big mouths).
Humble – a good manager will always be humble without being obsequious, and will handle people with respect. Don’t confuse humility and respect with weakness. By the way, bullies never make good managers.
Calm – it always impresses me when people are able to handle crises with calmness.
Goal-orientated – I like people who know what they want and then work to achieve it.
As you can see, it’s quite a tall order and there’s no magic recipe for finding good managers. I have made a lot of mistakes in the past with appointments. I use psychometric testing before appointing a manager as well, and even that is not foolproof. Candidates sometimes hide character flaws so well that even psychologists cannot pick them up.
All that I would like to bring home with this article is that those with the best output do not necessarily make good managers, and that this is the most common mistake that is made when it comes to appointments.
The second most common mistake made by businesses with regard to appointments is that if they have made a mistake they can’t or don’t want to fix it. As soon as you see that it was a mistake, correct it. Do it immediately, do it according to legislation and do it with respect.
Tuesday, September 9, 2008
Be pro-active: avoid foreclosure of your property
Industry Comment by Theuns Hanekom
Be pro-active: avoid foreclosure on your property
Many of you would agree that the property boom of the previous two or three years, have seen property prices soaring through the roof. It is not uncommon to find a 70 square metre flat or duplex costing R 750k or even much more in certain areas. Quite often you would hear current home owners say how fortunate they are to own their property already, as they might not be able to afford their current property if they had to buy it again today. How are first-time home buyers, especially young people, able to afford to enter the world of property ownership?
As a result of a cumulative five percentage points’ increase over the past 18 months and tighter credit criteria implemented by the banks, it has become increasingly more difficult to set foot in the property market. Gone are the days where first-time home buyers could include their costs in the loan amount, and a 100% home loan these days are almost unheard of. A person, who could have afforded a 100% home loan on a property purchased for R 950k two years ago, would now only qualify for a home loan of R 650k.
Current home owners should do therefore whatever they can, to stay in the property owners’ market in the face of a tough economic environment and an ever increasing cost of living. Although these are very difficult times for many property owners, they should keep a long-term view of their investment in mind. So, if it means that you should stop eating out, cut back spending on clothing and other luxuries and postponing your holiday plans for a year or so, you will be well rewarded if that means the difference between keeping or losing your house.
Unfortunately, due to many reasons such as the loss of your job, unexpected illness and subsequent medical bills, etc, it does happen that some home owners may no longer be in a position to pay their monthly bond installments. Should this ever happen, it is most important to make contact with your bank immediately and explain your situation to them. Do not wait until you have missed two or three payments. Rather be pro-active and contact them as soon as you realize that you are unable to pay your bond.
The banks would much rather attempt to help their clients and restructure a repayment plan before initiating foreclosure procedures. They may extend the terms of your loan, thereby reducing your monthly payment. If you have a short-term’s cash flow problem, the banks may assist you with a three-month “payment holiday”, or even decide on an “interest only” payment for a short period. Of course, these interim measures will increase your total debt over the long term, but at least you will be able to keep your house. It is also highly probable that you will sell the property prior to the expiration of the bond term and, hopefully, you would be able to absorb those additional costs through good capital growth. Another way of alleviating cash flow problems is to register a second bond over your property in order to consolidate all your other debt such as credit cards and vehicle finance.
However, as willing as the banks are to assist clients in distress, they will not be able to help all their clients. If you approach the bank because you cannot make your monthly bond payment but you still have your DSTV subscription, the banks have to wonder if the client is really serious about wanting to survive financially. The banks will look at assisting clients where it is likely that they would be able to meet their normal installments in the medium term going forward. If it seems unlikely that the client would be unable to meet his obligations over the long term, it might be in the clien’ts interest to try and dispose of the property as soon as possible in order to avoid foreclosure proceedings.
Be pro-active: avoid foreclosure on your property
Many of you would agree that the property boom of the previous two or three years, have seen property prices soaring through the roof. It is not uncommon to find a 70 square metre flat or duplex costing R 750k or even much more in certain areas. Quite often you would hear current home owners say how fortunate they are to own their property already, as they might not be able to afford their current property if they had to buy it again today. How are first-time home buyers, especially young people, able to afford to enter the world of property ownership?
As a result of a cumulative five percentage points’ increase over the past 18 months and tighter credit criteria implemented by the banks, it has become increasingly more difficult to set foot in the property market. Gone are the days where first-time home buyers could include their costs in the loan amount, and a 100% home loan these days are almost unheard of. A person, who could have afforded a 100% home loan on a property purchased for R 950k two years ago, would now only qualify for a home loan of R 650k.
Current home owners should do therefore whatever they can, to stay in the property owners’ market in the face of a tough economic environment and an ever increasing cost of living. Although these are very difficult times for many property owners, they should keep a long-term view of their investment in mind. So, if it means that you should stop eating out, cut back spending on clothing and other luxuries and postponing your holiday plans for a year or so, you will be well rewarded if that means the difference between keeping or losing your house.
Unfortunately, due to many reasons such as the loss of your job, unexpected illness and subsequent medical bills, etc, it does happen that some home owners may no longer be in a position to pay their monthly bond installments. Should this ever happen, it is most important to make contact with your bank immediately and explain your situation to them. Do not wait until you have missed two or three payments. Rather be pro-active and contact them as soon as you realize that you are unable to pay your bond.
The banks would much rather attempt to help their clients and restructure a repayment plan before initiating foreclosure procedures. They may extend the terms of your loan, thereby reducing your monthly payment. If you have a short-term’s cash flow problem, the banks may assist you with a three-month “payment holiday”, or even decide on an “interest only” payment for a short period. Of course, these interim measures will increase your total debt over the long term, but at least you will be able to keep your house. It is also highly probable that you will sell the property prior to the expiration of the bond term and, hopefully, you would be able to absorb those additional costs through good capital growth. Another way of alleviating cash flow problems is to register a second bond over your property in order to consolidate all your other debt such as credit cards and vehicle finance.
However, as willing as the banks are to assist clients in distress, they will not be able to help all their clients. If you approach the bank because you cannot make your monthly bond payment but you still have your DSTV subscription, the banks have to wonder if the client is really serious about wanting to survive financially. The banks will look at assisting clients where it is likely that they would be able to meet their normal installments in the medium term going forward. If it seems unlikely that the client would be unable to meet his obligations over the long term, it might be in the clien’ts interest to try and dispose of the property as soon as possible in order to avoid foreclosure proceedings.
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