MY R400 000 PROPERTY STRATEGY | SOUTH AFRICA
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- Опубликовано: 23 июл 2024
- MY R400 000 PROPERTY STRATEGY | SOUTH AFRICA
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DISCLAIMER: I`m not a financial advisor and hence the content of these videos are for educational and entertainment purposes only. Investing is a risk related practice and should be approached carefully.
If I could start over, this is what I would do.
Hi Loui. How do i join the membership?
You can click on any of my videos. Underneath the video, there will be a "join" option that will show all the different membership options.
Thanks for watching 💪🏻
Thanks Brother 😎👊🏻
What if you have R300000 cash on hand. Is it better to buy once off? I buy and sell bicycles and technology for 4 years but i want to buy my first property soon. Would like to know your opinion if its good to rather pay half of the house and take only half bond or buy a house straight off?
My friend said that if you buy your first ever house then you can get a discount from the government. Is that true?
Ive been looking for a video like this for ages!! Thanks
I'm glad you found it ! Thanks for watching 💪🏻
When you do renovations you should also include the time spent renovating. You won’t get rental income during that period. This is assuming that you will find a tenant immediately.
Overall great videos!! Very informative. Thank you for taking the time to make them. It’s great getting this kind of info from an SA perspective.
Great suggestion, Coenie. I will add it in the next video💪🏻
In these cases, I had only 1 month vacant and scheduled the payment to go off the month after.
Great video, this is exactly what I was planning on doing. Let me follow your channel 🙂
Glad it helps. Thanks for watching and welcome to the channel 🙌🏻 💪🏻 😀
Hi Louis
This is a really excellent video and this was very informative. Thank you very much
Thanks so much for the positive feedback. Really appreciate it. Thanks for watching. 💪🏻😁
very insightful, glad I found your channel.
Welcome to the channel 🙌🏻 💪🏻 😀
Great video. Louis, could you make a video on renovation costs, how much should you put into fixing up a fixer upper?
Thanks alot man, you can watch this video , sure, it will answer some of your questions. If not, I'll look into making a new video ruclips.net/video/3J49fyoel64/видео.htmlsi=kmhyQ5hoFe705zgq
Thanks for the video it definitely helps me out...Dankie 🙏🏽
Thanks for watching. I'm glad it helps 💪🏻
Check out my real estate playlist if you want to learn more.
@@louisreynhardt I've already been through your playlist the info is priceless...Thats why I send you a email about a possible Live speaking event in Bloem. If you might be interested.
Thanks so much for sharing this information.
Thanks for watching. Glad it can help 💪🏻
Great video!😁 This really got me inspired. Please let me know how I can get a copy of that spreadsheet you made please 🙏
Pleasure my friend. You can pop me an email at louisreynhardt@gmail.com 👊🏻 💪🏻
It would be great if you can do a bit more detailed version which takes into account Repairs & Maintenance and Management costs (admin costs of dealing with tenants)
Thanks for the suggestion. I will definitely consider making a similar more in detail video. Thanks for watching 💪🏻
Indeed, at the low end of 400k properties your tenants will typically give you hell. Expect high vacancy rates as well. Property insurance also seems to be missing.
Thanks for your comment. Property insurance forms part of your levies. I've had fewer issues with my lower income tenants than with some higher end properties. It's also vital to Vet your tenant and to make sure you minimize your risk. It's all about using the right skill and knowledge to make properties like this work. Altogether, it is definitely not risk-free. But at the end of the day, you are at least making money and have a large equity position. 👍👊🏻😎
@@louisreynhardt How is property insurance and levies synonymous or one included in the other? Levies are usually paid to a board or estate association for upkeep and maintenance. Whereas property insurance is to cover your property personally. Geyser explodes, plumbing leaks, storm damage, etc,. Or am I misunderstanding?
Great questions.
Full title properties you will have to insure you're outside buidling because you are the owner. This is like houses with no levies.
Secrional titles have common areas which are insured with your levies. This covers the outside like the roof, etc. Some levies cover geysers but not all, so you have to make sure about this.
Simply put with sectional titles, all the common areas are covered with the insurance. ( the outside parts )
Inside plumbing electrical, etc, will be the owners responsibility
Invaluable information. Thank you so much.
Thanks for watching and for your positive feedback 😀 🙏
New sub here, this is the content I signed up for
Welcome my friend. Thanks for watching hope you find alot of content to learn from here.
This is FANTASTIC info ! As a Principle of an estate agency in Cape Town if I may add a further tip.
1.) Properties with good ROI sell FAST. In order to get them faster and beat cash buyers get prequalified with a bond originator (It is free to do this)!
2.) If no properties are under R300k, sort the properties oldest to newest and search up to R400k on p24. If a property has been on the market for a long time there is a higher possibility the seller is closer to his/her "gatvol" point. Meaning they just want the property off their hands. This is also where great opportunity can come ! You can submit a realistic asking or even slightly bellow and if you followed step 1 then you have a higher chance of the seller accepting.
3.) Once you prequalified make friends with as many agents as possible and tell them you prequalified. If an agent can sell a property with out listing it they will (Less work to be done for them). You will make their job easy and they love that.
@RoomMush, great insight.👌
Thank you for taking the time to add your experience.
Definitely agree with you on all points.
Even in Cape Town you can still get great deals - most people would assume otherwise because, well...its Cape Town.
Thank you for sharing. I hope that this comment will get the attention it deserves. Hopefully, everyone watching this video will read the comments. Thanks again for watching and supporting the channel. 💪🏻
I was surprised when you said you're from cape town. Watching this video, I immediately started to wonder if this is realistic in cpt. What type of areas do you look at? The places I've seen and thought were good deals are around R800-900k, but I only looked at areas that I knew, which definitely biased my findings.
Also, thanks for your insightful comment!
@@skillpoints, It is ALOT harder to find properties like this in CPT. However I am finding (this is just personal opinion) that if you looking for this kind of investment the best area for this is in Wynberg. You will not really find any for below R300k but you will find as close to with an average rental income of R4500 - R5000. Levies and R&T's average R1300 -R1500.
There is one block in particular that has good financials and is well run. Pre paid water and elec. Grand Central Apartments.
You can find cheaper than these in other areas however those areas start to become dangerous with regards to risk and physical safety.
I hope this helps ! ALWAYS get a second opinion before investing :) !
@@RoomMush Thanks for the detailed response. It's nice getting the opinion of someone else from the same area.
Don't worry, I think you should take anyone's opinion on the internet with a grain ( or 5 ) of salt. At least now I have an extra area to check out on p24 !
Great content thanks. I wish i had done this first instead of buying a property to live in.
As long as you can learn, that's great. You have to live somewhere, so if your current residence is not too expensive or above your pay grade, you can still take steps to grow your portfolio 😉
@@louisreynhardt very true... need to out myself in this position again. I have some ideas of areas to target hopefully i be able to use the equity to rollover on other properties
the only issue im picking up with the video is the prime interest rate used to calculate your bond. Realistically a newcomer to investing will be charged prime plus. This means the return will be lower than 30%, but still a good strategy. Great video. thanks
Thanks for watching and for sharing your thoughts. In fact, when you buy a property in the right entity while having a good credit score, most of the time, you will get a prime - rate which in fact, will increase your return. This is just part of having the right knowledge. Hope this motivates you. Thanks for watching 👊🏻 😎
Great video thanks ,how do we gain access to your property evaluator spreadsheet
Thanks alot man, you can join the channel membership. Click on any video and underneath, you will see a join tab. You can pop me an email at louisreynhardt@gmail.com once you joined. Another benefit will be to get additional discounts on new products and courses.
Thanks for watching
Bro you drop absolute game changing insight you awesome bro keep up the great content and info cheers
Thanks a lot my friend. Appreciate the feedback 😎💪🏻💪🏻
Great great video. Are you doing the vetting process for possible tenants?
Thank you very much. Yes, that's correct. When I started, I used an agency so I could learn the necessary skills first
love the content, very informative.
Thank you very much. Thanks for watching 💪🏻
I have a serious difficulty understanding this stuff, but I'll keep watching and hope I come to understand all of this information because I'm renting right now and I do think I'm wasting my money
Just keep consuming knowledge my friend. Learn, learn and learn. Watch every video you can find and bevome obsessed about the topic. Feel free to reach out at louisreynhardt@gmail.com if you need extra guidance or one on ones 💪🏻
Mlungu ❤my man thank you for not gate keeping 🤝
👊🏻😎
Hi Louis, how could I get my hand on the speed sheet! Thanks so much!
Pleasure brother, You can pop me an email at louisreynhardt@gmail.com 👊🏻 💪🏻
Big thank u for this info
Pleasure my friend, thanks for watching 💪🏻
Hey Louis, great video. I am a principal based in KZN but I also create property education videos. Can I have permission to utilise some of your videos as clips in a video I am creating and then give your credit and tag your channel as well? All positive things I see from this video and the exact same stance I have on investing as well as tell my clients.
Hi Dwijii,
Thanķ you for reaching out and for also trying to educate people about property.
You are more than welcome to use the content. As long as you tag the channel and give credit in your video, I dont mind at all.
Thanks again for watching
Love your tattoos!!
Thanks a lot my friend 👊🏻😎
Quick one. How do you know/calculate what you could rent a property out for?
It takes some experience as well as market research. It helps to compare comparable rent to what you think you can ask. Go to property 24 and search for similar properties and see what they rent for. It also helps knowing a good rental agent that knows the trends.
Quality of these videos are lovely
Thanks so much, I put a lot of work into them. Thanks for watching 💪🏻 👀
This is amazing 👏. Great stuff
Thanks for watching my friend 💪🏻
My 2c....
1. Don't buy if you can't pay it off in 10-12y. Especially in SA ........
8k pm x 12months X 10y =R 960k
12y = R1,1 52,000.
1.1 Owning property = owning the problems, this drains more cashflow....
1.2 Rent 2 properties and re-rebt them out... This lowers risk , capital etc.
2. Get 1 bedroom extra for Airbnb or have a seperate section on the property where you can build and rent out something nice.
Thanks for your input. Love hearing different opinions, and you make some great points. Thanks so much for sharing. This will be valuable to a lot of people 💪🏻
Is it advisable to buy the property cash lets say it cost 400k is it a good invesment to pay cash all
Man you are always dropping Gems...in the previous video you introduced me to FLISP, so my question is can I apply for Flisp even if I would like to buy property through a trust/company like you say?
Thanks a lot my friend. Im glad that you can come to the channel and learn new things.
As far as I know you won't be able to qualify for a flisp loan in a separate entity it needs to be in your own name
@@louisreynhardt No thank you for the Nuggets of wisdom.
Baie dankie.
Die is awesome info!
Dankie Hendrik , waardeer dit 💪🏻🚀
Don't buy anything right now,,, prices are going to drop like stone,, in America they can't sell cars and homes,, I am a diamond miner,, the diamond price drop 60% hope I have a job next year
Prices might only drop next year. The right property at the right price is what you are looking for. Just remember that property is a long-term game, and there will always be short-term price fluctuations. Thanks for watching 💪🏻
I’ve been following the property market in KZN for over 2 years now. The property market is heavily propped up.
Sooner or later the bubble will pop.
Lots that struggled to get sold went for 1.2m ... when the banks were still giving loans.
Now it’s priced at 2m ..after all the interest rate tightening. 🧐
Farm price on the north coast was 55mil , then jumped to 65mil, now it’s 125mil 🤔 but no buyers ??? Why do they do that?
How can I contact you. I am also passionate about Diamond mining.
Or at least please recommend me books I could read about diamond mining
Its because debeers sold industrial diamonds mixed with high grade diamonds and then the seller found out thats why the prices dropped
Does anyone have telegram I’m from America and I’m trying to get an apartment in South Africa
What criteria do you consider when looking for places? What areas (locations) do you consider? Is a coastal vacation rental more profitable than student lodging? Do you lease out management of such properties or do you consider their proximity to yourself?
I focus on areas that I know And that I can drive to and back in one day if that makes sense. I use an agent for my student accommodation strategies and manage multi lets myself. The best way to describe my criteria is to make sure you really know your market and the locations well. Focus on the areas that you know will work. It takes a lot of market research, though, and it's difficult to explain everything in a short reply.
Am enjoying your videos. Pls let me learn from you. How do i get hold of your spreadsheet. Looks amazing
Thanks a lot my friend. You can join as a member to get access to all the tools and info. 💪🏻
You mean as a subscriber or is there another way. Am ready
Click on any 9f my videos. Underneath, you will see a "join" option . 😀
I do property sourcing and student accommodation management and R400 000 can really be achieved looking in the right areas. Also sourced a property for a client for R650 000 with renovations of R30 000 and the monthly turnover on it now is R36 000 with a bond repayment of R5100 (owner put R200 000 in cash)
1000% Its all about having the right knowledge. I rent single beds for students at R3760 per student so its definitely possible. Thanks for sharing and confirming that works in more than one area. Thanks for watching 💪🏻💪🏻
What about the tax (income less finance portion of the loan and other deductable exoenses) that you need to pay on your rental income? This is not included in the calc?
Great point, so I dont add them for the simplicity of the video. It's targeted at beginners. The main reason I dont include tax, vacancies, or repairs is because it's not an actual monthly expense and more of a reserve fund calculations. Also, taxes will be different for everyone depending on the entity and ofcourse how smart your accountant is.
Hi Louis,
hope you are well everything look accurate but why would people rent a bed for 3000 if their is they can rent another flat for the same price ?
Thanks for the video
Thanks so much for watching.
Great question. It all depends on the location and the quality of the property. You can rent a runned down one bedroom for R3k but a lot of people are renting the same amount that has a better quality feel and includes, for example, wifi and water.
Students usually rent for around R3760 per bed.
You will have to confirm whether it is liable in your specific area but it should work. In JHB, you might only be able to charge R2500 per bed, but your property might be cheaper
The prices of houses in the Western Cape is ridiculous. I can't speak on any other province. It honestly feels like you will never be able to buy a house even on a good salary 🤦
Its absolutely insane how expensive it is in the WC overall. 😅
Am a college student finishing this year 2024, I am studying 📖 civil engineering and am very interested in property, you video has just helped me understand more on how this will go,I still have a lot to learn though 😂
Well done for taking the time to educate yourself. Enjoy the process and never stop learning. Knowledge is power my friend.
Hi Louis, do you include risk into your equation? What if there is another lockdown and they cannot pay rent etc? Tenants do not always pay, especially in SA. I chat with people in the property industry often.
Keen to hear your thoughts
Hi Francois,
Thanks for watching and for asking a great question. So, "risk" can not be added as a monthly expense. One thing you can include is "vacancy." In this example, you can include, for example, a 16% vacancy, which is around 8 weeks or 2 months. The video was used as an example, and I will be making a more in-depth version in the near future.
What I do to minimise risk is to have a healthy reserve fund for " each" property I own. I work on 10% reserves for the value of the property. I.e if the property is bought for R320 000 I will have atleast R32 000 for that property.
Covid was crazy but something like this is very unlikely to happen again in the near future. (Vetting a tenant properly will also minimize non payments)
Just remember, investing and growing your net worth will always have risk involved, but with calculated risk comes reward. Do not ,not invest because of what might not even happen.
Thanks for watching. I hope my reply answers your question 🙏🏻
Dankie Louis, waardeer jou tyd en die terug kom na my. Ek hou ook van jou benadering
Great video!💯
Thanks a lot my friend 👊🏻😎
Good day sir. How can i get your excel spreadsheet?
You can pop me an email at louisreynhardt@gmail.com 💪🏻
What abouth home owners insurance?
Hello Louis do you have to pay for the transfer of deeds out of your pocket? Or the loan will cover that? Also is the transfer cost a separate amount Or is it included in the listed price of the property?
No unfortunately its not part of the sale price. So you will have to account for the transfer and registration amount, which will have to be paid upfront to complete the transaction.
Hi Louis,
Abdul here, I'm wondering if you manage the offer-purchase process yourself and the management of renting out, finding tenants, or do you have trusted proxies to manage those for you
Great question,
When I started, I used an agency to handle all of the above mentioned task. Now I manage some of my properties, and an agency handles the rest. It's better to learn from a agenecy before doing it yourself. Hope it helps.
You could have gotten R100k+ off on your property! Please make a video on FLISP!
The government is actually helping build SA with this!
Not enough people know about it and it would have been great to include in a video like this. Many South Africans qualify, buy a house and never knew they could have gotten up to R121 626.00 from the government to help pay for their first property.
(Edit: unless you already made a video. In that case please ignore 😂)
Thanks for sharing Coenie, you are 100% , Flisp is a great way to help first time buyers. Unfortunately you can not qualify for it when buying in a separate entity. You have to make the purchase in your own name. It's still a great initiative, and I regularly mention it to lower income earners. Thanks for sharing and for watching the video 😁💪🏻
Louis, I have to agree with you 100% on this. This is the most profitable property segment, both in terms of rental income and long-term capital appreciation.
Many beginners will do well by following your tips rather than going for the latest development or the nicest townhouse.
Thanks a lot man. I love this type of property, and the best part is that you can copy paste this strategy and it will always work.
Thanks for watching 💪🏻
Also the biggest pain in the rear segment. Tenants that can only afford 3k a months are usually going to make your life very difficult.
Works on paper...but in real life, finding tenants is a challenge. You gotta be ready to pay the bond and all other expenses for some time on your own.
@@mariaqumayo9442 100%
@mariaqumayo9442 Thanks for sharing. You are right. You should have reserves to cover your expenses should something happen. But finding a tenant is not difficult at all, especially if you have a quality property. Check out my latest video where I talk about this. Thanks 💪🏻 😊
Do you have a link to your Excel Template?
You can just pop me an email at louisreynhardt@gmail.com 👊🏻
This is what many investors did, but instead they looked for property that allowed Airbnb or short term rentals and they over saturated the Airbnb and short term rental market.. They made millions and now the market is destroyed in most areas.. renting has become the best option again at the moment, unless listings start dropping. Great example of a perfect rental unit. Students are the best especially since most get paid by government or other agencies, so you won't have to worry about getting paid.
Thanks for sharing your thoughts. Students can be a lucrative investment when done correctly. Unfortunately, short-term rentals have caused issues in a lot of areas.
Renting can certainly be much cheaper in the short term
Thank you so much
Pleasure my friend 🙌🏻😎
Hi Louis on your excel sheet I see commission and vacancy, please advise what those two costs are for although its zero on your sheet.
Thanks for your comment. Great question. Commission is simoly yhe percentage of fee you oay a rentak agent to manage a propetty on your behalf.
Vacancy is a no monthly fee you use to calculate your return if your property is, for example, only tenanted for 11 months out of a year.
@@louisreynhardt thanks for the response. How much is the commission on average to pay a rental agency?
As always you need money to make money. Tax and transfer fees and lawyers fees when buying a house is also a factor.
Thanks for your comment. Yes, you are right. That forms part of your "investment costs"
Everyone needs savings before investing.That's something you need to sort out before investing. You have to understand basic financial literacy first.
Hi Louis
Great video.🔥
I love the angle of focusing on the more affordable market.
Its great in terms of ROI compared to other loss making properties in the higher income brackets and whats also great is that as you mention this is achievable for many South African citizens. Its realistic👏
Keep up the great content Louis.
Appreciate it 🎉
Timm and Justin
Thanks T & J
I agree, this is a very realistic approach to starting out. Although it's not the only strategy out there, it's definitely one that is doable. Plus, this can be combined with other strategies later on.
Thanks for watching 💪🏻
Have you had issues with tenants not paying rent or moving out? My fear in getting into property is that it feels like the laws are set against the property owner and more for the tenant. I've heard some horror stories about not getting tenants not paying rent evicted.
Great question. The longer you are involved in property, the higher your chances are of dealing with these issues. I have been lucky enough to be able to difuse these situations. What I can say is that the most important part is to vet a tenant. The data has proven that a certain type of person with a certain type of credit rating is people who usually don't pay on time and refuse to move out. So, your main concern should be to avoid this from the start by understanding the vetting process.
I had two rental properties and I didn't want the stress of tenants and used a local agent. They scan the tenants and do background checks and credit history to see affordability and have legal leases for them to sign. Most people take advantage of an individual than they do to agent but it comes with a fee taken from a rent. But just weigh what's works best for you
Amen 🙏🏽
I'm the northern cape, Kathu where I'm from you'll pay approximately R12000-R15000 rent for a place like the R300000 one and you'll buy a 2 bedroom one bathroom house for over a million, the prices are extremely high
Thanks for sharing. Do you mean you can get rent of around R12k-R15k for a one bedroom in that area ?
@@louisreynhardt yes, that's what most of the houses go for monthly
@@louisreynhardt if you check on property 24, Kathu, Northern Cape, you'll see for yourself
Just a question how do motivate for lower amount then the purchase price on a property, do you just give your offer or do you need to motivate?
Great question.
You can motivate and explain your offer, but I have made low offers that were accepted without any questions.
Make an offer. They can only say yes or no. It always help to motivate your offer, but If its a motivated seller or distressed seller, they might just say yes
thanks @@louisreynhardt that is some solid advice, looking to purchase a 2nd property early next year saving up the requirements needed and doing my homework first will shout if I need more advice but you have earned yourself a subscriber! :)
@M.C.K.D Thanks, my friend. Welcome to the channel. Good luck with buying your second property. Just remember, knowledge is power, so keep learning and research as much as you can 👊🏻
Louise ,,where do you get properties for that amount, in Cape Town,,,for i have some money to invest but the property prices is so much now, and high ,, thanks,,,
CT is such a different market. Unfortunately, the lower end properties are very limited, especially in nice arreas. This example was in Bloemfontein 💪🏻
insurance? what if they break stuff
I dont pay for items/ house insurance
Only buidling/structural insurance
You can't buy a kak huis for R900 000 in Cape Town
🤣🤣🤣🤣
Love your channel 🏆
Thanks for the support my friend 🙏🏻🙏🏻
I appreciate some really good content ❤
Appreciate your comment. Thanks for the positive feedback 😀
Your margins are razor thin. Any move in interest rates will wipe out your margin. Also any defaults on rentals will wipe out that margin. Now assuming you have 20 such properties, rates go up and suddenly you underwater big time and you are on the hook for those bond payments.
The risk reward here is questionable especially given tenant rights in SA.
Lastly, if you need to liquidate a property it’s a super slow process in SA so that’s another factor.
In my view, investing your money in equities is lower risk ( depending on the equities you buy), liquid, and just less hassle (no tenants, dealing with maintenance issues, etc).
Thanks for your comment. You are 100% right, and there's always risk involved with investing in property. I see it as calculated risk.
Make sure you have a reserve fund for interest rate hikes, vacancies, and repairs.
Make sure you vet your tenant properly to avoid any unnecessary vacancies or non payments.
I personally love equities, and a large portion of my portfolio is in stocks. But the difference here is that you can't use leverage. You can only buy what you can afford. It's sounds like you don’t own property yourself? And remember, stocks also have large risk that, in fact, you can't really control. Again, this forms part of calculated risk.
Property is a long-term wealth building tool, and even though every few years your cash flow margins might not be high, you are still creating wealth with leverage.(IRR) Listen, property is not for everyone. If you dont understand it, dont invest in it. Stick to what you understand. The content created here is to inspire South Africans and to show them that building wealth is possible for most.
Thanks for watching
@@louisreynhardt I don’t disagree with you. Just suggest you highlight the risks also otherwise people think it’s really simple.
I owned a property portfolio 20 years ago across three continents. About 10 properties. I made money but it was tedious. And you right about leverage. That’s the biggest benefit but also where the risk lies since we have now learned a few times that property prices don’t alway just go up and rates don’t stay the same.
I liquidated my property portfolio in 2010 and now exclusively invest in liquid markets. By the way, although you are mostly correct re leverage and equities this is not strictly accurate. I for example am able to invest up to 3:1 using margin. But yes property is 8 or 9:1 often.
@Zion66666 Unfortunately, I can't cover everything in one 9-minute video, but luckily, I have a lot of videos where I cover the risk and stuff to look out for.
Property works for some but not for all. But it's definitely something that most can do. Building a million rand stock portfolio is much more complicated than building a property portfolio. But yes, leverage is a doubled edged sword. It can either help you create generational wealth or cost you your life savings. It's all about risk vs. reward.
Personally, I do not invest with margin because the stock market is definitely way more unpredictable than the interest hikes and risk that can ocur with property. I do, however, feel that both these assets classes need to be part of a portfolio. But again, stick with what you know and works for you.
I hope that someone will read our short conversation so that they can be aware of the risk and also consider your opinion. Im sure that it will be valuable to people. Thanks again for taking the time and sharing your insights and knowledge with us 💪🏻
@@louisreynhardt yeah. Thanks for responding. I think we are on the same page more or less. Agree with a balanced portfolio. Keep making your content. It’s value adding.
@@Zion66666advise on best liquid investments please ?
Thank you for this informative video, would you advise someone to purchase this kind of property in cash?
Thank you in advance.
Check out this video.
ruclips.net/video/9C1gCpzQnTI/видео.html
I talk about exactly this. Comment on that video if you have any new questions.
Thanks for watching
Consider:
Rule of thumb 1% of property value on maintenance p.a. (probably more if rented)
any period where there is no tenant will really hurt your ROI
30 year mortgage - long exposure to interest fluctuations
Plans seem to be based on quite an optimistic income - any market downturn would probably reduce this
Do you really want to be dealing directly with tenant? If not, you will greatly reduce your ROI again.
Calculate this investment against an index fund; much higher passivity on that investment type, and realistically, you'll probably see similar returns
Excellent point, you are 100% correct and it's very important to consider opportunity cost. Index funds can keep you wealthy, but it won't make you rich overnight. If you can, for example, only afford to put away R100 000 a year, it is going to take you a while to build significant wealth.
I think one thing that you are missing, which is a vital factor in property, is leverage. You will maybe outperform the property ROI, but you will have to use your own money. So if you calculate the cash on cash return from an index fund vs. a leveraged property portfolio, it will always outperform it when you buy the right types of property. Never mind appreciation and capital pay down...
But it also just forms part of a well structured portfolio . Etfs play an important role as well as stocks and high yield savings.
Good points!@@louisreynhardt
Thanks man, if you wanted to, you can check out some of my stock market videos. There's a separate playlist 🚀
This is listed as a 1 bed, did you use the lounge as a second bedroom?
It's actually a bachelors, so it's 2 beds in one open area. 💪🏻
Why do you not include the final value of the property as in that it wont actually cost 400k due to interest etc. Thank you
Because I dont pay the interest. My tenants does. That why leverage is so powerful
Can other southern African foreigners buy property in South Africa?
You should be able to. I would recommend consulting with someone who has done it to confirm what the process will look like. Where there is a will, there is a way 💪🏻💪🏻
When renting out the property, do you make use of a rental management company or directly by yourself? I have heard some horror stories of squatters staying in a property for a long time and breaking stuff before they leave, leaving you with a massive repair bill and lost income
I manage some properties myself and with others I use agents. I have learned the fundamentals, and Im comfortable with managing these risks. But I started with agents and learned as much as I could from them.
There will always be risks involved with property rentals, but the best way is to be pro active, meaning vetting your tenant properly, and placing the right tenant is very important.
Rental agent will take 10% from your income but your still liable for maintenance costs, if you stay close to your rental property I suggest you try to manage it yourself, overtime your will learn how to deal with difficult situations like bad tenants, and because you have 1st hand experience in dealing with these issues you'll be in a better position when you expand your portfolio
Excellent insight. Thanks so much for contributing to the channel 🙌🏻 💪🏻
How do you negotiate a 20% discount on a property?
I look for motivated or distressed sellers. Meaning its someone who is desperate to sell. It's not really a matter of motivating a seller to accept an offer. It's rather a matter of finding a motivated seller 👊🏻
would love to learn
Check out my real estate playlist if you want to learn more about property 💪🏻
Is it advisable to pay it off cash completely
Yes it can be, if you habe other cash available. As long as you dont uise all your cash. Always always habe reserves no magger what
HI Louis how do I get the excel sheet ?
You can join the cheapest level to get access to the documents 💪🏻its like R20 to join
If you have already joined, you can email me at louisreynhardt@gmail.com
Thank you bro, really appreciate this. If I want to continue buy more flats like this....i heard that I should 1. Buy the flat under a company 2. If I have the capital eg 300k, i should buy more that one flat and put down deposits. what do you think?
Yes buying under a business that is then linked to a trust is a good way, in fact you can even create many different businesses and attach different properties to them. It minimizes risk should you get into a situation where you can no longer conver the bond on one property then the other properties won't be used as collateral.
Thanks for sharing your insight and giving some great advice. Knowledge is power 💪🏻💪🏻
Yes thats one way of doing it. Set up a separate entity or entities and use leverage to buy 3 or 4 properties with finance instead of buying 1 property with cash. Your property portfolio will be much larger than it would have been if you bought cash. But again, it all depends on each persons situation💪🏻
On a 400k property.... And you have a deposit of 150k but you have a bad credit score will the bank help you
Depends on your salary and whether you have a dissposable income. Reach out to a bond originator and get pre approved. That should give you a good indication
You are awesome!!!!
Thanks for watching 😁 💪🏻
Hi Louis great video. i’m 41 years old,is it too late to start in investing in property like these?
Yes, definitely, you can still take out 20 year home loans if you have good credit and a stable income. It would be a good idea to consult with someone or book a session to see what would work for you, but broadly speaking, it should work well.
You can always reach out to me at louisreynhardt@gmail.com
My intention is to sell the properties i currently have registered under my name. Then set up an entity, wich is where my question is, is a trust the most better entity to register under? Can it be run as a business that can have tax benefits?
@nhlanhla this was such a good video right!
From one investor to another, here are my thoughts:
If you want to, you can get an attorney to transfer the property directly into a company or trust and as far as I know, you don't necessarily need to sell the property to someone else and then start again.
But as far as I know, you would need to pay transfer fees because the attorney has to transfer the property into a new entity (its like a sale but to your company / trust)
And if you have a bond on the current property, your bank would need to be happy for the new "bond" to be registered in the company or trust. You would probably need to stand surety for the bond because the new trust / company would yet be income generating.
There are quite a lot of costs involved in this process either way:
-Bond cancellation fees
-New Bond Initiation Fee
-Transfer and Bond attorney costs
-If you sell the property to someone else and start fresh, you'll also have estate agency costs to pay. You could save this fee if you just transferred/ sold the property to your company / trust.
If you intend to buy more Properties in the future, you could always keep existing properties in your own name if it's only 1 or 2, and then any new properties could be bought in a trust or company.
Because there are significant tax benefits to also having a loss making property in your own name, if you're earning a salary. (You get tax refunds)
If you are considering protecting your wealth for future generations (family), than a trust is optimal because it allows you many tax planning advantages. Like really!
But if you're buying property with a business partner, then a company would make more sense because they're not family.
All the best Nhlanhla 😉
@@moneyreimagined thank you so much for taking your time to give the insightful information. It won't help me alone but many. I think I will keep them for the next 5 years or so, because I am running on a loss and have been benefiting from returns. And their values are increasing well enough when the time comes I'll decide to either sell them to a buyer (without agents) or transfer them to a property trust i would have established by then.
Thank you so much and all the best to you too Sir.
@nhlanhla_magz928 it's a pleasure Bud 😉
Goodluck with your Investing endeavours.
Keep asking these great questions and learning. It's the best thing we all can do to improve our wealth 🔥😀
Your main concern should be why you need to sell the properties. Although there are solutions to moving your properties to the right entity's the question is, is it a good and viable idea?
If the properties are not producing income or you dont have access to equity, it is basically a liability.
A good place to start is to compare the cost that you will incure to complete the transfers vs. the cost or the benefit of just leaving it in your own name.
Goodluck my friend 💪🏻
Thank you for sharing this with us. Im 100% convinced that it will benefit a lot of people 🚀
Can you send me the spreadsheet please.
Hi Mary,
Thank you for subscribing to the channel. The Excel sheets are available to members only. You can click on any video and select the join option. It's included in the cheapest membership level. 💪🏻🚀
Hi!! PLs send me a copy of the spreadsheet that you use
Sure, you can pop me an email at louisreynhardt@gmail.com 👊🏻
Bro I've sent you my email as I've requested but you haven't sent the spreadsheet yet??
I haven't received your email. It doesn't hurt to ask in a more polite way.
Apolgies, for sounding rude❤. I've emailed you just now
most of these cheap properties are in bad areas or are run down and need a lot of maintenance also trying to get a 20 percent discount is a big ask . . there is also alot of costs he is not including , ten percent of the purchase price is bond cost and transfer fees. then there is the rates and taxes and water costs levies for most of these , sectional properties takes a big cut of rental income .
Define a bad property? In jhb/pretoria / Kzn and Bfn, there are great properties for sale in CBD areas. Pretty properties are not always a good property in this video the monthly expenses you mentioned is included, and it can still cash flow. Just remember it's used as an example. Knowledge is power my brother. Sectional title properties are great for first time investor when investing in the right deal and when the numbers make sense. Thanks for sharing your thoughts and for watching the video 💪🏻
I like the video and the info you're providing, but you're not including ALL the possible expenses.
Example, what about the vacancy rate?
Are you taking into account that there might be a time period where the property will be left open while you're searching for tenants.
Also, 30% ROI - is that really something that is viable? Does that fall in line with what you need to become financially free? I've seen properties give an ROI of over 90% already.
Thanks a lot for your comment. Im glad that you like the video. You are asking all the right questions so well done.
The video was just an example. Although there are other expenses like vacancies and repairs. They are not actual monthly expense and should be treated as reserve or emergency funds. In some of my other videos, I talk about having a 10% cash reserves of the property's value. In this example, you should have at least R32 000 in reserves.
If I can repeat a 30% ROI year over year, I am quite happy. If you can get 90% ROI deals, that's great, then you should focus on that. Unfortunately, not every little detail can be covered in these videos, but it stands as a base for beginners who are learning. Hope this makes sense. Thanks for supporting the channel 🙌🏻
@@louisreynhardt 100%! I love that you know what I am talking about! 😅 A lot of people would be ignorant to learning more about property investments, and this is a great way to demonstrate how it works. Because a lot of people believe in the fallacy, "location, Location, LOCATION!". But that is just one of maaaany factors to take into account. You sound like you know a lot and have been doing this for a while, tell me, where did you get your knowledge from? Or how did you learn?
Because I learnt from Hannes Dreyer, my mentor for a couple of years now.
@tygandaproductions I agree, I do not know everything, so I just stick to what I understand and will always be open to learning.
I have attended Hannes's webinars in the past and had the privilege to work alongside some very established investors like Jaco Grobbelaar. I have read basicly all property books I could get my hands on. The best way to learn is also to buy courses from people you know are doing what you are trying to do.
@@louisreynhardt It would be great to work with somebody like you!
Using your current revenue and cost figures, what would be the return on investment if the same property was purchased in cash in full? i.e. no bond registration costs and no monthly bond instalments.
You can then simply divide your annual cash flow with your money invested. In this case, you can just deduct your bond from the monthly expense. This will give you a cash flow of around R4100 x 12 divided with your cash invested of R320 000 = 15,6% ROI
Which is around half of the leveraged version, I think. That's why leverage will always be the better option numbers wise.
Only properties for 400k i find is in very dangerous gangster areas or locasions. Family homes that people sell because its too dangerous to love there
You can always look at R500k properties and make lower offer for example. But with that said, The example I used was in Bloemfontein. Properties in WC for example will not be a good idea in tha price range.
Howzit i live in the UK and got R800000 to invest in the beautiful amanzi, interest rates are at 11.75, pls avise most feasable way of invest that loot pls
Thanks for reaching out, you can always pop me an email at louisreynhardt@gmail.com and we have a chat. Theres jist a couple things you need to consider.
@@louisreynhardt thanks Louis
Anyone can assume they are going to get a massive discount on the purchase price and start their calculations on that basis. Do it at the proper price and it probably wouldn't have been profitable. If you had actually bought the house for R320K, then it would be believable.
The video is not to convince you that it's possible. It's simply to share what I like to do. If you buy property at asking price then you don't understand property. Check out my latest video to see how I've done this multiple times.
living in South Africa must be nice! you could barely find vacant land for P400k let alone a whole property!
🤣 Where are you from ?
@@louisreynhardt Gaborone, Botswana! That 4 hour drive from Gauteng makes land EXPENSIVE 🤣
@varnageT Apparantly yes. It's so interesting to hear how prices are different all over. 🤣🤣 maybe you should consider the drive or use easy properties 😁
So you need to rely on getting a tenant? If you can’t find one for 2 months. You in big trouble. And rentals are not guaranteed
Yes, that's how rental property works.
You should ALWAYS have reserve funds. If your property is vacant for more than 2 months, then your property is not in a high enough demand area
Nice Louis, jy is n yster.
Dankie pella 👊🏻😎
Do you offer any property mentorship.
Yes I do my friend. You can send me an email at louisreynhardt@gmail.com to find out more. Thanks for watching 👊🏻 😎
house flipping
The join button is removed
Hi thanks for reaching out. The button is still there. If you want to, you can pop me an email and we can chat from there louisreynhardt@gmail.com
Baie moeilik om in die Kaap te doen waar beginer woonstel pryse vreeslik hoog is.
Dit is verseker baie moeiliker in die Kaap.
Die Kaap het wel steeds lae inkomste behuising en die selfde strategie kan gevolg word. Dit kan dalk net meer risiko betrek omdat die areas nie so goed is nie.
Maar om realisties te wees sou ek fokus op 'n Ander mark in die Kaap, bv studente akkomodasie.
@@louisreynhardt Hier is plekke wat ek al gesien het waar jy n redelikke % van jou bond kan kry (De Wijnlanded en Guldenland is twee wat ek nou onlangs na gekyk het). Met n groter deposito is dit moontlik om dit cash flow positive te kry. Maar van wat ek al gesien het sit dit maar so R600-R900k afhangend van waar jy kyk.
As mens studente akkomodasie doen. Ek verstaan dit nou as n huis met kamers koop en uitverhuur sal jy n groot salaris moet verdien on te kwalifiseer vir die financing of n baie groot deposito moet neer sit. Die plekke waar studente wil bly is maar in gewilde dorpe, ek bly naby stellenbos en jy betaal maklik R800k vir die goedkoopste een slaap kamer. Van die developments charge 1.3M vir n een bed met n badkamer en n leer tafel wat dubbel vir die kombuis.
@@flourishdietitian2653 Ek sou nie kan koop as dit nie binne ry afstand is nie. Ek wil die plek kan sien, en as iets verkeer gaan daantoe kan gaan. Al is dit n langerige ry.
What about capital gain tax?
There will be no CGT for this deal? If you dont structure the deal correctly, you might pay some income tax.
Advice to structure to avoid income tax
@andrerenejames8319 I would say start by watching this videom its a bit longer but packed with info.
ruclips.net/video/Ggym4H_CL7Y/видео.htmlsi=h4_f2gZxA4L8ZO3i
in cape town that R400k flat will cost at least double 😂
Unfortunately, this is true 🤣
Except if you look in areas like Wynnerg or Heideveld, for example. I'm not sure about the actual safety in those areas, but still, it's property that can work when done correctly. Unfortunately, I do not know that side so well.
R400 K will buy you a shack in Cape Town. You can't even get a one bedroom flat here for less than a million
If you are looking for value per Sqm. It won't be in Capetown. Its also not a cash flow location
What about tax implications?
You can account for it as part of your reserves. But if your portfolio is structured correctly, you won't have any tax problems.
Are you renting 2 x beds In a bachelor apartment for R 3k a piece?
I don’t think that’s realistic
Thanks for your comment. It's realistic, depending on your area. It works in Bloemfontein, especially if you can include wifi and water
This is the real monopoly strategy..buy cheapies and volume thereof for the middle class guy..only way to make money off property. This is also a hassle considering the renters you are aiming for.
I'm not sure if this is a negative or positive comment 🤔 🤣
@@louisreynhardt more renters..more risk..more poorer class renters..bigger risk. This is however a quicker way to make roi. If you come from money..property investing becomes much easier. Coming from no headstart.. not sure if property is the way to go. I have a few..and although no hiccups experienced..not sure if its the best investment vehicle...but then again I'm from the WC..where property values are sky high
@jldp24 Thanks for your comment, man. I have multiple lower income tenants with excellent credit history. Infact better than most middle to higher income earners. More tenants in one property actually means less risk. If one of two defaults, one will still pay.
I certainly do not come from money but always had my basic needs met. Property can work for anyone when done correctly. I always see people stop with one or 2 properties and give up. But I guess it's not for everyone. I do, however, feel if you have a skill that you get paid for and you have a good. Credit score: You can build wealth. No matter what your background or history looks like
@@louisreynhardt my next asset will be a house with 2 flatlets..done with townhouses and apartments.
Great, so basically, a Multi let strategy. All the best to you. Hope you can find a good deal soon 👊🏻😎