HOW TO MAKE MONEY THROUGH PROPERTY INVESTMENT IN SOUTH AFRICA
Francois Janse van Resnburg of Franmar Property consulting, and author of the book Making Money Through Buy-to-Let in South Africa, sits down with Transform Real Estate to speak about his experience, advise and tips for entering into the property investment market. Transform speaks to this expert for the inside scoop.
According to Janse van Rensburg, his passion for entrepreneurship started at an early age: “I grew up in a small town and from a very young age I was very intrigued by people who are considered as being successful in life. I have also read a lot of biographies about successful people and love their stories of how they achieved success – Richard Branson, Steve Jobs, Elon Musk, Robert Kiyosaki to mention a few. I have also realized that they were ordinary people who had a dream and a vision and who became extraordinary.”
He goes on to say: “After school, most youngsters have dreams of becoming successful and be financially free but, as soon as reality kicks in and they have to commit to responsibilities of a family, buying a home, medical aid, insurance premiums, those dreams start to fade and they lose focus. I was no different and realised that a job on its own will not allow me enough time and money to enjoy life to the fullest. I have also realised that working a 9-to-5 job wouldn’t provide me with a sustainable income after retirement.”
It was in 2002 when Janse van Resnburg attended a property investment seminar that he clearly remembers one speaker talking about how the money you earn must work for you. “Immediately after the seminar, I started researching all the options. The ‘aha moment’ came when I realised that you can buy assets – buy-to-let property which can be utilised to generate a sustainable income for the rest of your life. I further discovered that you are actually using the bank and tenant’s money to pay for that asset which, once paid off will give you a constant inflation-linked income. My next step was to form a legal entity through which we bought our first property.”
But what exactly is Buy-to-Let property, according to this expert?
Buy-to-let is property, typically an apartment, you buy to rent out. There are a number of options when it comes to investing in residential property such as buy-and-flip, buy to renovate and sell for a profit, buy low or from a distressed owner and sell high, buy and increase income potential, and rent out. I believe your risk with buy-to-let is much lower than all the other options.
“I believe people are more informed and educated about property and the economy nowadays. Want-to-be investors are learning that they can get more than one home loan from a bank to buy additional property or properties. People also realised that the Government can’t provide for the housing shortage – especially in urban areas – and that the demand way exceeds the supply. In the current economic situation in South Africa, people have less disposable income to qualify for a home loan and the additional costs involved in owning their own home and therefore have to rent.”
What are the benefits?
Says Janse van Rensburg: “The number one benefit is that buy-to-let property, once paid off gives you an inflation-linked income for as long as you keep that property.
“Another benefit is that you need very little of your own money to invest in property as a bank will be more than willing to give you a home loan to buy such a property and the tenant will pay that bond plus all the other expenses provided you have bought the right investment property.
“The third biggest benefit to me is the fact that you can leverage the equity in property to buy more. It is important for any investor to be in control of your investment, therefore, investing in property gives you that control such as where to buy, when to buy, what price you want to offer, selecting your tenant, monthly rental amount and to make the rules.
“Lastly, buy-to-let property provides you with time and money to plan a prosperous future and to leave a legacy for your family.”
What to look out for/be careful of when starting out in the buy-to-let market?
“Most new investors are so anxious when buying their first property that they sometimes pay too much for a property. A word of advice would be to practice patience and to look at as many properties as possible, keep a spreadsheet with all the details of each property, then short-list two or three properties and do the sums and the one which is making financial sense would be the best one at the best price. Ideally, a property which is cash flow positive is usually the best option”, advises Janse van Rensburg.
“I think the best piece of advice would be to have a plan” he goes on to say. “Ask yourself why do you want to invest in buy-to-let and what would your objectives be and how will you achieve them. Different investors will have different reasons for investing in property such as paying for a child’s tertiary education, travel overseas, to be financially free or to provide for retirement.”
You never stop learning
“Through the years I’ve kept educating myself on property investment and I have also learned a lot from mistakes I have made. I believe no one can grow or become successful in life unless you have learned from your mistakes. I am so glad I made the decision 16 years ago to research the property investment opportunity as this gave me hope for the future and made my dreams come true.”
Finally, he says: Buy-to-let property investment gave me the opportunity to retire early and live my passion to teach and mentor youngsters and other people in investing in property and most importantly to help ordinary people become extraordinary.
Just by reading and applying the easy-to-follow processes in Making Money Through Buy-to-Let in South Africa, you will realise that ordinary people can become extraordinary. This book explains why buy-to-let property investment is the only sensible opportunity to earn an inflation-linked, passive income for the rest of your life. It gives ordinary South Africans the hope that they might enjoy a financially secure retirement by building a substantial property portfolio, either when they start at a very young age or by supplementing their lifetime savings or pension pay-out at a later stage. Making Money Through Buy-to-Let in South Africa addresses all the questions would-be property investors would ask, including how to: establish legal entities; determine which properties have the best return on investment; leverage other people’s money and use very little of their own; obtain finance and register a bond; manage the transfer process; and select and manage the best tenants.