Real Estate Investor Magazine
February 2023 edition: full text
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Read it as a magazinerei.co.za
FEB/MARCH 2023
BOND SURVIVAL GUIDE
How to save R420 000 on your mortgage
STOP SPIRALLING ELECTRICITY COSTS
10 Ways to take control today!
THE FUTURE OF REAL ESTATE TRANSACTIONS
From Blockchain, ChatGTP & Due Diligence
SKHULILE NDLOVU
International Banker becomes property entrepreneur
BALWIN EXCELS ONCE AGAIN AT INTERNATIONAL PROPERTY AWARDS!
5 STAR AWARDS WON 2022:
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REI TEAM
EDITORIAL
Founder & Editor-at-Large
Neale Petersen neale@rei.co.za
Head of Content
Dayne Stern dayne@rei.co.za
Digital Strategist
Asheeq Cader asheeq@rei.co.za
Digital Designer
Caro Kleynhans caro@rei.co.za
Accounts Manager
Marisa George marisa@rei.co.za
Digital Strategist
Alexander De Villiers alexander@rei.co.za
CONTRIBUTORS
Neale Petersen Dayne Stern Schalk van der Merwe Sophie Gamborg Justin Leve Sean Godoy Carlo Mariani Meyer de Waal
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CIRCULATION
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FEB 2023 SA Real Estate Investor Magazine
All rights reserved. No portion of this publication may be reproduced or used in any form without prior written consent and permission from Reale Media. The publisher gives no written guarantees or assurances and makes no representation regarding any goods or services written or advertised within this edition. Prospective investors should always consult their attorneys, advisors or accountants before investing. Copyright © Reale Activation. Pty (Ltd)
EDITORS LETTER
The benefits of ‘Big ideas’ solving problems in an economic downturn
I
t was English economist and philosopher, John Maynard Keynes, founder of modern macroeconomics whose ideas fundamentally changed the theory and practice of macroeconomics. His work was built on the causes of business cycles which set the standard of economic policies of governments worldwide. His statement that, ‘difficulty lies in not so much in developing new ideas as in escaping old ones.’
Our government can take a leaf out of his book in escaping old ideas and implementing new ones (not based on ideological thinking) while they ponder the economic future of South Africa. The necessity to apply and implement new ideas to fix the electricity crisis, rampant corruption, crime and appointment of a new cabinet to grow the prosperity of the ailing SA economy is a must.
In his 2023 State of the Nation Address (SONA), President Ramaphosa said that ‘unleashing’ SA’s own electricity generation programme among private households and businesses is a key part of the country’s wider plans to end load shedding. He identified 5 key points to fix the electricity crisis: • Fix Eskom and improve the availability of the existing • electricity • Fundamentally transform the electricity sector • Enable and accelerate private investment in generation capacity • Accelerate procurement of new capacity from renewables, gas and battery storage
• Unleash businesses and households to invest in roof top solar
Adam Smith, the father of modern economics, said in his writings that wealth is created via labour, and that self-interest spurs people to use their resources and ‘ideas’ to earn money.
Smith's theorises that economies thrive when competition, capitalism, and a free market, are alive and well. On a more individual, household and company level, microeconomics study of individual and business decisions regarding the allocation of resources and prices of goods and services. Small says that here are six key microeconomic business factors that affect almost any business daily: customers, employees, competitors, media, shareholders, and suppliers as well as the relationship between supply and demand.
He says the heart of economic theory, is inextricably linked with the concept of generating ‘big ideas’ to solve problems. When they stick they can to guide you and your business to an extraordinary future. Now if that is not message to all property landlords, business owners and entrepreneurs to implement in their businesses daily.
Successful investing.
NEALE PETERSEN FOUNDER & EDITOR-IN-CHIEF
“ Success today requires the agility and drive to constantly rethink, reinvigorate, react and reinvent.”
- BILL GATES
SA Real Estate Investor Magazine FEB 2023
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CONTENTS
FEB/MARCH 2023 #154
TRENDING
05 Editorial View 14 Cover Story Profile 24 Company Profile
FINANCE
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36 SURVIVAL GUIDE for your Home Loan - Save R420,000 on a mortgage of R605,480 46 10 Tips to take control of spiralling electricity costs for your business
INVESTING
54 Ski-ing & the likeness to property investing 58 WeConnectU: Let's Engage 2023
54
COMMERCIAL
70 Coworking space versus Traditional Office Space 66 Loadshedding survival - will solar power increase the value of your home?
66
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TECHNOLOGY
80 Bringing Due Diligence to the Residential sector digitally 90 The Future Of Real Estate Transactions 86 How Artificial Intelligence could revolutionise the Commercial property sector
WEALTH
96 Prince Harry and Meghan Markle’s Netflix Show Mansion for sale
66
OFFSHORE
104 Now is the time to invest in UK property as a South African: the buying process explained
RETIREMENT
116 How to protect your family from the unforeseen costs of dying 110 10 Factors and Guidelines to assist buyers to find the ultimate retirement property
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REI MAgazine
DEC/JAN 2022
NOV 2022
OCT 2022
JUNE 2022
MAY 2022
APRIL 2022
archives
Firstly, allow me to introduce myself as REI Magazine’s new content editor. I’m excited to continue providing and improving the quality of investor information and real estate insights that you have come to value since our first REI Magazine edition was published in 2007. We have a few innovative ideas for the REI platform that we will be introducing over the next few months so keep your eyes on this space.
real estate, we only really have the precedents set by the two previous World Wars to study. In these cases, America, Japan and Europe shifted economic production to feed the war machine. Instead of investing in traditional goods and services, resources and capital were disproportionately redirected from normal economic activity into the war effort. A direct result was less home building and less investment into new office buildings, retail centres, hotels and such for the duration of the previous two World Wars.
And what a particularly inauspicious time it is in the world right now. As if the economic impact of COVID pandemic was not enough for global economies to deal with, Putin's unhinged warmongering in However, in the immediate aftermath of World Ukraine is shaking up the world’s fragile geopolitical War Two there was a surge in demand for real SEP 2022 AUGUST 2022 as soldiers returned JULY 2022 balance to the point that we find ourselves on the estate home to settle down brink of World War Three. and build homes for their families. Job creation was accelerated and the expansion in civilian While there is an adage that claims opportunity in employment led to increased demand for commercial volatility, the potential for a major international real estate, and values saw a healthy rise across warfare means that institutional investor’s appetite the real estate board. for risk is at an all time low, especially in emerging markets such as South Africa, and this does not The fact that commercial real estate is an illiquid bode well for our economic outlook in the near asset class makes it difficult to quantify the long-term future. Energy and food costs will soar which will impacts of a protracted war. Generally speaking, drive up market volatility as well as the cost of heightened market volatility is not ideal for investors equity; and this will result in downward pressure with a short term horizon. Those close to retirement on returns. or needing investment income will suffer from a fall in equity markets and a decreased demand Investor’s knee-jerk reaction to volatility in the for commercial property. But those investors with equity markets often causes stock prices to fall, patience and diverse income streams could be well which results in a downward adjustment in wealth placed to survive the storm, and could prosper across the board. Less wealth and low risk appetite if they have the resources to take advantage of means less investment to keep the commercial generational investment opportunities. real estate wheels churning. During periods of heightened global volatility, we can expect many As it stands, the staunch sanctions levelled against investors to pull their money out of commercial Russia have torpedoed their economy to the point real estate in favour of “safer” investments such where many expect it will take years, if not decades, as bonds and commodities. to recover. And while we all hope for a swift and peaceful resolution to the hostilities, it seems wise MARCH 2022 FEB 2021 DEC/JAN 2021 When it comes to assessing the macro impact to be prepared for a protracted conflict in Europe, of a protracted large-scale war on commercial and the economic impact will certainly spill over to
ASK THE EXPERTS
Send your questions to info@rei.co.za or post on our FaceBook or LinkedIn pages and we will direct them to the necessary expert
Avoiding Capital Gains tax when selling a property in a trust
COERT COETZEE WealthMasters
I
own a property in a living residential trust. My small business is struggling and as a result the income is not enough to sustain it in the short term. I am more than 5 months behind in bond payments and now I am forced to sell my property. The problem is, if I sell my property, which has around R1,5 million equity in it, then I will be forced to pay 40% capital gains tax because it is in a trust. Is there a way that I can look at selling the property but not be liable for the capital gains tax on the profits? Your advice on this would be helpful?
F
ortunately, you own the property in a living trust. It means that you can apply the conduit principle of SARS to make the tax liability on the capital gain 100% zero. However, you’ll have to make sure that the beneficiary clause of your trust is correctly structured for this purpose. It will be best to consult with one of
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FEB 2023 SA Real Estate Investor Magazine
our trust lawyers before you sell the house. Coert Coetzee, Founder of Wealth Masters Club
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EDUCATION
Key advantages of investing offshore into the Switzerland residence market
TONI ENDERLI Sales Director Lauchernalp Resort, Switzerland
I
am a keen skier, and I am looking to invest in a destination where I can get the benefit of both the snow skiing lifestyle but more importantly that gives me maximum benefits within that particular country or investment destination. I have identified Switzerland as a place where I can both invest but also get the benefits of living there part-time in an area where I can get both the lifestyle and the benefits you get from investing in property offshore. What are the key benefits of investing in Switzerland, the type of properties, typical returns, and investment benefits such as tax, etc.
S
witzerland is a proud nation that emphasizes family, tradition, and a love of the outdoors.....
Switzerland is a dream destination to both live and invest in. In fact, Switzerland has been named ‘the best country in the world’ several years in a row. It is one of the most immigrant-friendly countries in Europe and the most sought after by businessmen because of its high standards of living, political neutrality, world-class infrastructure, and beautiful landscape. It has been an ideal destination for retired people, business investors and wealthy individuals.
Switzerland’s taxation system, geographic and political position, low inflation, highly skilled professionals as well as its competitive business environment are all factors that make it a country of preference for investors. The economic stability of Switzerland must be the envy of all nations!
Switzerland is also an attractive business centre for companies,due to its business model that aims to provide the ideal framework for the foreign investors. As a result, about 30% of the world’s biggest brands have offices in this country. In fact, 15 Fortune 500 Companies such as Glencore International, Nestle, Novartis, Roche Group or ABB have the headquarters in Switzerland.
“In an unstable global economy, Switzerland is a popular safe haven for investors due to its political neutrality, policy stability, strong currency and low levels of inflation and unemployment. South Africans can now invest in this stable, year-round destination for the first time. It’s a great legacy investment for families as there are no death duties,” said Toni
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SA Real Estate Investor Magazine FEB 2023
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ASK THE EXPERTS
Invest now in residential or wait for the market to improve?
CARLO MARIANI The Property Coach
I
am the current owner of one buy-to-let residential property in Johannesburg. I am struggling to get my rent paid in on time on this property and is always a struggle. I still desperately want to grow my property portfolio but I am just wondering if now is a good time to buy given my experiences on the rental side and the market seems to be in the doldrums because of load shedding, poor municipal services, etc. What would you recommend that I invest now or wait until the market improves?
T
here are two separate issues in this one question. Firstly, getting rent paid in full, on-time, allthe-time is core to the success of any property investor. I’m sorry to hear you’re struggling. Here are some practical solutions:
1. Make your tenant selection process more robust, using credit checks and landlord references as non-negotiable
2. Be prepared to say no to substandard applicants, even it feels
info@rei.co.za
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FEB 2023 SA Real Estate Investor Magazine
painful in the short-term
3. Ensure you use a professional lease agreement. My first tenant was a nightmare and it was entirely my fault. I learnt the hard lessons, didn’t give up and never looked back.
Secondly, waiting is rarely a winning strategy, unless you’re convinced that the residential property market in SA is about to crash. This is unlikely, considering the robustness of the underlying demand and demographics drivers and the not overly aggressive property lending by the main financial institutions, as regulated by the National Credit Act. This does not mean buying any property, in any area, at any price and just waiting...that might be a losing strategy. Develop area expertise, operate with strategic focus, grow your knowledge and collaboration platform. Then take patient action, not desperate action.
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VIEW MORE
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The latest replays
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Would you like to host your own webinar or event with us? Send us an email on info@rei.co.za
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MASTER INVESTOR
Meet SK: the real estate entrepreneur who wants to make a difference for first-time buyers
By Neale Petersen
Skhulile Ndlovu is a passionate and knowledgeable real estate entrepreneur that wants to make a difference in the South African property space. His LinkedIn profile highlights his passion for digital solutions, being a former international banker but most importantly proves his passion for keeping himself educated on a continuously evolving property journey.
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SKHULILE NDLOVU
Photographer: Sethu Dym Dlamini , Dime Creative Studios Creative Director : Muhle Ndwalane, Asante Solutions
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MASTER INVESTOR
H
is humble upbringing in This instilled a solid business acumen Pietermaritzburg, KwaZulu- in him with acquired knowledge, which Natal (KZN) and his focus on later resulted in Ndlovu and a friend being a self-made entrepreneur co-founding a wine and corporate started from a very young age. branding business while they were university students. Unbeknown to He was only 5 years old when he him, he was getting educated and assisted his grandparents with the prepared to build his future business running of their farm which supplied and career ambitions in banking, fruits and vegetables to their local finance, digital solutions and real supermarket. His duties ranged from estate. ordering seeds, ploughing, harvesting and delivering the supplies.
MINI BIO
Name: Skhulile Ndlovu (also known as SK) Age: 32 years old Family: Single Company: Co-Founder & Chief Executive Officer of Ntaba Holdings and Founder and MD of Encore Real Estate Current position: Chief Executive Officer of Ntaba Holdings Career highlights & achievements: 2018 - Attended the World Economic Forum in Switzerland; 2019 - Selected to the Obama Leader fellowship programme; 2020 - ENACTUS South Africa Alumni of the year 2020/21 – University of Free State – Master of Land & Property Development Hobbies & Passions: Golf, technology, digital solutions, travelling & reading books Books that have made an impact on his investment life: Making Money out of Property in South Africa by Jason Lee; Steps to Property Wealth in South Africa by Jason Lee Motto/favourite quote: ‘Just do it’ (Nike’s pay-off line) and ‘Inspiring greatness’ (UKZN’s slogan) is one of his motto’s
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MASTER INVESTOR
Skhulile subsequently matriculated at Masijabule High School close to Pietermaritzburg (KZN) in 2006. Thereafter he attended the University of KwaZulu-Natal (UKZN) where he acquired a B.Comm degree. He majored in Supply Chain Management, Marketing and Human Resource Management. Ndlovu then studied for a postgraduate degree in maritime law and economics from UKZN.
At UKZN he was part of an international student organisation called ENACTUS (formerly known as SIFE), sponsored by HSBC Bank, focussing on sustainable entrepreneurial community projects.
H e w a s subsequently selected to go overseas to Malaysia
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and Singapore in 2011. On his return he joined HSBC Bank.
SK the employee
SK started his corporate career journey with HSBC Bank, which is one of the largest global banks, with international headquarters in London. Ndlovu was based locally in their Sandton office in Johannesburg when he landed his first job. He spent five years that started with the graduate programme, trade finance, trade support on the trading floor, then served as an analyst for a number of international clients.
Then a new opportunity arose with UBS Investment Bank a leading global investment bank with their head office in Switzerland. He was appointed to the
SKHULILE NDLOVU
investment banking: security division In the same year he decided to equip on the supporting desk for traders himself with a Property Investment and from 2015 – 2017. Practice programme qualification from Wits University to navigate through After his 5 year stint at HSBC Bank his new proposed business venture and almost 2 years at UBS Investment and terrain to fulfil his clients property Bank, Ndlovu says, ‘ this gave me the investment aspirations. necessary fundamentals to understand business finance, investments, and Late in 2017 Ndlovu formed his own how property finance works both from property business focusing on servicing a banking and investor perspective.’ first-time buyers, young professionals This also gave him the international looking to buy their first properties, exposure and the experience he wanted. entrepreneurs looking for office space and educating people with limited Ndlovu decided to leave his comfy knowledge about property. well-paying corporate job after being bitten by the colloquial ‘property bug’. His company Encore Real Estate, a He was always an avid student and property sales brokerage and marketing reader of property education books business focused on marketing, selling and material after deciding that it was new developments and managing now time to take the plunge into real properties on behalf of property estate as an entrepreneur. developers in Johannesburg and KwaZulu-Natal. Today he says, ‘ the move into my own real estate business International Banker has been a well-calculated move.’
becomes property entrepreneur
His passion for property education He first joined an international real is also part of the company offering. estate agency in the Sandton area to Encore Real Estate Academy ( a division service their clients for five months. of Encore Real Estate) is an accredited He realised at the time that many SETA company in the real estate training people could not afford to buy those area, where different qualifications expensive properties in Sandton and for real estate agents, investors and professional can be attained. Moreover, saw opportunity in other areas. Encore Real Estate is making inroads
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MASTER INVESTOR
in the property digital transformation Solutions to handle all their digital solutions space especially around marketing and technology solutions. property technologies and smart building solutions. Today, Ntaba Holdings have 3 major projects that they manage, market and Ndlovu’s passion for education sell in St Francis Bay and KZN. They played a significant role in the various have at least three more key projects organisations he served. In 2017 & in the pipeline in the St Francis Bay, 2018 he did a postgraduate degree in Jeffreys Bay & Durban areas including Management specialising in Corporate Ballito. Governance at Monash University. Recently, they launched their first major residential development called Formation of Ntaba Avoca Heights located in Avoca, Holdings Durban. This is a secure residential Ndlovu was always constantly estate that provides a live, work and working, seeking new opportunities - play environment starting under the especially in the affordable and new R800,000 price mark per unit, a ‘sweet development space aimed at first-time buyers, as this is where he feels where he could make the biggest impact.
In 2019, soon thereafter, Ndlovu met his current business partners Altus Fourie (General Manager), Kevin Penney (Chief of Marketing, Mzimkhulu Nxumalo (Chief of Operations) and Tiaan Potgieter (Chief Financial Officer) and formed Ntaba Holdings. COVID hit in March 2020 and even after many new development submissions were made to municipalities for approvals business grinded to a halt before picking up again in 2021. Ntaba Holdings partnered with Asante
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SKHULILE NDLOVU
spot’ for young professionals, first as you are dealing with a stringent due time-home buyers and investors. diligence process, managing yields, maximising ROI for investors all the Ndlovu as CEO of the company time. Navigating the municipalities wants Ntaba Holdings to be known as in getting development approvals is a leading property developer in the also not a straight forward process. residential affordable space, moreover they are looking into converting Opportunities abound commercial properties to residential However, he believes despite the (mainly in the KZN area) and also in challenges there are more than the student accommodation space enough opportunities in the property nationally. space - you just have to find them.
Affordable housing; technology or Investor Challenges ‘PropTech’ and green solutions, are Raising capital is probably one of the all big opportunities if you have the biggest challenges in real estate and knowledge, insight of industry and the is not a small money process to follow ability create and protect investments.
Key insights, knowledge or lessons gained
Invest in your knowledge – books, digital content, associate yourself with the right people and business partners who are consumers of the product.
Gauge what products are available and whether you are in the financial sector or investment space. In property it makes sense to understand and do what government stipulates as a potential opportunity and not
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MASTER INVESTOR
NDLOVU’S TOP 5 BUSINESS & INVESTMENT TIPS
break regulations. Understand what technology can do for property – digital transformation.
1. Partner with the right professional team
Property developments generally give above average returns.
2. Invest in technology – as
it is revolutionising how we manage our properties, source data insights for investment decisions
3. Invest in knowledge as it
can aid you!
4. Make the bank your friend
5. Be on the ground – in the
arena all the time
Ndlovu’s lasting legacy
Ndlovu believes that property ownership comes with personal dignity. Once you own a home, it is an investment, financial tool to borrow against and also can become a provider not only for businesses but in your personal capacity - a fundamental start to making money and building long-term wealth.
Ndlovu wants to build Ntaba Holdings to be a household name. He would like to contribute to property sector whether in an advisory capacity or serve different board of directors to contribute knowledge and expertise. Encore Real Estate Academy also gives him the opportunity to share his knowledge and leaving lasting impact through education.
One thing is for sure is that you need to look out for Skhulile Ndlovu. He definitely is going to be one of our leading players in the property game of the future in South Africa.
FOR SALE:
Upmarket Apartment in Avoca Heights 2 Bed, 1 Bath | R845 00
Nestled nicely on the backside of the Durban North Suburb, Avoca Heights affords an opportunity to those who would previously not have been able to afford property in the area, to own an apartment a few kilometers from Umhlanga.
ENQUIRE NOW
SA Real Estate Investor Magazine FEB 2023
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COMPANY PROFILE
Ntaba Holdings focus on developments that add to your quality of life
Ntaba Holdings is an up and coming property development company with a dynamic team that aims to give its clients quality of life through the construction of homes of a high standard and value for money.
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NTABA HOLDINGS
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MASTER INVESTOR
We build for your comfort!
Ntaba Holdings is proudly a level 2 BEE company. The founders and the team at large possess a wealth of experience in property finance and related sectors, with all members having successfully been involved in major projects in the past that have been very successful thus have been translated to this winning team joining forces under Ntaba Holdings. As part of our long-term strategic vision, the company recognises that to build and sustain a vibrant local economy, it needed to ensure that the supporting social infrastructure in terms of education, health and housing was in place in our target areas to support it in. By increasing property values through quality value for money homes to attract and retain those ‘key investors’ that would be an asset in our chosen areas.
NTABA HOLDINGS
The curators of Ntaba Holdings
Skhulile Ndlovu, heads up the Ntaba Holdings team as the Chief Executive Officer, Mzimkhulu Nxumalo, Chief of Operations, Tiaan Potgieter as Chief Financial officer, Kevin Penney, Chief Marketing Officer and Altus Fourie as General Manager – Property Development Specialist
Skhulile Ndlovu
Kevin Penney
Tiaan Potgieter
Altus Fourie
Mzimkhulu Nxumalo
SA Real Estate Investor Magazine FEB 2023
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COMPANY PROFILE
Ntaba Holdings - Property Developments
Ntaba has 3 key developments that they are busy with and with another 4 in the pipeline (Port St Francis, Humansdorp & Jeffreys Bay). This includes:
St Francis, Links Golf Estate - Eastern Cape
This Jack Nicklaus designed golf course was voted as the Best New Course in South Africa. St Francis Links has also been included in New World Wealth’s top 10 golf estates in SA for 2019 and is currently rated the 5th best course in South Africa according to Golf Digest. Ntaba Holdings is developing building packages in the estate priced between 3.7mil to 8.5mil
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Homestead Views, Security Estate - Eastern Cape
Homestead Lifestyle Estate offers a variety of turnkey sectional title and full title homes that are meticulously designed for contemporary family living. The project is 75% sold out with construction of the estate well underway with the first residents taking occupation in Dec 2022
COMPANY PROFILE
Avoca Heights – Durban, Kwazulu- Natal
As demand for affordable, lifestyle and modern designed apartments continues to outweigh the supply, it is without doubt that the demand for this attractive Avoca development will be a game-changer In the Durban North property space.
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ENQUIRE NOW
Contact Us
Physical Address: 2 Ncondo Place, uMhlanga, Durban, KwaZulu-Natal Telephone: +27 72 302 3655 Email: sk@ntabaholdings.co.za Website: www.ntabaholdings.co.za
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MASTER INVESTOR PROFILE
SKHULILE NDLOVU
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FINANCE
PAGE 36
SURVIVAL GUIDE for your Home Loan - Save R420,000 on a mortgage of R605,480
36
PAGE 46
10 Tips to take control of spiralling electricity costs for your business
46
TRENDING ONLINE
Discover how tax laws allow investors to claim millions
SA Real Estate Investor Magazine FEB 2023
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COVER STORY
SURVIVAL GUIDE for your Home Loan - Save R420,000 on a mortgage of R605,480
By Editorial
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FINANCE
If a home loan is paid off over the normal 20-year term, the interest that is paid to a financial institution is often more than the capital borrowed, says Meyer de Waal, a conveyancing attorney in Cape Town, who made a study of home loan repayments, how to save thousands of Rands on home loan repayments and FLISP subsidies.
SA Real Estate Investor Magazine FEB 2023
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” I
COVER STORY
f the buyer is a first-time homeowner, then such homeowner can save thousands of Rands, if the proceeds of a FLISP policy are paid into the home loan account, reducing the capital as a ‘once-off’ payment.
Not many first-time homeowners are aware that they can apply retrospectively for a FLISP subsidy, where they have never apply for the subsidy previously.”
Total Payment over 20 years
For example, if a home loan of R605 480.00 is paid back over a 20-year term at the current prime lending rate of 10.5%, the interest to be paid back will add an extra R845 317.00 to the total home loan repayment.
This will mean that the homeowner will end up paying back R1 450 79.00 to the bank over the 20-year repayment term, where the home loan interest rate of 10.5%.
If the interest rate is 11.2%, then an extra amount of R914 275 will be payable on the home loan, and the total payment would be R1 519 755.00.
How a first time home owner can save thousands of rands
We recently assisted Tumelo, a new home owner who initially did not apply for a FLISP subsidy before taking transfer of his new home.
Tumelo took transfer of is new home in March 2022.
The home loan registered was for the amount of R605 480.00, which means that the total repayment, with capital and interest at the prime lending rate will be
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FEB 2023 SA Real Estate Investor Magazine
FINANCE
R1 519 755.00 over the 20 year repayment term, as the bank approved a 11.2% home loan interest rate.
Only in late in 2022 Tumelo realize that FLISP subsidies were available for existing homeowners as well. Tumelo was assisted and guided to process his FLISP application by our FLISP consultants.
In January 2023, he received the good news that an amount of R89 187,00 will be paid back into his home loan.
The advice to him is to continue with the current home loan repayment and pay off the home loan as quickly as possible and shave off 6 years and 8 months on the 20-year repayment term. By doing so, Tumelo will save up to R420 000.00.
The Calculations
The first is a calculation done one how much he will pay without the FLISP subsidy.
The home loan amount is R605 480.00, paid over 20 years and at the rate of 11.2%
Pay FLISP subsidy of R89 187 into home loan
Then we calculate the timing, considering the various dates of the registration of transfer and the actual date when the FLISP subsidy will be paid into the home loan.
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COVER STORY
We then calculate the savings of the FLISP subsidy of R89 187.00 paid into the home loan, where the monthly home loan repayment remains at R6 332.32 per month.
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FINANCE
Calculate new repayment term reduced to 13 years & 4 months
The actual savings on a home loan with a capital value of R605 480.00 is that can be saved if the FLISP subsidy is paid into the home loan as a onceoff payment and the home owner continues to pay the current home loan monthly premium is an amount of R420 934.00.
AMOUNT SAVED
Says De Waal “Many new first time home owners are not aware that they can save thousands of Rands on their home loans if they apply for a retrospective FLISP subsidy”.
To qualify for such a subsidy, the home owner must be a South African citizen, with financial dependents and must have not owned a property before. Home owners whose combined gross household income is between R3 501 – R22 000.00 per month can apply. As from the 1st of April 2022, the FLISP application process was de-linked from only finance approve through a traditional home loan, and now any home buyer/owner can qualify for a first-time buyer FLISP subsidy if they have financial assistance to buy a property in the form of: • the beneficiary’s pension/provident fund loan, • a co-operative or community-based savings scheme, i.e. stokvel,
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COVER STORY
• the Government Employees Housing Scheme, • any other Employer-Assisted Housing Scheme, • an unsecured loan, • an Instalment Sale Agreement or Rent-to-own Agreement.
Save even more - Renegotiate high interest rate to a lower rate
Many homeowners are trapped in their high interest rates when their home loans were granted.
Their financial situation may have improved, and they do not know that they can approach their own bank to consider a reduction in their interest rate for their home loan.
Take the example of Tumelo, whose home loan was approved at a rate of 11,2 %, which is higher than the current prime lending rate of 10,5 %.
Based on the interest rate of 11.2 %, Tumelo will pay R1 519 755.00 over a period of 20 years to settle the bond.
How it looks now
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FINANCE
One the FLISP subsidy of R89 187.00 is paid into the home loan of Tumelo, his financial situation will change.
The risk for the bank now also changed and reduced and with the FLISP deposit paid into the home loan, the bank ought to consider a reduction in the home loan interest rate for the client.
This seldom happens, as the home owners are not aware they can ask the bank for such reduction.
Herewith the possible savings, if the interest rate can be reduced to the current prime lending rate of 10.5%
These are the savings
• Total repayment on 11,2 % x 20 years = R 1 519 755.00 Less • Total repayment on 10,5 % x 20 years = R 1 450 797.00 Total amount saved = R68 958.00
The opportunity to renegotiate a lower interest rate is open and available for all home owners, and they must make use of such opportunity as the ever increasing interest rates are adding more pressure to the budgets of home owners.
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COVER STORY
If your own bank do not want to reduce your current high interest rate and your financial situation and credit score and the value of your property improved, then consider switching your home loan to another bank that may grant you a lower home loan rate to save thousands of Rands.
DO YOUR OWN CALCULATIONS
FLISP Subsidies
To calculate your own Flisp subsidy – click on the FLISP Subsidy Calculator
CALCULATE NOW
What home loan can I qualify for now?
Homeowners can do a quick online check if they can qualify for a higher home loan, go to https://mybondfitness.co.za for a free online assessment.
Watch a video on how to check your credit score and do your affordability check online: My Bond Fitness Video
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FEB 2023 SA Real Estate Investor Magazine
Switch your home loan?
Need assistance to switch your home loan? Register here
Click here for an online credit check and affordability calculation, all in one. You will receive a certificate used to reflect the possible home loan that you may qualify for.
Watch the interview on SABC 1 Yilungelo Lakho with Meyer de Waal, discussing this topic.
ENQUIRE NOW
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UTILITIES
10 Tips to take control of spiralling electricity costs for your business
By Editorial
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FINANCE
All indicators point to 2023 being another year that South Africa will be required to operate in the face of a very challenging energy-constrained environment. Additionally, spiralling energy costs will drive an immediate cashflow crunch for businesses, and surging inflation is going to cause a spending slowdown.
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UTILITIES
I
t’s time to batten down the hatches…and have a plan. Whether this is saving electricity, using it more smartly, or generating their own, South African business and property owners must have a plan now, before the crunch hits.
for next year.”
“While this is being couched as ‘only’ 18%, in reality it is a 34% increase in just over a year,” he adds. “This is going to lead to inevitable price increases on everything, driving inflation way This is according to Roger Hislop, past the current 6-7% which is already energy management systems executive crippling growth and job creation.” at CBI :energy, who says, “South Africans Hislop points out that, in addition are understandably shocked by the unprecedented tariff increases that to this, most municipalities with Nersa has approved, with an 18.65% distribution licenses will also add a increase set to take place from April higher markup, meaning that come 2023, and another 12.74% confirmed the beginning of April, South Africans
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FINANCE
may expect to see an increase of up to 22% or more on their utility bills, depending on who their local supplier is. “These huge cost increases, together with continued low reliability of energy supply, are going to not only strengthen the case for installing solar and battery storage, but also clearly show that private generation is only half the solution: everyone needs automated energy management and load control systems to reduce wasted consumption and optimise power availability.”
off your business’ electricity bill.
2. Check your bills
Install managed smart meters behind your utility meter to confirm you’re being billed correctly. You’ll also be able to see day by day what your consumption trend is to identify runaway usage before you get a monthend bill-shock.
3. Measure, measure, measure
Put managed smart meters on key “The only solution in the short term distribution boards or large loads to is for both business and residential understand where your consumption consumers to use electricity more is happening, and when. efficiently, use less of it, and treat it like the scarce resource it has become,” 4. Energy design he recommends. Build a simple plan around what parts of your business are energy-critical such as IT infrastructure, production 10 tips to help you machines, knowledge workers’ computers, and communications take control of your systems. Consider which areas are energy costs your first, second and third priority electricity consumers; this allows you to plan around energy resiliency systems. 1. Understand your bills Many business owners are unclear on what they’re paying for, such as ‘time 5. Schedule your loads of use’ tariffs and Notified Maximum Just putting bigger loads on an Demand penalties. If you comprehend automated schedule can easily save these, then some simple behaviour 10% of bills. Air conditioners, geysers changes you make could take 20-30% and hydro boils don’t need to be on
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UTILITIES
at night. Most office lighting can be switched off too. Basic dumb timers can do the job, although a better option is centrally managed load controllers that let you quickly adapt to changing conditions.
6. Just when required
Don’t leave anything running unless it’s needed. Install load controllers on your meeting room air conditioners, for example. This, combined with a room occupancy sensor, means you only consume power when necessary.
falling, although pent-up demand is keeping costs high, so shop around and make sure that you’re talking to an installer with strong credentials and a solid (referenceable) track record.
9. Apply load management to your SSEG
By managing your loads using even a basic Building Energy Management system, you can reduce the size of the inverter and batteries you need, while also ensuring that it is not tripped by overloading. You can optimise this when you use energy to “sweat the 7. Manage your physical sun” – in other words, don’t waste environment sunlight by starting the day with full Look at your office design and make batteries. it more efficient. For example, use less electric lighting and more natural lighting options such as light pipes. 10. Consider the impact You could also put in draught-doors of energy security on your to reduce your heating and cooling business costs. Electricity costs come directly off the
bottom line, but reduced productivity, 8. Implement Small-Scale damage to equipment or machines and not being reliably open for business all Embedded Generation have a more serious negative impact – (SSEG) this must be understood to successfully In South Africa, SSEG is generally navigate our energy crisis. either generator sets or solar PV. Generators are a useful stopgap, but their energy is very expensive per ENQUIRE NOW kWh. The price of solar systems is
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PAGE 54
Ski-ing & the likeness to property investing
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WeConnectU: Let's Engage 2023
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Investor case study – Slava Village: Making residential living safe and affordable
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INVESTING
Ski-ing & the likeness to property investing
By Carlo Mariani
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PROPERTY EDUCATION
I
grew up in Italy, less than 2 hours from the high mountains in the Italian Alps, so skiing is a big part of my "youth" before I moved to SA in 1999. With Covid lockdowns behind us, I was very excited about a skiingholiday and I was not disappointed until the big crash (will tell you more later...)
Here is what my ski holiday reminded me of (as it relates to property investing):
The power of starting "early"
I started "skiing" when I was 2 years old (well, they don't allow that any more...) but skiing is totally 2nd nature for me and even after 3 years of not being on the slopes, it was so easy and quick to ski well again.
What we learn when we are young(er), we often masterand enjoy at the same time. It is pretty much the same thing with property investing. Start as early as possible in your youth and start as early as possible in 2023.
with skiing is mainly down to have the right ski instructor that has the experience to get you going right from the first day.
As much as I am a skilled skier, my son improvements just in a week were mainly down to the experience of his instructor Margherita (as well as his enthusiasm).
So why re-inventing the wheel of rapid progress and success? Millions of people have learnt how to ski before you...what so exciting about "failing fast"...other than a bruised back-side... Would you not benefit from having the right guidance and support from somebody like me that has invested in SA property since 2003? Hundreds of aspiring and growing property investors have done the same by joining our PropertyHack.Club or engaging my private coaching services.
The morning is cold but beautiful
Waking up in the dark freezing cold is tough, even for a morning person Starting right is like me. But you get massive rewards for doing so. In the mornings the critical Truth is the 1st property investment ski slopes are at their absolute best, deal is often a "make or break" for smooth, powdery and with hardly your property success. Starting right anyone you need to share them with.
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INVESTING
Starting your property journey is often the toughest and scariest move to make, but also the most rewarding in so many ways. The only way to start is to start and to start now.
I see the same mistake with many growing property investors investing in too many different areas, using too many different strategies. Focus first, diversify later, much later.
Ski or snowboard? Make up your mind when you start
Our family "white" holiday in the Italian Alps suffered a big blow when my wife Zinhle fell on an icy road. A badly fractured wrist and a trip to the local Casualty ensued, with an early return to SA to help her recovery and healing.
They are both great snow disciplines but also fundamentally different. When you start it is unwise to try both of them at the same time. It will slow If you hope or plan for 2023 to your progress down and cause you too many unnecessary painful falls. be easier, you will be likely very Start one of the two, master it and disappointed... Expect the unexpected only then move to the next discipline. and be ready for it.
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PROPERTY EDUCATION
2 HACKS FOR YOU
Hack 1
The best crash helmet I can think of is knowledge, that is local and practical on how invest inproperty the right way.
Have a crash helmet in the form I look forward to guide you and of adequate health and property support you through this exciting insurance. ahead of us.
Hack 2
Have a back-up crash helmet in the form of adequate cash reserves so that you can sleep well at night no matter what is happening in the world, in SA and with your property investments.
Carlo Mariani Founder The Property Coach
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PAGE 66
Loadshedding survival - will solar power increase the value of your home?
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Coworking Space versus Traditional Office Space
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TRENDING ONLINE
Growthpoint powers SA business through load-shedding
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ENERGY
Loadshedding survival - will solar
power increase the value of your home?
By Editorial
S
tage 6 loadshedding is now firmly in effect, many South Africans are without power for up to 12 hours each day, and the threat of Stage 8 blackouts loom large on the horizon. It’s no wonder then that many households are turning to ‘off-grid’ power sources to keep the lights on and return to some semblance of normality.
“Solar power has emerged as the most popular alternative energy option due to its relatively quick installation, soundless efficiency (unlike a noisy generator), its environmental benefits and the prospect of lower future
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energy bills,” explains Grant Smee, property entrepreneur and Managing Director of the Only Realty Property Group. “However, the upfront costs associated with solar installation may be prohibitive for the average middle-class homeowner, with options ranging between R59 000 to R289 000 according to pricing from solar provider Solana Energy.
“Luckily, the increased popularity of solar power has given rise to a variety of innovative financing options to make solar more accessible and more affordable.”
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1. Outright purchase:
Buying the system outright using one’s own funds.
3. Financing the system through a home loan provider:
“Some of the major banks now offer the ability to ‘add the cost of solar “Various solar financing companies installation to one’s home loan.” have popped up in recent years, offering consumers the option to 4. A subscription service: pay a monthly fee for solar, with the “Solar providers such as GoSolr offer understanding that you will own the a fixed-monthly subscription to solar equipment after a certain period of power using their equipment. Prices time - usually five to seven years.” generally start at R1 580 per month.”
2. Rent-to-own:
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ENERGY
than they usually would, due to an oversupply of homes.
Smee also cites the importance of justifying the significant initial financial investment by considering the value “Solar power is definitely a Unique it will add to your home in the long- Selling Point (USP) and a way for sellers term. to distinguish themselves from the competition,” Smee comments. “Thus, According to South African home I would encourage homeowners to loan experts, ooba Home Loans, solar make the transition now while they can panels can increase the value of a afford it, as it can be a lifeline should property by around 3 to 4%. “Taking they become financially distressed into account the current electricity in the future and need to make a crisis in South Africa and with no quick sale.” long-term solution in sight, I believe that this estimate is actually rather By investing in solar power, owners conservative,” says Smee. are also able to market the ‘peace of mind’ that their property will offer prospective buyers, both in the short Ability to sell the and long-term. “The buyer has the buyer long-term assurance that they will be able to work from home and perform daily peace of mind Most of the country is still experiencing household tasks such as cooking a Buyer’s Market, meaning that many without interruption.” Another positive well-priced and well-designed homes selling point is the prospect of lower are sitting on the market for far longer electricity bills and resilience against
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COMMERCIAL
unforeseen tariff increases. “Eskom was recently approved to implement an 18.65% tariff hike come April 2023, which is yet another blow to South Africans dealing with interest rate hikes and the rising cost of living. In contrast, most solar providers’ annual price increases are in line with annual inflation, giving consumers the ability to plan and budget accordingly,” explains Smee.
Factors to maximise your solar investment
1. Choose your financing option wisely.
“If you’re investing in solar power with the goal of adding to the value of your home, make sure that you own the equipment outright. If you’ve opted for the ‘rent-to-own’ (and haven’t completed the contract) or solar subscription option, the new owner will have to carry the costs of the contract.”
2. Take the size of the installation into account.
“The more solar panels on your roof, the more electricity can be generated.”
3. Make sure that you purchase a hybrid solution.
“A hybrid system consists of solar panels, a smart invertor, and a battery. The battery is what keeps your electricity running during loadshedding, using the power generated from the solar panels during non-loadshedding periods.”
4. Choose a reputable service provider.
“Make sure that your provider is accredited, uses the highest quality materials to increase their lifespan and that they offer a warranty should something go wrong.”
Finally, remember location is key. “If your roof is constantly in shade, the solar panels will receive very little sunlight to generate electricity, making a costly installation essentially useless. Solar power has the potential to greatly increase the selling potential of your home– but all factors must be considered to maximise your return on investment,” Smee concludes.
FIND OUT MORE
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FLEXI OFFICE SPACE
Coworking Space versus Traditional Office Space
By Editorial
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COMMERCIAL
F
or generations, professionals worldwide have commuted to offices for work. As the business world evolves, workplaces change. Isolated office cubicles have transformed into open-plan floors where collaboration is encouraged. High-tech coffee machines, pingpong tables, and comfy couches have become common amenities in new-age workplaces.
On the other hand, traditional office space is located in an area exclusive to your business. Both office types offer excellent benefits and appeal to different types of businesses.
When choosing the right office for your business, consider whether a traditional or coworking option is more suitable for your team. Considering the pros and cons of a coworking A s m an y p ro f es s i o n al s g o t space vs traditional office space is accustomed to working from home, essential. There are many factors to business owners and employees consider when deciding on the right pondered the future of office working. choice for your business, so follow Since the COVID-19 pandemic and our guide to make a more informed the subsequent lockdowns, many decision. companies have reconsidered their office operating policies to control overhead costs in times of uncertainty. Advantages of a
Traditional office?
Now, most companies have returned to the office, whether that is on a full-time basis or a flexible hybrid 1. Company culture model, which allows staff to divide their working days between working You have your own private office in the office and at home. space to build and develop your ideal company culture. You can design the A coworking space allows you to space to complement your brand and work among other professionals across pay close attention to detail. From table different industries. For example, a tennis to the type of coffee machine, marketing agency could work alongside you can work to shape the company creative freelancers and sole trader culture that you want to reflect your start-ups in a shared office space in business. This closed environment is a coworking space. built around your company’s values,
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FLEXI OFFICE SPACE
with no potential for your unique use of important facilities such as culture to dilute when all areas of your conference rooms and meeting rooms. team are working in different places.
2. Flexibility
In a traditional office environment, businesses have complete control over the space. You get to choose the opening hours, the level of security, and the amenities you offer your staff. Some companies like to keep it simple and cost-effective, and others want to treat their staff to an on-site gym and ergonomic office furniture.
3. Privacy
Traditional office environments create a private space for your teams to work in and discuss sensitive or confidential topics. In a private office exclusive to your company, you can openly share ideas and plans without worrying about competitors or other people listening in. You also get exclusive
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4. Wide variety of office choices
When renting a traditional office space for your business, you are open to more than the coworking options in your preferred town or city. In most areas, you will have many choices when it comes to available buildings and locations.
Cons of a traditional office
1. Office management
Running a fully functioning workspace is no walk in the park. If you choose to have a traditional workspace, you will likely need to hire an office manager and reception staff to keep your office running smoothly.
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2. Fewer networking opportunities
What are the advantages of a In a traditional office, you get to meet coworking space?
and mingle with your coworkers on a daily basis. But meeting like-minded people from other companies and sectors proves more challenging when there's just one company under one roof.
1. Collaboration opportunities
Coworking spaces break down the barriers that traditional offices can have. When you opt for a coworking set-up 3. Long-term or hot desks, you immerse yourself in a social environment. You'll get to commitment to one focus on your work, but you'll also location get the opportunity to have social interactions with others who work in A flexible workspace may suit you different industries and professions. better if you want the freedom to move and not commit to a long-term agreement. That way, you don't have to 2. Work-life balance make decisions now about the future Many professionals enjoy a better of your business, and you're free to move with the needs and growth of work-life balance while working in a coworking space. Coworking your business. spaces tend to have a communityinspired structure, making them more
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FLEXI OFFICE SPACE
flexible than traditional workspaces maintenance, bills, cleaning, and and, therefore, less stressful for those office management are included in working in them. the rental price.
3. Ideal for the hybrid working model
Cons of a coworking space
Since the COVID-19 pandemic, many businesses are turning to the hybrid working model. This allows employees to split their time between working in the office and working from home. A coworking space can be the ideal set-up for companies using this model as they don't require as much space as they did when the whole team would be working in the office daily.
1. Distractions
Coworking memberships offer the perfect solution to businesses turning the hybrid working model. With access to lounges, coworking spaces and offices when you need them, it has always been challenging for businesses to adopt flexible working.
4. Budget-friendly
Coworking spaces can be more budget-friendly. You can rent a smaller, more affordable space within the coworking office and scale up when necessary. Most coworking spaces are serviced, meaning all costs for
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Some people prefer to work in a quiet, closed-off environment to limit distractions. Even though professionals in a coworking space surround you, some people concentrate better in their own private areas.
2. Meeting rooms
Coworking spaces offer excellent meeting rooms that give you the privacy to discuss confidential ideas. However, in most cases, you must book a meeting room or conference room in advance to ensure that it is available when needed.
3. Lack of privacy
Coworking offices are where creativity and collaboration are encouraged. However, some professionals, particularly those dealing with sensitive information and confidential work, may
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prefer the privacy and exclusivity that Instead, you can start by renting a comes with a traditional office space. small space and opt to expand it if your team grows or you need more employees to work from the office. Why are coworking
spaces preferable to standard office spaces?
Many businesses enjoy the flexibility and freedom that comes with a coworking space. Firstly, you're not tied down to an extended leasing agreement. Secondly, you get to immerse yourself in a sociable environment that unites a diverse group of professionals. The networking possibilities are endless. And last but not least, in a serviced coworking space, you don't have to worry about office maintenance and other management qualms, so that you can focus on the job at hand.
Best option for you
We hope that this guide to the pros and cons of coworking space Every Regus location has a team of vs traditional office space helps you specialists on hand to deal with any to decide which type of office is the problems, from technical issues to best fit for your business. Take a look at dedicated desks in coworking spaces, security needs. private offices, and shared offices In the post-pandemic world, many we offer at Regus across our many businesses are opting for coworking locations to find the ideal office space spaces to deal with the quick-changing for your business. needs of their company. Renting a ENQUIRE NOW coworking space means you can for more info on franchises and flexi leases commit to a whole office building.
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Skills Development In The Workplace
Ca l l i n g a ll business o wn e rs a n d in t e rn s
The Skills Development Act in South Africa was created to help develop the skills for South African people in the workplace, enabling job seekers to improve their chances of finding work and keeping a job.
Its purpose is to improve productivity in the workplace for employers, the competitiveness of employers as well as to promote self-employment.
EMPLOYER BENEFITS
• Train young people to groom for employment • Create jobs (while assisting in alleviating poverty in SA) • Tax incentives • Improve BBBEE Skills Development scoring
EMPLOYER OPPORTUNITIES
• Mandatory grants access - 20% of the 1% skills levies you have paid will be paid back to you. • Discretionary grants access – internships, learnerships, bursaries and skills programmes.
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IF YOU WOULD LIKE TO ENQUIRE HOW YOUR ORGANIZATION COULD BENEFIT FROM SETA FUNDING, PLEASE CLICK ON THE LINK BELOW OR EMAIL AND WE WILL MAKE CONTACT WITH YOU.
ENQUIRE NOW Start Now
www.rei.co.za
(+27) 21 761 3848
info@rei.co.za
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Digital Transformation is changing Real Estate
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Bringing Due Diligence to the Residential sector digitally
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PROPTECH
Bringing Due Diligence to the Residential sector digitally
By Editorial
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TECHNOLOGY
F
ounders Justin Leve and Sean Godoy met as co-tutors on a successful online property course, which gave them a unique opportunity to get to know each other.
Choosing the right partner in any new business venture is absolutely key. Justin’s property career originated in the commercial sector, where his client-facing roles have been focused primarily on investment property deal facilitation and due diligence advisory. Sean’s experience as a property market analyst evolved into providing a range of advisory and training solutions to the property industry. He is also a Proptech enthusiast and commentator, having co-founded the SA Proptech and Proptech Africa Associations.
Justin Leve
“With exciting innovation in the form of Proptech rapidly gaining traction throughout the SA property market, we saw the opportunity to collaborate on an online solution that facilitates an often misunderstood and underutilised area of residential property - a thorough pre-transaction due diligence process for buyers and sellers” says Sean.
“To this end we were lucky to have assembled a passionate and highly skilled team to bring our due diligence Toolkit to fruition during a
Sean Godoy
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INVESTING
12-month period of ideation, product development and plenty of problem solving. This was a fascinating learning curve for us too, as neither of us had prior experience in the world of software development, or the additional and crucial avenues of brand, web and user experience (UX) design.”
Since the platform launched at the end of 2021, they have achieved some rewarding milestones in the market - major product updates pre- and post-launch, industry partnerships (Enterprise Development Property Fund and ooba Home Loans), successful market outreach and stakeholder feedback campaigns, with further exciting developments on the way.
What need does PropDD address in the market?
PropDD’s pioneering product, the PropDD Residential Toolkit TM accessed at www.propdd.online adds value to both sides of a property transaction for buyers, sellers and estate agents, at an affordable price point.
The PropDD Residential ToolkitTM provides an online framework that guides a buyer through the process of investigating and understanding the important legal, technical and financial aspects of the property they are looking to purchase, to better inform this important decision. This process is known as due diligence.
The Toolkit facilitates this process by allowing a user to upload relevant due diligence documents and record information in their own secure toolkit vault. They can then auto-generate a professional Due Diligence Report which they can share with selected external parties, along with read-only access to their vault.
For example, a buyer may want to share their toolkit information with the financial institution where they apply for finance, or their attorney. Moreover, as an added resource, they are able to build a simplified cash flow based on their purchase strategy with the easy-to-use PropDD cash flow calculators.
The Toolkit was also developed for use by sellers, as well as the estate Purchasing a property is one of agent they appoint to sell their property, the most critical financial decisions enabling them to fast track the due a person will make in their lifetime. diligence process for prospective
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PROPTECH
buyers by providing them with relevant property information upfront that is often not easily accessible. This will empower buyers to make quicker and more informed decisions. The sharing functionality of the Toolkit makes this possible and establishes a greater level of trust with buyers.
and educational.
“Our ultimate goal is to improve transparency and aid decisionmaking around residential property transactions. We are not aware of any product like this in the SA market, and our international competitor research yielded a limited number of similar The PropDD platform also enables products” says Justin. property practitioners to significantly improve transparency and boost “We see effective property due their marketing strategy, while diligence becoming an industry simultaneously meeting the regulated standard, and our aim is for PropDD disclosure requirements related to a to become the primary facilitator in sale. All of this is facilitated through driving this process.” an online Toolkit that is easy-to-use
INVESTING
Key features of the PropDD Residential Included with this process are TM Toolkit downloadable, legally compliant sale agreements for freehold and sectional title properties, the use “Purchasing a property of which is optional. Furthermore, is one of the most critical a comprehensive property inspection checklist is included where a user financial decisions can identify and flag any physical a person will make issues, upload photos and input any important notes that relate to each in their lifetime. The issue detected. PropDD Residential
ToolkitTM provides a framework that guides a buyer through the process of investigating and understanding the important legal, technical and financial aspects of the property they are looking to purchase, to better inform this important decision."
The Toolkit is designed for a single residential property and associated transaction, and takes a registered user through the key legal, technical and financial stages of the due diligence process, allowing them to upload important documents and input information where required.
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All documents and information are stored in a secure toolkit vault which only the user has access to. However, should they wish to share read-only access to their Toolkit Overview page with any designated party of their choosing, they can do so by using a secure sharing function. This will enable the designated party to download any documents uploaded to the user’s toolkit vault, including a Due Diligence Report which summarises all information the user has inputted as of that date.
A user is also granted access to a number of other useful resources when they purchase their first Toolkit, such as the PropDD cash flow calculators and an instructional Market Analysis 'how-to' guide.
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ARTIFICIAL INTELLIGENCE
How Artificial Intelligence could revolutionise the Commercial property sector
By Editorial
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FEB 2023 SA Real Estate Investor Magazine
TECHNOLOGY
A
rtificial Intelligence (AI) has been hailed as the ‘ultimate disruptor’, with companies from all sectors excited about its potential to fully automate tasks and improve efficiencies.
Jack adds that while many AIpowered tools have come onto the market in the last six months, ChatGPT is by far the most popular, boasting one million users within a week of its public launch.
But as the mainstream use of AI has skyrocketed in recent months, many What is ChatGPT? have found themselves wondering if ChatGPT is a machine learning the ‘AI revolution’ is a sign of great algorithm designed to understand things to come – or a threat to traditional and respond to text input in a humanwork as we know it. like way and can be used for a wide range of natural language processing John Jack, CEO of Galetti Corporate tasks, such as language translation, Real Estate believes that the use of text summarisation, and question AI in the local commercial property answering. sector has many positive and farreaching implications, when used The free-to-use service was launched strategically. by San Francisco-based OpenAI, the “The use of technology in our creator of DALL·E 2, at the end of industry has accelerated, and now 2022. It is widely considered to be with the advent of easy-to-use AI the most powerful and user-friendly tools, we have the ability to improve language-processing AI model to date. efficiencies, reduce costs, and make better-informed decisions”. “In the commercial property context, the primary benefit of ChatGPT is as a “This doesn’t mean that AI is better tool to analyse data and communicate than a human workforce, and business more efficiently with clients through leaders should keep in mind that these fast and accurate responses,” explains tools are most effective when utilised Jack. “However, as AI capabilities by a skilled professional. Don’t view AI are constantly and rapidly evolving, as a threat to job security, but rather we believe that this technology will to ‘work smarter’ and provide tenants, transform even the most advanced tasks landlords and property managers associated with real estate transacting with a better experience.” in the near future.”
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ARTIFICIAL INTELLIGENCE
The benefits of AI in the commercial property sector He explains that AIpowered systems can be used to analyse large amounts of data on property prices, rental rates, and market trends to help predict future real estate values. “This empowers us to make informed decisions and allows clients to better manage and optimise their commercial real estate portfolio, which is good news for the industry at large.”
Other potential uses of AI tools in commercial property include:
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Leasing: “One of the key areas of a commercial real estate business is centered around leasing management. Here, AI can assist by answering FAQs, scheduling tours, and applying for tenant leases. Accurate and human-sounding chatbots provide prospective tenants with quick,easily accessible information to speed up the leasing process.” Property management: “To improve property management efficiencies, AI tools can be
FEB 2023 SA Real Estate Investor Magazine
•
used to automate routine tasks such as responding to tenant enquiries, document generation, making payments and scheduling maintenance.” Automating energy management: “AI can be integrated into a property’s automation systems for seamless control of lighting and temperature control through standard language demands, allowing for reducedcosts and a lowered carbon footprint.”
TECHNOLOGY
The limitations of AI
required to identify the purpose of these tasks or the larger context they fall into,” he says. “This can lead to While a firm believer that AI-powered it making mistakes when the data is tools have the potential to keep incomplete - something a human the commercial real estate sector would pick up on and work around, on the forefront of innovation, Jack which is why human perspective is emphasises that this technology is always needed.” not without its limitations.
Ultimately, Jack believes that an AI- “AI systems are excellent at performing smart workforce of skilled and forwardspecific, repetitive tasks, but they lack thinking real estate professionals the crucial human understanding armed with AI-powered tools is the combination needed to move the industry forward. “Companies that embrace rather than fear these tools will come out on top,” he concludes.
John Jack CEO Galetti Corporate Real Estate
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PROPTECH
The future of real estate transactions
By Editorial
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FEB 2023 SA Real Estate Investor Magazine
BLOCKCHAIN
Farbod Sadeghian Founder and CEO Qlindo
REI speaks to Farbod Sadeghian, founder of real estate technology company Qlindo on blockchain, crypto currencies, title, smart contracts, green real estate investment tokens and how it is transforming real estate
SA Real Estate Investor Magazine FEB 2023
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PROPTECH
What will the impact and benefits be of smart contracting?
Smart contracts are the kind of technology that can prove truly revolutionary in a number of ways and could be applied to all kinds of transactions. Using smart contracts, transactions are only triggered when all conditions are met, so they are inherently secure. And as they are stored on the blockchain for everyone to see, communication becomes truly transparent ––fraudulent real estate developers are going to have a hard time getting around smart contracts, that’s for sure!
virtual shares, where people can take entire single properties and divide them into smaller shares to be sold via the blockchain. However, Qlindo's approach works by securing $Qlindo token holders the highest ROI and aiming to build the most profitable green real estate portfolio.
How will property titles be managed on blockchain?
Depending on the country and the kind of operating property laws, blockchain-based virtual shares can include property titles through the use of smart contracts. However, many countries still lack institutional regulations of this kind, which is why Is selling shares using the majority of blockchain real estate crypto currency the only current method of projects see the property tokenized and only in rare cases accredit using blockchain when instead the investor with true property rights. purchasing real estate We are confident that this will change shares at the moment? in the coming years, as the technology Selling real estate on the blockchain evolves and the laws change with it. is not limited to cryptocurrencies. For example, a common method is
BLOCKCHAIN
Will blockchain eradicate money laundering through real estate and make the transactions more secure & transparent?
Lastly, how is blockchain really transforming the real estate industry?
Blockchain technology connects buyers and sellers in entirely new We hope so! Blockchain technology ways, cutting middle-men out and counts –among its many advantages– thus helping both parties save on the fact that it can bring security fees, commissions, and streamline and transparency to real estate the process. When talking about transactions. Any and all transactions fractional ownership, blockchain are automatically and instantly saved on significantly lowers the barrier for the blockchain, making them publicly entry and allows people to get on accessible and traceable. the property ladder by pooling funds together and trading tokens in real time. Naturally, as transparent and What other benefits secure transactions are the basis of does blockchain offer blockchain technology, bringing these real estate? advantages to the real estate market Well, transferring real estate would be a big step forward, too. ownership in a fast, secure, transparent way is probably revolutionary on its own merit! True to the promise of Web 3.0 technology, it’s a decentralized and ENQUIRE very “unbureaucratic” way of doing business, and it has the potential to Click the button above for more be the most secure method available information on the market.
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PAGE 96
Prince Harry and Meghan Markle’s Netflix Show Mansion for sale
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WEALTH
Prince Harry and Meghan Markle’s Netflix Show Mansion for sale
By Editorial
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FEB 2023 SA Real Estate Investor Magazine
LUXURY PROPERTIES
The Montecito mansion, where Prince Harry and Meghan Markle filmed much of their Netflix documentary Harry & Meghan, is on the market at $33.5 million.
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WEALTH
T
he Montecito mansion, where Prince Harry and Meghan Markle filmed much of their Netflix documentary Harry & Meghan, is on the market at $33.5 million. The home is featured on TopTenRealEstateDeals.com. Fit for royalty, the Mediterranean-style, sixbedroom home with 13,599 square feet includes ocean and mountain views, multiple terraces, and a regal great room chandelier and arched windows – where Meghan was extensively filmed for the show’s interviews. The home was built in 2006.
The Duke and Duchess of Sussex moved to Montecito in 2020 where they lived for a few months at Tyler Perry’s home before buying their own $14.7 million mansion. The six-part Harry & Meghan docuseries follows the couple from the early days of their courtship up to their well-publicized resignation from the royal family and move from England, and is setting television viewership records.
Montecito has long been a favourite escape for the wealthy, including John and Jacqueline Kennedy’s honeymoon The home’s exterior includes two in 1953, and increasingly drawing acres of lush grounds with romantic Hollywood types such as Oprah walkways and year-round flowers, Winfrey, Kim Kardashian, Gwyneth soaring palm trees and accent vines, Paltrow and Ariana Grande. a vegetable garden, c i t r u s o rc h a rd s , and even a chicken coop for fresh eggs. Amenities include a pool, hot tub, bar, gym, game room and a theatre. A picturesque guest house is perfect for any king or royal relative who might drop by for the beautiful Southern California weather.
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Page 100
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PAGE 104
Now is the time to invest in UK property as a South African: the buying process explained
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Open page 104 in the magazine →UNITED KINGDOM
Now is the time to invest in UK property as a South African:
the buying process explained
How is it possible and how best can I make a good return?
By Editorial
2
023 kicked off to a good start for the UK property investor market with the news that interest rates were coming down. The Financial Times reported that TSB and other UK lenders had dropped their mortgage rates as confidence grew in the market and UK lenders fought for home loan
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customers, but in comparison to this time last year they remain high.
A year ago, an average 2-year fixed rate buy-to-let mortgage was 2.9% and now it is around 6%, which explains why there is some negative outlook regarding the UK property sector.
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Open page 105 in the magazine →OFFSHORE
“Historically the best time to invest is when people are the most negative”, as quoted in The Times by Rob Dix, co-founder of The Property Hub and this makes sense because buying a property now at today’s rates ensures your investment numbers work and takes away the uncertainty faced by investors who bought when rates were very low.
Furthermore, the UK continues to go through a rental crisis as rental prices soar; last year they increased by 7.9%. My sister moved out of her London property last week and the landlady relisted the room to let, within 10 minutes she had received 15 enquiries and the lease was resigned that week. Demand is high and buyto-let investors are not seeing void periods.
Now is the time to invest in UK property, how is it possible as a South African?
Buying property in a foreign country can seem daunting. From which area to choose, to legal processes, finances, tax and mortgages, there are many decisions to be made. Many people never take the first step mainly due to fear of making a mistake or not knowing where to start. Often investors deem it unattainable due to the cost and fear of the unknown, but the entry level for international real estate investors is much lower than people think. With lending accessible to most investors, the minimum investment requirement is around R800,000, which would buy you an asset class around £120,000.
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Open page 106 in the magazine →A simple guide to the UK investment process:
benefits thereof. In the UK, South Africans can borrow between 60% - 80%, with interest rates around 3-6%. The current UK base rent is 3.5%. 1. Prepare Finances: Mortgage costs involve a broker and Getting your finances in lender fee and total around £2000 approximately. South Africans can order The first step to buying a foreign access a mortgage in the UK relatively property is to evaluate and prepare your easily and due to the double taxation finances. If you are looking to make treaty between South Africa and the use of a mortgage, it is important to UK, any tax paid in the UK will not be understand the obligations as well as paid again in South Africa.
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Open page 107 in the magazine →OFFSHORE
2. Property Selection
Do your research and due diligence and most importantly, know what the desired outcome is. If you are looking for a buy-to-let unit, then rental returns and capital growth are important. Alternatively, if your goal is to acquire a second or holiday home, that will result in a very different purchase. At LIO Global Property our properties are carefully selected in specific locations focusing on stability, investment security and yields.
3. Legal & Due Diligence
Once you have selected your property and are ready to proceed, a solicitor will need to begin the conveyancing process. The solicitor prepares a legal report, offering full due diligence. This report includes local searches, rights of way, confirmation of title and planning consents, and raises any issues that you should be made aware of. Solicitor costs vary from £900 - £1500.
4. Exchange of Contracts
Once the solicitor is satisfied that due diligence is complete, the contracts are exchanged, and the deposit
is due. Most developers request a 20% deposit, and the remaining 80% balance is paid on completion.
5. Completion
In the UK, completion equates to transfer in South Africa, and this is when the remaining balance of the funds are due and when keys are ready to be handed over. At this stage you will also be required to pay Stamp Duty Land Tax, which your solicitor will make you aware of early in the process, so you have an idea of the cost, but it is also advisable to speak to a tax specialist.
LIO Global Property’s team has been investing in the UK property market since 2003. We always prefer to take a long-term view on UK property investment because the market is constantly changing and buy-to-let is not a quick returning asset class. With a long-term view in mind, you have the potential for building a successful property portfolio and in doing so building generational wealth. The UK provides a low-risk opportunity to property investors in that it is one of the oldest and most consistent markets in the world.
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Open page 108 in the magazine →LISTING CAPE TOWN
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Open page 109 in the magazine →RETIREMENT
PAGE 110
10 Factors and Guidelines to assist buyers to find the ultimate retirement property
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How to protect your family from the unforeseen costs of dying
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TRENDING ONLINE
Six Trends That Will Define Retirement Property in 2023
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Open page 110 in the magazine →RETIREMENT
10 Factors and Guidelines to assist buyers to find the ultimate retirement
By Editorial
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FEB 2023 SA Real Estate Investor Magazine
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Open page 111 in the magazine →INVESTING
SA Real Estate Investor Magazine FEB 2023
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Open page 112 in the magazine →RETIREMENT
I
nvesting in a ‘forever home’ is a big decision that requires careful consideration of existing and future needs. In South Africa, there has been a massive shift towards coastal semigration, with retirees following suit. According to the property market intelligence report, Lightstone, the town of Margate on KZN’s South Coast is emerging as an in-demand location for retirement living. There are many great reasons for this, but investors mustn’t overlook certain key factors when choosing a home.
Eskom released in October. Add in the climate crisis and resultant water supply concerns, and self-sustainability should be top-of-mind for retirement investors. Solar panels, LED lighting, and water storage solutions should all factor in the decision.
2. Security
Safety and security are always key deciders for property investment in South Africa which is why security estates are a popular choice for retirees. Considerations should include electric “There has been a significant shift in fencing, 24-hour access control, CCTV retirement trends the past few years, cameras, and emergency response. because retirees are living longer than ever before,” explained Reece 3. Active lifestyle Daniel, Developer of Serenity Hills With retirees living longer, it’s in Margate. “People are now looking important to think about the for a retirement home where they opportunities for active living when can enjoy an active, outdoor lifestyle investing. Gyms, swimming pools, which has meant a shift in priorities. hiking and biking trails, tennis courts,
bowling greens and volleyball fields are all some of the facilities that are attractive to retirees.
To assist buyers on a retirement estate house hunt, here are 10 Natural spaces key factors to consider 4. The mental and physical benefits of
the natural world are well-documented, 1. Self-sustainability and connecting with nature in South Africa’s blackout woes are set retirement is becoming increasingly to continue into 2023, according to important. Nature reserves for hiking the medium-term adequacy report and bird watching, dams and lakes for
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Open page 113 in the magazine →INVESTING
fishing, and the seaside for relaxing life expectancies and the rising cost and bathing … these make for happy, of living. That’s why it’s important to healthy living. consider locations where property prices and cost of living are substantially lower than in other coastal towns. 5. Quality of life and area
Area is an important factor and comes as no surprise as quality of life 8. Healthcare becomes one of the biggest deciding While it’s not something people factors in retirement. Area’s such as want to dwell on, diminishing health Margate’s natural beauty, accessibility, in later years needs to be addressed. year-round subtropical climate, and That’s why frail care, dementia, and laidback lifestyle have positioned it as a top retirement destination.
6. Pet-friendly
There are documented health benefits for senior citizens living with pets including decreased blood pressure, anxiety, and depression as well as improved cognitive function. Despite this, many retirement villages have regulations preventing pet ownership. It’s well worth considering pet-friendly estates, even if there isn’t a pet in the house now, it’s always good to have the option.
7. Value for money
Even those who’ve put away a significant amount of money for retirement will still need to spend carefully because of extended
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Open page 115 in the magazine →INVESTING
step-down facilities are all important factors when choosing a retirement home. Where these are accommodated on-site, there’s no need for relocation in the future.
9. Children’s facilities
An often-overlooked factor in retirement living is facilities for the younger generations. Even if grandchildren aren’t around just yet, they’re likely to be in the future and their needs need to be considered. Estates with fishing dams, jungle gyms, swimming pools, and near the ocean will encourage more family visits in future.
10. Community
The importance of socialising and community engagement for mental well-being was highlighted during the forced isolation of the pandemic. Those residing in lifestyle estates benefit from ongoing community engagement through social clubs, sports classes, and volunteer programmes all enhance day-to-day life.
IMAGES: SERENITY HILLS
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SA Real Estate Investor Magazine FEB 2023
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Open page 116 in the magazine →INDEMNITY COVER
How to protect your family from the unforeseen costs of dying
By Editorial
B
udgets are tight. There is no doubt that many South Africans are experiencing tough times, with rising inflation resulting in that bag of groceries costing substantially more than we are used to. This doesn’t even include loadshedding’s effect on our time management, which adds additional pressure on the running of our households.
There are some expense items however that most South Africans would agree are non-negotiables, such as medical aid and car insurance. We don’t procrastinate when it comes to getting those in place, and keep them going at all costs, because we want to protect our families from financial drama should anything unforeseen happen.
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We also know that it’s important that we consider what we need in place as safeguards for our families when we pass away, but there is a common misconception that a funeral policy and life cover are enough.
In 2012, Capital Legacy was founded by Alex Simeonides as a result of Alex identifying a crucial flaw in traditional estate planning.
Many people don’t plan for, and aren’t even aware of, all the unexpected legal fees and costs at death. A few examples would be Executor fees, Conveyancing attorney fees, Masters fees, Correspondence Fees, Testamentary trust fees, Inheritance tax and other immediate expenses such as travel costs and household expenses. Depending on your Estate,
Page 117
Open page 117 in the magazine →RETIREMENT
SA Real Estate Investor Magazine FEB 2023
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Open page 118 in the magazine →INDEMNITY COVER
these bills can rack up to hundreds “The Estates I encountered often of thousands of rands. didn’t have enough liquidity to pay off the debts and cover the fees and Even with a funeral cover and life costs involved in winding up the Estate. cover, some estates don’t have enough I found that family members were in liquidity to cover all the costs, and the dark as to the process and costs so the Executor of your Estate may they would need to cover and often have to sell some of your assets to properties and other assets would pay for the winding up of your Estate. need to be auctioned off to cover This has a devastating ripple effect these costs which naturally meant that on family members who may end up the legacy the clients had intended not inheriting what was intended, and to leave behind didn’t materialise”, children and spouses having to change says Capital Legacy CEO and founder, their standard of living completely. Alex Simeonides. Before starting Capital Legacy, Alex saw cases where Executors had to 3 Examples of Legal auction off cars and homes, leaving families destitute and having to start Fees at Death from scratch.
1. Executor Fees
This led to pioneering insurance to The industry standard fee charged by cover these legal fees and costs at the executor or assisting professional to death with the creation of the Legacy wind up your estate will be a maximum Protection Plan™. of 3.5% + VAT of the value of your
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Open page 119 in the magazine →RETIREMENT
estate. An estate worth R3 Million will This is where the Legacy Protection pay, for example, approximately R120 Plan™ comes in very handy, seeing that 750 in fees. In terms of South African all these fees and more are covered Law, Executors may also charge 6% by the plan. (plus VAT) of any income into the Estate after death.
2. Conveyancing attorney fees
This is the fee charged by the conveyancing attorney when property needs to be transferred. Fees are calculated on a sliding scale depending on the value of your house as determined by an assessor. A home worth R1 850 000 being transferred to a beneficiary could cost the estate R30 544 in fees.
3. Testamentary trust fees
This is the fee charged by the trustees to administer the trust you create in terms of your will, usually to look after the money you leave to your minor children. On average, 1.15% of the net asset value is charged to establish the Trust, and 1.6% is charged annually for the ongoing administration of the Trust. The total cost of a Trust with R1.5 million in assets over 15 years would be R377 250.
Free will drafting
We offer a complimentary Willdrafting consultation in which we will draft your Will and calculate your estimated legal fees and costs at death to determine which Legacy Protection Plan™ would be best for you. For less than R200 a month, you can ensure that these costs will be covered and rest easy knowing that you have planned for the unexpected.
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Indemnity cover
The costs of dying are one of the most important factors often overlooked when drafting your will and considering your estate. Make sure you prioritise this type of insurance for your family’s sake. These fees eat away at the legacy you plan to leave behind.
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Open page 120 in the magazine →Look out for our next issue in March 2023
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