Recommendations?

I am looking for a rental agency to manage and let out our 3 bedroom house in the Albertville / Greymont region.

Would be ideal for student accommodation or for a family. There is a gardener and security contract thrown in to look after the place.

If anyone can make any recommendations or is interested in renting the place - R6500 + elec for the month, please post your details here and will touch base with you.

Regards,

Commercial property blowing up?

I was driving through Lonehill, Fourways and Roodepoort recently and it is quite interesting to see the number of auction signs that are outside the commercial property developments. A lot of these are these trendy "strip-mall" type setups but also these smaller office complexes.

What I find interesting though is that while the developers are in trouble the tenants don't appear to be closing up shop - does this mean that the developers themselves are so far over-geared that the rental they were getting from the tenants was not covering their costs? That seems odd...

Or is it more a case that the tenants are the problem and simply paying later than they should be?

Anyone an expert on commercial property in South Africa and able to comment?

Property share and share alike

A new model in property investment has hit the Cape Town market. We’re familiar with the term ‘shares’ when used alongside ‘stock exchange’, but ever thought about buying shares in property? Not ‘timeshare’ or ‘fractional ownership’, but real shares that you can buy or sell. Realcor Cape has taken a bold step in a new direction by offering buyers shares in its new hotel at the development costs.

“We’ve undertaken to create a business model that works both for Realcor as well as for the investors by going into partnership with them as a way to build up capital for the hotel and create wealth for investors,” Deonette de Ridder, Realcor’s Managing Director says of their new development The Blaauwberg Beach Hotel.

“Buying shares in the hotel is the same as buying shares in a commercial property and an income generating business. So the moment the value in the property increases, shares will in turn become more valuable. Shareholders benefit from the fixed capital which is the building itself and from the profit of the hotel business,” says de Ridder.

Recently back from its first-class launch in the United Kingdom, Realcor intends to sell shares in the hotel to both foreigners and locals. De Ridder comments, “South Africans should benefit from this hotel as well. The model was well-received in the UK. There was a lot of interest in the development of the hotel, but the idea of buying shares in a hotel is new and will possibly take time to catch on in the traditional market place.” Twenty percent of the shares offered will be on sale to the public, while the rest is on sale to listed funds. This means the public own shares together with listed funds. “Realcor is currently registering its prospectus and the shares should become available early in April,” adds de Ridder. “We are also excited that RMB has offered finance to build hotel, showing that there is faith in the project.”

The model is different from fractional ownership and timeshare in that the buyer doesn’t own a particular room or put in a lump sum never to see the return on that money. Rather, buying shares in a property is a flexible exercise. For one, you can sell shares at your own discretion while buying shares could mean earning good dividends. What’s more, shareholders will qualify for special rates and services should they ever choose to stay at Blaauwberg Beach Hotel. The idea that you are increasing the value of your shares by staying at the hotel is a marvellous advantage. This along with the fact that the hotel is environmentally-aware makes the investment an appealing one.

South Africa’s investment opportunities have necessarily been more progressive since a growing and diverse economy mean that investors need to keep thinking up creative and more appealing offers. “It’s a good climate for growth and South Africa’s property industry is benefiting from this kind of innovation ten-fold. What’s more, investors will not only benefit from the capital appreciation of the building itself, but also from the profit of the hotel as it runs”, adds de Ridder.

With the current property market boom in a slight decline, investors will benefit by buying shares now since share value is very likely to increase dramatically. “South Africa’s property market is definitely a buyer’s market at the moment. An investment now could lead to high returns later on. Buying shares in the hotel will ensure that this return is seen sooner rather than later,” ends de Ridder.

Realcor Cape is currently in the process of registering their prospectus and the shares for the Hotel should be available in early April this year. Investors will be able to purchase shares at the development costs of the project.

Contact information:
Deonette de Ridder
Realcor Cape
Tel: 083 700 4028

Source: PressPortal

Deposits

Would you think it inappropriate if your bank made it a rule of thumb that you had to have a minimum of 25% deposit before they would finance your home?

Part of the problem that the "credit crisis" has highlighted is the extension of credit to consumers who could ill afford the gearing on a property portfolio.

South African consumers have long gotten used to the idea of paying between 0 and 10% deposits (which many of them grumble about).

These are the same people who are now seeing their houses being repossesed.

The flip side of that is that housing is a basic right and many people believe that banks MUST lend to them on terms that make it possible to house their families.

Do you believe it is your right to be able to get a loan without putting down a sizeable deposit? Would you be offended if your bank said you could apply for a loan by putting down a 35% deposit?

Give me your thoughts on what you believe is an appropriate level of deposit for the South African residential property market....

Review your personal balance sheet

Reproduced with permission from the Bad Entrepreneur blog.

I'm definately not one of those Robert Kiyosaki "Rich Dad, Poor Dad" preachers - but I think there was one really simple concept that was in the original book, which I believe that ordinary employees or employers should remember and take out of the book...

... and that is around their personal balance sheets and being able to distinguish between an asset and a liability.

It sounds like such a simple concept - if your income producing (cash positive) assets outweigh your liabilities then you're going to get ahead in the game.

The problem comes in when you can't distinguish between an asset and a liability on your balance sheet... don't worry - the concept has managed to flummox most of the geniuses on Wall Street so you're not alone.

It is an interesting exercise - write down your assets and liabliities.

Quick question here - how many of you put your house and your car down as "assets" and what value did you attribute to them? Do you owe any money on either your car or your house? Then it's not an asset in my opinion.

You might argue that there is "equity" in your house at the moment if you decided to sell it now. If you managed to successfully sell your house for more than you owe on it, THEN it becomes an asset. Until you've sold it, there is NO EQUITY in your house... remember this idea that there is inherent equity in your house is exactly what blew out the US market and guys that are trying to sell their houses now are quickly discovering this.

If I take R660 a month and I am servicing interest on a bond - then I don't classify that as having bought an asset. If however I took R500 + R160 in trading costs and I invested in a property unit trust or share which yields say 7.5% after tax THEN I would classify that as having a R500 asset...

It becomes an asset when it generates real cash in your bank.

For me - I felt I had hit some positive landmarks when my share portfolio for instance exceeded what I owed on my major liabilities. I then have a real asset to be able to A) generate cash and B) settle the liability at any given stage and remain "ahead of the game".

Go and have a look at your personal balance sheet again and see if you can identify what is an asset and then yourself similar goals to service your liabilites as quickly as possible and try and build up real assets.

New property concept

I see that estate agents Jawitz Properties has come up with a new method of selling property... Interesting method. The press release is below... What's the view on this offering?

Jawitz Properties Launch New Sales Methodology
4 February 2009

In response to the slower home sales, falling prices and the increase in the number of urgent sellers, Jawitz Properties have introduced a new method of selling property in South Africa and which is currently used internationally in countries like Australia and New Zealand - Sale by Private Tender.

Says Jawitz: ‘We are seeing more urgent sellers currently than for some time. Even though rates may be coming down, some homeowners are still wanting to move into a more affordable property or may be immigrating and the departure time is drawing nearer or have bought subject to selling their home and need to sell quickly’

Sale by Private Tender gives sellers the opportunity to meet these deadlines and still achieve a market related price within a limited time period. As compared to the normal selling method currently used in South Africa, there are limited viewing days and offers have to be submitted by a specific day and time in order to be considered. From a time point of view, this works for the seller.

While buyers may have a shorter time to make a decision, in the current market, an opportunity missed is an opportunity gone. While the limited viewing times is the same as auctioneering, Sale By Private Tender avoids the ‘firesale’ approach buyers often bring to an auction looking for bargains.

The advantage to buyers of having a specific cut-off time is that all offers are received and then submitted to the seller who then has an opportunity to look not only at the price but also at the quality of the offer. This is especially important at the moment given the banks current tough lending criteria. There may be reserve prices on some of the properties says Jawitz but the seller can then counter offer in the normal way. “We’re excited to introduce this new sales methodology to the market and we’re confident that it will work for clients who are open to the realistic price the market will pay. Even though prices have dropped in real terms over the last year to create better value for buyers in the market, there are still very few bargains. Unlike an auction, buyers are not aware what price they’re bidding against and will put forward their best offer” says Herschel Jawitz, CEO of Jawitz Properties.

Abalengani

Anybody heard much about this Abalengani Property Group?

They're listing their property assets on the JSE in a reverse listing into the Kaydav shell. They're talking about dual listing of Preference and Ordinary shares with the pref shares offering an after tax return of around 15% and you get ordinary shares thrown into the deal.

Getting mixed feedback from the industry - any comments?

Creative rent collecting strategies....

Aaaaahhhh the not so glitzy side of property... the non-paying tenant.

A female colleague of mine and I were chatting today and she's at her wits end. She has a male tenant in one of her properties and he is simply refusing to pay his rent. She has tried to be nice by giving him extra time to pay his arrears and tried debt collectors and lawyers letters.

The more she pushes the legal route the more aggressive the tenant gets and she's feeling completely at a loss to try and get the money out of this guy.

She's served notice on them and the tenant has disregarded the letters saying that he will leave when he has found another place...

I saw the topic came up on one of the trading websites and I saw some suggestions for a little creative pressure on the tenant:

1. Two Nigerian heavies outweigh one Sandton yuppie on steroids...

2. Another suggestion was to send the maintenance man around in the late afternoon to remove the front door or gate for that much needed coat of paint. The money might suddenly materialise when they realise you don't intend having the door back overnight....

Thought maybe I'd throw the idea out and see if anyone has got any ideas for some creative (even legal) debt collecting solutions for this kind of situation??

ApexHi

As a shareholder / Unitholder in ApexHi I can't say I'm very happy with the offer from Redefine income fund to buy out the unit holders in ApexHi and Madison.

I believe shareholders are better served by staying invested in ApexHi and will enjoy stronger dividends from the ApexHi portfolio.

I intend voting against the offer.

Ouch!

I went to go and get Chinese last night and pulled into our favourite takeaway place near Cresta.

The shopping centre I went in had 7 (thats right 7!) shops that had been boarded up and were listed as TO LET out of 25.

A key anchor tenant who had a double story restaurant was one of the most noticeable tenants missing.

Says a lot for the state of the commercial property market in SA... Going to be interesting to see what effect this has on SA commercial property rentals. Anyone noticed whether rental rates are coming off yet??