In my last post, I shared my story of how I transformed my body in 30 days. It was easy to do, because someone showed me the “recipe” of getting an athletic body in the shortest possible time. I followed the recipe and the result was exactly what I wanted. So if this is possible with training, isn’t it possible with anything else in life. You find the recipe, the plan, you execute it and the results are a given.
I once read that to be successful in any industry, you need to be a specialist. What makes one a specialist? Knowing something that 99% of other people don’t know. And how do you achieve that? By reading 5 books on a specific topic. Yes, by reading 5 books, you would have done something that 99% other people didn’t do. Specialist. Easy.
So with the above in mind, I started the property game 4 months ago. I read a whole bunch of books, met with people in the industry and started following trends and articles. I was looking for the recipe on how to make money out of property. I met great people, from bond originators, to estate agents, conveyancing attorneys to developers. I had several lunches and dinners, I invested in friendships and I spend an awful lot of time reading books and browsing the net. At the end of my “study”, I knew a lot about property in South Africa. I knew that some people had made millions and I’ve also learned that some had lost everything. I knew that it was a risky business but I was confident that I had the recipe to make my first killer deal.
And… I did.
I bought a property on a sheriff’s auction. Now sheriff’s auctions are a different ball game and you are taking a huge risk when involving yourself in one. Here are 3 things that you need to take special note of:
You need cash
People say “You need money, to make money!” and I’ve always disagreed and said “You need time, to make money!”. Well in this business and in the current downward market, you unfortunately do need money in property. When the hammer falls on you at an auction, you need to pay a 10% deposit of the purchase price and commission on the spot and in cash.
You are not allowed to view the property
Well, at least not on the inside, so you can drive past the property but you will never be allowed to view it on the inside. When I do my research, I always try and get as close as possible or ask security guards whether it is vacant or not and what the condition is. This is a huge risk and as a rule I always make provision for at least R100k to do repairs and for legal costs should you need to evict a tenant or owner.
You are responsible for all outstanding levies
Yes, any outstanding levies, including body corporate levies, electricity, rates and taxes, etc. This can be an expensive exercise and one needs to do proper homework. The outstanding levies on the property I bought, was a staggering R132k.
Now, with the above in mind, I had done my homework and had my eye on a property in Bryanston. I did a valuation and knew that the property was worth R1.7m. In a bad market (as it is now), I calculated that I can drop the price with R100k and make a quick sale. The property is situated in an upmarket neighbourhood and through research, I knew that one would find a buyer easily. I did my calculations and my highest bid would be R1,120,000.00.
On the auction day (Tuesday) I was sitting next to an old man from Cape Town and we started chatting (my friends always find it odd that I chat to complete strangers), but he was convinced that it was a great deal and in the process became my biggest fan. He encouraged me to increase my price as it went past my bid and the hammer eventually fell on me with a bid of R1.2m.
That Saturday I went to the property (for the first time) to drop off my cleaning lady and as we were busy unpacking, someone knocked on the door, it was the neighbour and they wanted to buy the property. I couldn’t believe it! I actually changed my mind and decided not to sell but to move into the property myself. The neighbour was serious and convinced me otherwise. We signed the agreement and this morning the funds were transferred into my account. The final selling price was R1.6m.
I’m now convinced that everything in life has a simple recipe, we just need to be willing to learn and spend the time to figure it out. Today, property is one of my most enjoyable hobbies and in the process, it is making me more money than what most people earn at a 9 to 5 job.
Let me know if you read this post and if you have any questions. I’m always keen to chat property and answer questions about it (I am a specialist, remember).
Ps. The old man from Cape Town was more excited than I was when I got the deal. 🙂