Investor of the Year Finalist – Thabeni Madela

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  1. How much do you estimate your current net worth is across your entire portfolio?
    Redacted
  2. What type of property do you invest in — please circle below and add the area of the property, province & suburb.

Residential:

1. Kyalami Hills, Gauteng, Kyalami Hills – Riverbend Estate

  1. Witbank, Mpumalanga, Reyno Ridge, Ridge View Village 1
  2. Potchefstroom, North West, Campus Living Three – Student Accomodation
  3. Johannesburg, Gauteng, Normandy Complex, Ormonde
  4. Evander, Mpumalanga, Leopard Tree Nook, Evander
  5. Newcastle, KZN, Aviary Hills [1000m2 – Vacant land/Stand] – bought cash – R190 000
  1. What is your reasoning for your property selection criteria? (Why, when, where and how?) My properties are all for residential market at this stage. There is a good mixture of properties for student accommodation and normal working class. I currently receive a total rental income of R25700 per month before bond and other deductions. Location and rental demand are my main selection criteria at this stage. I also consider potential capital growth whenever I buy a property. My goal at this stage is to acquire more properties for student accommodation, my target location for this year is Potchefstroom, where I intend to buy a property closer to the University of North West.
  1. What has your overall strategy been since your started investing?

My strategy has always been to look at locations with high rental pool/demand; I have found these locations to be areas close to shopping centres, universities, industries and places of work. All my properties are financed by the bank. My strategy in acquiring the loans is to pay the deposit of 10% every time I buy the property. This assists me in getting the loan at the better and reasonable interest rate. My definition of a reasonable interest rate is prime minus. I have found that paying the deposit forms a good basis for negotiating the interest rate.

  1. When did you start investing in property?
    I bought my first property in June 2010, second in October 2013, third in October 2015, fourth in June 2016 and the fifth one in May 2017. I am currently renting out 3 properties in my portfolio. I stay in one and my two brothers who are currently studying stay in another one. Even though I bought my first property in 2010, I did not consider it as an investment because I was staying in it, which does not make it an investment according to Robert Kiyosaki. Therefore, my first investment property was bought in 2015.  I consider the properties I’m renting out to be assets since they generate some income.
  1. What was the first property you ever invested in?
    The first property I invested in or rented out was a 2 bedroom flat in Witbank. This property was purely bought for investment. Graciously, the property had tenants who were willing to extend the lease with me or under new management. Thanks to the previous owner.
  1. What has been your most significant property investment to date?
    My most significant property to date is the one I bought in Kyalami Hills, this property was bought off plan from the developer. It was in the second phase of the development selling at R1,180 million in 2015; the last phase was sold out in 2016 for approximately R1,5 million a unit. This means that I would make a profit of about R250 000 in less than 2 years, should I decide to sell. Another exciting property deal I have made is the student accommodation property that I recently bought in Potchefstroom, it’s a two bedroom flat that is situated about 50m away from the North West university campus. This location allows a student to walk to the campus, thus saving parents money for student transport. Students can attend late lectures at night without worrying about transport. I foresee myself acquiring more properties around universities. I believe that it is also a way of giving back or assisting the government to combat the lack of safe and reliable student accommodation. In my market research study, I have observed that the number of student intake has drastically increased and university residences cannot accommodate all admitted students, as a result, the need for external accommodation is apparent and lucrative. However, this opportunity is not without its challenges, such as delayed payments etc. so, one needs to set aside a buffer for such periods.
  1. How much of the capital used to start investing was your own?
    I have paid the deposit of 10% for all properties I have. Transfer and registration fees were also paid by myself for all properties registered in my name. Figures that are still fresh in my records are: Potchefstroom where I paid R114 000 for both deposit and transfer and registration, in Kyalami I paid the deposit of R75 000 (other costs were included in the purchase price), in Witbank I paid close to R50 000 for both the deposit and the transfer & registration costs.
  1. Outline your asset management and risk management/strategies for these categories:

Lender diversification: I pay extra on my bond repayment in order to beat the interest and also to have advance cash in my property. I also have a life and disability cover that will cover my debt should something happen to me.

  1. How would you say you conducted yourself ethically in your investment practices?
    My tenants undergo the normal vetting before they are accepted. I negotiate the rental increase with them until agreement is reached.
  2. Do you contribute to your family or community? How?
    Yes, one of my properties is occupied by my brothers who are still studying. This is a way of assisting my parents who are currently battling with school fees for them. This property is also a home for my relatives who are coming from far to look for job opportunities in Johannesburg. I had my cousin whom I was assisting to get the driver’s license for a fork lift who also stayed at my place.
  1. If you could do it all over again, what would you change and why? I would buy more properties for student accommodation. I would start very early to invest in property.
  2. How has investing in property changed/altered your life? It has given me the sense of ownership, responsibility and accountability. I am very quick to respond to the needs of my tenants.

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