credit record

Why Your Credit Record is the Key to Growing Your Wealth

By: Retha van Rooyen, Director at M5 Property Addicts 

I used to be a person that lived a very vanilla ice-cream kind of life.  I had a good job with a good salary, I had a credit card which I hated and diligently paid every month and the standard things like clothing accounts and a cell phone bill.  I was permanently stressed about all these accounts and made sure that they were all paid in advance of the due date.  This made me very poor and I was broke by the 3rd of every month. Bills paid, salary gone….

Read: How you can go from employee to property mogul 

Not even for a moment did I know that I was actually sitting on a goldmine; my credit record.  My credit score looked like the results of a champion Olympics athlete, I had full marks, or at least the highest score you can get.  My exemplary credit record allowed me access to millions of Rand in debt.  Well that isn’t so great, any sane person would think, do you really want to get yourself even more bills to pay?  The problem, however, is that I was thinking of this debt in the form of bad debt, where this meant buying a car or paying school fees with my extra debt. That is bad as I am not getting income from buying these items.  I didn’t understand what “good debt” was.  In a nutshell, good debt is when you buy something using a loan, but that item is making you money.  In my world that means property.  You can rent a property out at a value higher than your bond and expenses and have a profit at the end of the month, giving you extra money just by getting the loan and buying the right thing with it.

But this is not what this story is actually about, we all know how rentals work, big deal. But what if you could do a development with just your credit record? One of my first property investment deals was just this.  I did a joint venture with a developer.  I applied for a bond to secure the land and the building work. The developer built the property at cost, meaning he didn’t make any profit on the deal. The actual cost of material and labour was paid for by the bank. Why would a developer do that? He must be crazy you might think. 

You see, he does not make any profit during the building process, but when we sold the property right after it was finished and split the profit of the sale, he made a lot more than he would have if he just charged for his building work.

If you know anything about building a house, you will know that you do need some cash upfront to pay architects, council fees etc. so how does that part get paid for?  All the upfront professional services were on a delayed payment plan, thanks to the developer’s great network. Initial material was bought on loan from the suppliers, thanks to the developer’s available credit.  As soon as the bank made their first payment all accounts could be settled, and the project was running smoothly.



The last thought in your mind must surely be, that we were lucky to find such a developer partner. And you will be correct, we were very lucky, and since then we made him a full-time partner in our business.   We have also decided that “ubuntu” will live through us and we have opened this model up to people with great credit records.  M5 Property Addicts are now playing the role of the developer and all you need to bring to the partnership is your credit record!  If you are interested in becoming a development partner, fill in the form here and a member of the M5 Property Addicts will contact you directly.