 restaurant here living in the Cape Town City Bowl. A restaurant hallelujah is situated right in the heart of the city. Over the last few years the impacts of young professionals has created so many new and exciting things to see and do. The rejuvenation of the city has been something really special to experience. There are some really beautiful suburbs in our neighborhood. Nestled below the iconic Table Mountain by the Ranezik and Tambursklo, filled with unique and beautiful homes. There's such a young vibe in the city with an incredible blend of diverse cultures catering to everybody's desire. Within the city there are so many genuine and passionate people and you'll find them in places like the Woodstock Exchange. Offering everything from handcrafted works art to a culinary experience hard to forget. For those who enjoy the outdoors, Lion's Head and Table Mountain are phenomenal places to explore. Living in the City Bowl has definitely given me my dream lifestyle and this is my neighborhood. Welcome to episode 32 of the Private Property Podcast. I'm your host, Zaman Dongwa. On day 61 of the National Lockdown and on this evening show we're going to be looking at the five real estate investment mistakes to avoid. I know a lot of us are probably thinking about venturing into real estate and you really want to make their first investment tonight's show is the one you want to be looking out for when you want to find out which mistakes to avoid and to help us better understand which mistakes to avoid and you know there'll probably be more than five but here the top five that you simply have to be aware of. I'm joined by Terai Jack who's the co-manager of partner at M5 Property Addicts. Good evening Terai, thank you so much for joining us this evening. Hey Zaman, thanks for having me and welcome to everyone else who's watching from wherever they are. So then one of the big things that you know there's certainly this lockdown has given people is the time to pause and think and one of the things that they're obviously thinking about is their investment options. Some people are obviously considering going into property and that's why they be tuned into the Private Property Podcast because they want to get different ideas of different strategies or how to go about getting that foot into the property ladder but today we want to look at what mistakes they should afford. Let's perhaps just go straight in you know what's the first mistake that you've seen you know different property investment investors rather or even yourself that you've made that you think ideas at home should be aware of and trying to avoid. Yeah thanks Zaman, this one so you know I'm fortunate to be one of those people that I that I actively involved in the property space so I invest myself together with the company that I run and alongside of that I also have other people that invest with us and the number one thing that I also realized when I was starting off is that I just didn't know myself so it might come as a surprise and people are expecting to say yeah big things but the reality is that if you actually don't know yourself and you want to invest the whole reason of why we want to invest is basically about two things is that you want to put your money somewhere so that you could be earning some money today or tomorrow right and if you actually don't know yourself then it actually doesn't mean that you actually know what you're wanting to get out of it whether it's today or tomorrow and the reality is now if you are to look at yourself and understand who you are are you a numbers person are you a people's person what kind of a person are you what are your capabilities what can you do and what can you not do that way you then be able to actually say hold on let me play in my strength and within my strength I can actually execute very easily without thinking what I can do so let's me let's give an example if you're an accountant it just makes life easier to do numbers because that's what you are that's your skill that you have so that's the very big mistake that we actually don't know who we are and we jump on to do something that we're thinking is going to give us money and we realize I don't want to be like this I don't want to rent properties or I've already made money I've already put in a lot of money into let's say a flip where you're buying and you're selling but somewhere along the line you're halfway through the flip and you realize this is not what I want I want to keep this but the property is not a rental property so that that's the first biggest mistake that I've learned so far I think you know it's probably one of those things that we don't think about as you were saying earlier in terms of being one of the first things to essentially avoid but more than anything I think it's one of those things that certainly as viewers at home you almost need to stop and think okay so what do I actually want to achieve especially when you're considering property what are my skillsets what am I good at am I more of a people's person or my great with numbers and the moment you begin to understand that it does help you then even look at the type of different strategy that you'll probably want to take further down the line so of course then that that first one is not knowing yourself so you certainly want to avoid that so doing that deep introspection and really being clear about who you are and your intention with your property portfolio or your property journey is important now TJ what will be the second thing that viewers at home should avoid I mean if you now understand who you are Zama the next thing they the natural best thing is now to understand okay you've got missing gaps and we all have gaps we all have blind views we're not all perfect so now that you actually know that this is where you are and it's okay to be where you are because none of us we are aware of what property can do I'll give you an example when I first bought my property it was about to live into that property so there's a lot of things that I didn't do that you're supposed to be doing when you're buying a property for investment so the best best thing that you can do which should be natural when you now know yourself is to say okay fine I've got these gaps where how can I fill these gaps and that is education for me education is very important and some people who are at home now could be saying TJ do we need to go and get a degree do we now need to enroll back into school that's not the idea the idea is that number one there is so much available content that is available in terms of books there's so many people that have written books I've written book my one book myself and over and above that there are so many podcasts like this one where you can tune in and you can listen and there is actually schools that are out there that teach people how to invest in properties but I always say to people you know when you are when you understand who you are and now you are trying to figure out where the missing gaps it is always good that you gravitate or look for schools that are where the teachers are in those schools are not just teachers from an academic perspective but people who are actually doing it because what happens is that people that are just academics when you're in the property space it's very very practical that you need to get your hands with so if you're working with people or people that have never done what they are teaching you it becomes very problematic because all they are doing is to giving you the textbooks answers right and when you are on the ground and doing it everything is now different so the second thing that I would really press on upon people is that and I've always seen this as a mistake even to those that are investing on the site they're investing in things but they actually don't have the education around it or they just not aware of how to do it so I'll give you an example um someone gives me let's say hundred thousand to invest on a property they have no idea where the property is they don't know what i'm going to be doing with the money so are you really investing the answer to me is no you are just giving me money now on the other hand let's talk about someone else who is going to buy their first two-bed one but that's where I studied officer in in my first two-bed one but what what is that property about what am I going to do with it so if I go in and I get educated this is where I'm going to start learning small things like there's different ways of doing property it's not just about renting it's not just about buying and selling there is a whole lot that you can now do with property so once you get the education your level of awareness grows from zero to let's say a hundred then you look back again and you say but who am I and what can I do and you start seeing easier things and you start gravitating to certain things because it's who you are so people go out into these seminars and they think well you can do a whole lot of flips no flips is good for that person who was telling you that flips are good because that's what gravitate and who they are maybe for you it's not maybe for you it's a bmb but how can you start the a bmb if you if you get the education around a bmb you actually figure out that maybe you might not need to own a property you can go and rent and you can do a bmb for as long as contractually it's allowing you to do that now all of these options are available for us but the biggest mistake is that we are not aware of it because we are not educated around it and it is on ourselves not to blame anyone else or any other system is upon ourselves to get educated and that's such an important one I think being able to make sure that you're not only holding yourself accountable but really make sure that you take advantage of the different information that you find out there and really do take charge in your own education when it comes to property is so is so important if you're just joining us at home I am speaking to Terai Jack who is the co-managing partner in five property addicts and we're looking at the real estate mistakes you want to avoid so of course many of us are probably looking or exploring going into real estate investment and perhaps we're not so sure about the different mistakes that you know are out there so we're unpacking some of the mistakes that you definitely want to avoid and you know as TJ said the first one is not knowing who you are and not understanding what your skill set is and how you can best utilize that when you are building your property portfolio as you walk your property journey and the second one is you know knowing how you can fill the gaps understanding the gaps you have in your skill set or even in your knowledge and knowing how to adequately fill it is very crucial TJ what would you say the third mistake our views at home should avoid is? The third one Zama is that a lot of us we want to do it alone because that importance of having a power team there you get it so probably it's one of those should I say businesses or not just a business book it's an investment right and for that reason it's actually one of those things where it is very much like a sport right let's take an example like rugby sport there is the ball and that ball is the goal right and we can easily put that as an analogy to say that ball is your property there is so many players that is involved for you to just get that property and from the start of getting the conveyors to getting the attendees to getting through your builders and things like that and that's the power team that we're talking about but the more you grow Zama that's one component of you know don't do it alone the second layer to that Zama is that we only know what we know and even if we go into to get educated and to read books and things like that our level of awareness is only going to grow to a certain level however when you start meeting other people that are also in the property space this is why the private property does the private show you know you get a whole lot of people that are coming through and this is the same reason as well why I also started off what we now call M5 property added capacity and this is a community of like-minded individuals people who are doing properties there could be in different space it could be Airbnb it could be Sunder accommodation it doesn't really matter but the point is that they're all doing property investment from there I can then meet John and start gravitating to John because John is doing Airbnb and I don't need now to learn from ground zero but now and now John I can go spend half a day at his house where he's doing Airbnb and I can learn a whole lot so networking is very very important and this is where one of the biggest mistakes that we have we want to do it alone we are in our own little house and we are only in our own little corner and we don't network to actually just widen our horizon in our education on who is doing what and by the way many of problems that I've had in the properties in the property space the more I've networked all of those problems have gone away because I now meet specialized people who are doing what I am struggling with every day when I get that problem I know how to call on John because I've met John I know what John does and that problem all of a sudden falls away. So of course that power team is quite important and we'll definitely you know look at a different episode where we look at what goes into your power team or who goes into your power team it's such a crucial part in your property journey you want to make sure that you have the right set of people to help you navigate your property journey so we definitely will be doing an episode on the power team that should be you know part of what you you make sure you invest in on your property journey and that investment isn't always in money sometimes it's making sure that you have the right people who can reach out to the right attorneys perhaps the right people who are into construction if there's any type of work that's going to be needed the right people who are able to remodel your property the right plumbers right electricians the right bond originators who are working with you so we'll definitely be sure to cover that topic in the coming weeks. TJ what would you say is the fourth mistakes that our views on home should avoid? I think this is the biggest one Zama especially when you've gone through all of the steps that I'm talking about and by no means am I saying that these are steps that one needs to get to from step number one to three but it's a facade of things that you need to be to be covering if you're wanting to make an investment in property is is a serious one the biggest for me Zama is that now we are in the crust of it our feet is wet and we are now at a property at the actual property that we're now we want to buy whether we are buying it in a different space from where we are living or close by it doesn't really matter but the effect of the matter now is we are there now we are wanting to buy this we go and we see it the biggest thing in Zama is that when you're buying for an investment your heart needs to be very distant away from you it is a numbers game and emotions should never kick in at any time and this is where I generally say to people the biggest mistakes here is we do not do our homework very well now what do I mean by that it falls into two facets the first one is what we predominantly call do diligence DD and do diligence is just actually to cover everything you you almost like a private investigator you want to know who owns this property why are they selling it if this property here that I'm buying how many what kind of how can I change it to to be producing more income if I'm to sell it how much can I sell it for so you predict all of those things given the information that you've got in your due diligence but if your due diligence is not good what's going to happen is that the moment you buy it what you've missed in your due diligence is going to bite you right and that's how you're going to lose money and that's when we start saying property investment is not good and on that due diligence what then kicks in as well is what we call running numbers right so we spoke about you know remove your heart away from it you know so you kind of like going to your property leave your heart right at the gate there or in your car and you go in with numbers so running numbers is very important so because it's about investment it's about money is it making money I remember when I bought the farm where we almost where we lost five million rent when we bought that farm it was for an investment and we're saying hey we're going to have chickens here and things like that but we didn't run our numbers so all of it was in the A right and it made sense when we're talking about it made sense but because now I'm doing business very differently where when I go and buy property whether it is a farm whether it is a house whether it is a factory whatever you're going to be using it for you need to be able to run numbers so what are the numbers that we're talking about if we're talking about property rental and predominantly this is what we do in our business and we want to actually understand what is the acquisition cost how much money are we going to spend in buying this particular property what is the cost of that money so you need to cover that in so it's one million rand for argument sake and there's going to be closing costs how much are those closing costs we spoke earlier on around number two to say that you need to have the power team in your team so your your your attorneys already needs to be already giving you an indication if you are transferring a property of x amount it's going to cost you x but mind you the more you are working with these attorneys and you're giving them more work the likelihood of you paying less and less is very high because you now have a relationship and this is where our biggest problem is also when we are doing investments we are working with john peter susan there's no relationships that we are forming but coming back to the numbers part so you are you now have your acquisition and you now go back and say okay what is the cost of money payment i need to be paying 10 000 rand that's the cost of your investment now at the back of that you now want to say how much rental can i collect and you've included things like insurance and all of these other costs that you can include municipality and all of that and it's a 10 000 rand that you are having you know it's a it's a ballpark figure that we're giving then you are making 20 000 rand on that properties amount for rental so you affected in what if one tenant doesn't pay what if five tenants doesn't pay so all of a sudden you're you're kind of like round about it a 15 000 if you subtract your 15 000 from your 10 000 which is your cost of running that property you're making some money right five grand so that's good money that you're making there you've affected in maintenance and things like that right so on that perspective it's a good property what about the other way around where potentially your rental income was 9 000 but your running cost is 10 000 so essentially you're saying that you know part of doing our homework is making sure that we're also just run the right numbers and i think you know coming from what you're even saying it's very clear to me that we certainly need to do another show a very different show on what we mean when we say run the numbers because there are so many different ways to run the numbers there's so many different factors to consider and oftentimes people simply don't know so even if you've got now an investor who's got a few properties under their belt perhaps even advising them on different ways that can optimize costs in their property portfolio so we do promise to add that as another episode that we will explore because understanding the numbers that we must run and we talk about this all the time we say run the numbers run the numbers understand the numbers before you make that decision make sure that the numbers also say that this is a good deal but so many of us probably might not know what exactly we need to be running and what these numbers essentially mean so we'll definitely be sure to cover that in a different episode we're going to go for a quick break and when we come back we'll be looking at that last mistake to avoid but as Tisha and I was talking you know of it we're saying that when you look at investing in property and exploring investing in property you have typically more than five you know mistakes that you want to avoid so we'll probably be putting in a bonus you know tip or bonus issue that you should probably avoid just after the break so when we come back I'll still be speaking to you Charai Jaku is the co-manager partner at M5 Property Addicts we're looking at the five real estate investment mistakes to avoid we'll be back just after this. Back to episode 32 of the private property podcast I'm your host Zaman Duma Kumar Lohan joined this evening by Charai Jaku is the co-manager partner at M5 Property Addicts and we're talking about the five real estate investment mistakes to avoid now Tisha you're about to share that last mistake that we should avoid cause to our viewers at home if you've got any questions or comments do send them through and Tisha and I will unpack them if you've made any investment mistakes that you want to share with our listeners and viewers at home please do share them and a lot of us learn from each other's mistakes I think more than anything we want to make sure that some of the mistakes that we've made other investors don't make so do send through those comments and questions Tisha that last mistake that we should be avoiding when we're going down the property investment journey which one would you say it is yeah thanks a lot on that so I think the last one for me is that I wanted to throw in for someone who is also not starting off but potentially they have done four or five properties and they're now really looking at you know building their portfolio and this was also a lesson learned from me when I was starting off as well is that we tend to neglect and it's not by by by the fact that we choose to but it just so happens that when you start buying your properties you you're buying a particular area because you like it or you're buying your property because maybe your first property that's where you are staying and then you moved on into another area you've outgrown that property and the biggest one for me is that we tend to neglect understanding the areas that we're investing in so there are so many there's so many companies out there I can just drop in a few names that I favor to look into so for instance tpn is my favorite in these days I like the way in which tpn zooms in into a particular neighborhood and it tells me from an investment perspective what I am likely going to be seeing in that particular area what kind of an area is it is it a growing area what kind of trends of are happening in that particular area so if I am being serious about my investment and I am wanting to grow that my portfolio is this the right area for me to be investing in do people actually who live in this area are they good pay payees do they pay well in on time and there's data around all of this so when I'm now buying I'm actually making an informed decision right but what if if I've got an area too that I was earmarking on or potentially I am just thinking maybe it could be a good area can I not now do a comparison with the area where I'm already investing in and that could actually inform which area then I can go into and that for me is was a very big one because now I can literally going in particular areas and I can heavily invest in them because I know from a from a growing perspective it's a good area for me is it a cash flowing area or is it an appreciation of assets why am I investing in that area in such kind of reports like the tpn for me it gives me that my confidence so that I can jump into that area to invest in now you know tj we we did say earlier on or just before the break that oftentimes they're obviously more than the five mistakes and we'll add in a bonus sixth mistake that viewers at home should avoid what would be that bonus sixth mistake that you think viewers at home should avoid when they're looking at investing in real estate 100 percent Zama so so the bonus one for me is that what normally happens to us and you know if you look at all the reports normally it stipulates that the majority of people who are investing in properties they get to number two and they kind of like get stuck there for a long time or they get to number three and then they don't grow and I've always wondered what happens or what happened to those people and I already lived it the reality is that when you get to a certain level we get scared and and I'm going to mention this to say that this is the biggest mistake that we have because we get scared too early in the game right we get that one bad tenant and boom Zama we want to sell we get that one tenant who doesn't pay for three four months and boom we want to sell where is in anything that we are going to do outside property or with property included at any given times Zama number one there is a risk in everything that you do just waking up you and me it was very risky for us but we mitigated that by just standing up right so in property alone there is also risks that are there but we now need to know how to navigate them and the longer you stay in the game that's number one and then number two the more you're also growing your portfolio the easier it gets on the other side because now you have processes and you've got systems that you're working with that helps you to navigate such kind of issues and the bigger your portfolio the more it gets bigger when one person doesn't pay you don't feel it where is when you just have your two bed one bath and one person doesn't doesn't pay you're going bankrupt in two months time right so for me that's the biggest one and i write about that in my book that i recently wrote a bed debt to property mogul in two years that we really get scared too early in the game you know it's like we are in love and that boyfriend doesn't pitch up when he said he is going to pitch up and we're signing divorce papers already and they are defense the boyfriend should pitch up when he says he's going to pitch up but tj before we wrap you know you're mentioning your book perhaps tell us a little bit about the book and some of the issues that you tackle in the book yeah so the book what i really wrote the book zama the title might sound glamorous uh it's not at all it's right right about i looked at myself when i was starting off and i looked at what was some of the obstacles that i faced i pulled up my heart into it from just being employed when i started off property investing i was employed what were some of the other challenges that i had but when i also started off zama i was in debt about that particular time of roundabout five million rand so how did i navigate that to start being able to build the property business that i've built and i had to go outside the books in terms of thinking what can be done and actually realize that there's quite a lot of people that don't know these things so i've put all of those things out to the surface and hoping that you know those that are going to be reading the book they will get the nuggets and then they can apply it in their own lives so the book is really written around the challenge is how i managed it and how can you actually do it yourself in your own personal life uh in the chapters that i walked through from all the time when i was uh when i was born all the time to to where i am today but really focusing it around property uh because i think that property is one of those spaces where if if you're doing it very well it does not just bring you money on the table today but it can really gives you money and wealthy for the rest of your life plus your generations to come and you know for viewers at home tj who might want to buy the book how do they go about doing so um the book is available on our facebook page uh in five property addicts um that's that's number one or number two it is on my personal page which is www.tauraijack.com and we've got you know comments and questions coming in from viewers at home and the comment here is from Gattakor Achaipu who says i think my mistake was to buy properties in my own name i'm still learning about buying through a company or trust and Gattakor i mean that's one of the mistakes that a lot of us uh you know newbie investors essentially do you buy those first few properties in your name and sometimes it may be because perhaps you didn't think you're going to go down the real estate investment option maybe you just thought i'll just have one or two and that's it but then the property you know bug bites which is a thing and it happens and you realize that perhaps buying those first few properties may not have been the best things to do we did promise of course that we're going to be bringing you an episode in helping us structure our property portfolios and looking at the best ways whether we must use the PTY or trust and the different ways of different pros and cons of using either one of those instruments TJ we're going to wrap it up this evening thank you so much for for joining us and of course if people at home want to reach you how do they go about reaching you they can reach us via our website www.m5propertyversity.com and that's where we are and that is to arrive jack who's the co-managing partner at M5 Property Addicts we're talking about the five real estate investment mistakes to avoid first that's it for this evening until tomorrow evening i hope you're staying well and staying safe of course do continue participating in the private property podcast competition that we posted details on just here below on Friday we'll be announcing who the lucky winner who gets to walk away with that 1000 rand prize is and i'm sure this prize you know will go a long way given that we find ourselves in COVID and really wanting to make a little bit of extra money everywhere we go so do download the app and make sure that you send us that screenshot and you might stand a chance to win that 1000 rand prize so tomorrow evenings stay home stay safe and we'll be back again tomorrow cheers thanks a lot bye hi i'm khumotso boi and i'm an entrepreneur from sueta sueta's come a long way from a small town to a mini city of its own sueta's got some really really nice suburbs like deep-gluf extension but the locals call it deep-gluf expensive a lander is known as a server that had the first brick houses bought in sueta a iconic games pirate philagazi street or nasa mandela and desmond tutu resided to the west of sueta you find suburbs of dobsonville and protea these two suburbs are actually very cosmopolitan fresh young and very new right next door to sueta river neighboring suburb which is out of the park for a little adventure and a little fun sueta's got so many night spots from the news cafe at moponyamore to your philagazi streets at kumzi's to just chilling at chaff pausy just between the towers and having a simple bright place just in yama something very close to my heart is actually seeing people move back into sueta growing businesses remodeling homes it merely says to us that sueta's a growing city there's way more to this place than what we think sueta needs to be discovered daily i'm so proud to call sueta my home and this is my neighborhood i'm an entrepreneur i moved to sentin to pursue a dream i've based myself in sentin because it's the gateway to efika the neighborhood of sentin is alive it's alive with possibility it's got the most amazing vibe if you need to get anything done this is the place to get it done one of the things i really love about sentin is how it lights up at night if those lights don't inspire you nothing will sentin is the richest square mile in efika it has everything from shopping in sentin city to five star hotels like a macalangelo for my international guests it works for me to be here there are so many designer stores there's an abundance of clothes and everything else to choose from being an entrepreneur i travel a lot so it's really convenient to be able to get onto the hot train and in 15 minutes i'm at the airport business is important to me but my family is everything and that's why my family and i are looking to move into one of the suburbs in sentin sentin has some of the most exclusive homes in the country in places like hide park and sandown a little bit less fast paced is your suburbs like brineston and gavolia brineston was a natural choice it's got great open spaces it's safe my son's already at a really good school there sentin gives me great variety from an awesome nightlife to beautiful places for lunch to spas where i can really relax and recharge things happen in sentin and that's my neighborhood