 Don't you just love the smell of passive income in the morning? Building a property portfolio is a pretty good route for financial independence. And as always, we are here to help you get going with some expert advice and insight. This is the Private Property Podcast. My name is Tumi, let's unpack. Congratulations to Glenn Majosi for walking away with that 500 grand cash prize from yesterday's show. Thank you so much, Glenn, for interacting with us. Shoot your shot and share this post and tag your friends. And the person with the most shares wins 500 grand cash. Here's some handy tips to get you started off your property plans and strap and get them ready to launch. Number one, to become a truly successful residential property investor, you need to learn everything you can about every aspect of the industry. So the first step is to educate yourself. Number two, people usually have two options when it comes to finding a roof over their heads, either renting or buying. When it comes to residential real estate, your first priority should be to invest in a home for yourself, then start building your empire. Number three, your credit score basically determines your buying power. Before you start discussing how to finance investment properties, you need to take a good look at your credit score first. Number four, it's all about repetition. Buying another property from your first property profits is how you get investment return, the cycle going, and you have to have your portfolio working for you. Number five, any investment involves some risks. Finding it, putting all your eggs in one basket is the riskiest thing you can do. If all your investment properties are in the same type, it will be hard for you when the market drops. Whether you are starting from scratch or looking to grow, we hope that these facts help you to get the best out of your residential property investing. Today we are joined by a former Miss Universe and she holds five degrees and is in real is a real estate superstar, a true combination of beauty and brains. She has been working from Pam Golding since 1994 and she's the area principal for Durban North. Ladies and gentlemen and the private property family, help me welcome our guest tonight, Carol Reylo Reynolds. Carol, good evening. Thank you so much for joining us. To me, thanks so much for having me. Five degrees, ma'am. Five degrees. That is absolutely amazing and truly an expert. Someone we want to have on the seats to have this conversation with as we are talking property and investing. So jumping straight into our conversation tonight, I always mention property portfolios on this podcast. Can you explain exactly what this term means for somebody who's watching us for the first time and wants to start a property portfolio? Yes. So essentially property is a fantastic asset and investment class. So if you can start to build a portfolio, in other words, own a number of properties that you've invested in to secure rental income, then that is a fantastic wealth creation tool. In fact, it's one of the reasons that I'm in property. I'm so passionate about using property to create wealth. Something I've taught my children and it's something that I think everybody should investigate and explore. And if they have the means, they need to get going as soon as possible. And what can a property investor do in order to start building a portfolio? Like someone already has a home. They are looking and they are prospectively looking to go into this. You said one word that I like then you said investigate. How does one investigate this and start building a portfolio? So you need to start researching areas that generate good rental returns. So popular areas where there's good capital growth where you know that your investment is secure because the area has stood the test of time where there's always a demand for tenants. That's the key because when you're building your property portfolio, you actually want to use other people's money to grow your wealth. So you're going to investigate bond finance, which means that you have to look at your credit score and make sure that you've got a good track record so that you can secure bond finance. And then you need to make sure you're going to invest in an area where tenants are in high demand and easy to find so that you can then place a tenant into your property that tenant will then subsidize your bond finance. And the property starts to work for itself, which is what you want. It's always a good idea to get your money to work for you rather than you having to work for your money. And you know when it comes to property investments, right? It has a reputation as something that is really just for the wealthy. And does one need to have a lot of money up front before they start investing and what advice would you give to somebody who wants to start? There are so many ways to do that. One is to form a syndicate. If you haven't got a sufficient deposit, then find a group of friends who have got the same interests in you and who are also keen to get a property portfolio going. Form a syndicate. You can either buy in several people's names or you can form a little company and become shareholders in a company that you use as your investment tool. And that little company becomes your property company and the four of you work together to slowly build an asset base and properties. So you can start, for instance, you could each contribute 100,000 Rand, which means you've got a deposit of 400,000. And then you can seek to acquire a bond for about 600,000. Look at properties that are valued at a million Rand. And boom, you get started. A million Rand is a really nice starting point because the numbers work so well. So if you can gear your property and by gearing, I mean using the bank's money to finance it, you can put down a deposit of say 30 to 50%. So in this case, we're talking about a 400,000 round deposit. So 40% deposit. You gear the balance, which is your remaining 600,000. And then you'll rent normally in the million Rand price band. You will find that you should be able to get a return on your investment of 6% per annum. So you should be able to get 6,000 Rand a month as your rental income, which will pretty much cover your bond installments. And then you've just got a shortfall that you each need to contribute 80% per annum. And then you've just got a shortfall that you each need to contribute every month, which would go towards your rates and levies. Remember that your tenant will pay the utilities. And the beauty of having a little shortfall is that you become, it becomes very tax efficient because at the end of the year, when you're doing your annual tax assessment, you've got a small little loss to enter into your books, which counteracts the rest of your income and profitability, which then gives you that additional tax benefits. Property is such a great investment because A, you can use other people's money, in other words, money from the bank. B, you can use your tenant's money to cover your bond. And C, you can gear yourself just perfectly so that you, covering your costs, or there's a slight little shortfall which enables you to become really tax efficient at the same time. Sure. And you know, we are, we are watched by people from all categories in the property space. And what do seasoned investors and a seasoned investor who's probably watching this mean by diversifying a property portfolio? Yes. So it's a good idea to have a range of properties in your portfolio and to look at different areas to invest in. So for instance, there are a couple of areas in South Africa that are really safe investment wise. Cape Town obviously is very popular. The North Coast of KZN has been a booming market for the past decade. So you want to do your research and speak to state agents all over the country. We're happy to offer advice. We don't charge for advice. And that can help you just do some area research. So I think it's really important to explore the areas that you want to invest in and then to diversify. Maybe you start with a little apartments in Aung Shlonga. And then once you've got your first one, you've built up a little track record with the bank. And then you use that property as leverage to enable you then to buy your second property and possibly at that stage, you look at something in Cape Town. Once you've done those two, maybe Santa's a good area. Maybe there's a lot of tenants there. It's a good place to invest. So you're slowly growing your portfolio in a diverse way with multiple areas factored into the equation and even multiple price bands. So some investors have a strategy whereby they only bar off plan. That's also quite a nice way to build a portfolio because you put your deposit down today to secure the apartment. But the development only registers in two years time, which means that over that two year period, you haven't really had to subsidize the property at all. You've just paid your deposit. You've managed to secure your bond. You haven't parted with any other money apart from your deposit. And in two years time, you might already have achieved capital growth on that investment. We often launch products that we launch at say one and a half million round. And by the time the development is registered, that one and a half million round apartment is already worth 1.8 or 1.9 million. So our purchases and our investors have already built in a little profit for themselves just because property generally appreciates over time. Sure. Thank you so much for that. I'm just talking building a property portfolio and we are joined by Carol Reynolds. And so this is the time for you to share and make sure that you tag your friends to stand in line to win that 500 grand cash prize. Carol, coming back to you, what would you say is one of those traits, right? That all successful investors have in common. And with that also, what advice would you give to somebody who wants to become a successful property investor? I think the key to be successful in anything is research, and planning. You have to have a strategy and you have to have a plan. So as an example, we've got some investors who are serial investors on our development. So their whole strategy is around buying off plan, enjoying the capital appreciation. They will either then flip at the end of the development's period, or they'll hold and rent off. I've got other investors whose strategy is that they are always buyers and never sellers. So their strategy is simply to grow a portfolio and to hold. And they hold and then they rent it out and they keep growing and they never sell. So they try and hold on to all that stock. It's like playing Monopoly, I guess, where you just keep buying and keep going. So that's amazing if you've got the equity to just be a buyer and never be a seller. That's a really nice strategy. Another strategy that some investors have is actually to flip homes. So this is fantastic, except that in South Africa, our transfer duty is quite high. So you need to do your research before you get involved in flipping because you need to make sure that the acquisition costs don't eat away all your profit. But the bottom line is, in order to be a successful investor, you need to understand your product. You need to be well researched and get advice from experts in the field. Make sure that you're investing in an area where there's sufficient capital growth. So for instance, if you do want to renovate, buy an old property and renovate, you know that you're not going to overcapitalize in that area because you've done your research and you know that the price ceiling is really high. So there's no risk that you're going to spend 200,000 rand and then realize you've overcapitalized and you can't recuperate the money. So before you jump in, seek out advice. Advice in South Africa. Like anywhere in the world is free, especially from a state agency. We're happy to help. And we can give you all the steps that you need. And once you're armed with the correct advice, that's when you can start investing and making your money work for you. Speak to your accountants as well. Always really good to look at the tax implications of what you're doing, the financial implications. They can give you advice on what vehicle to use, to purchase your properties. And then, if you don't have the money, then start by buying your first property in your personal name because Sars has given us a lot of tax benefits for acquiring residential property in our personal names. For instance, there's a capital gains tax exemption up to 2 million rand. So you want to really be well-researched so that you make all the right decisions from the beginning. Yeah. No, thank you so much for that. And thank you so much for that. Thank you. Thank you. Thank you. Thank you. No, thank you so much for that. And thank you so much for such an insightful conversation about how one can really build that property portfolio. Thank you so much for joining us and have a great night. That's a pleasure. Thanks to me. Take care. And thank you so much to everyone else for showing us love on Facebook tonight. It's time to announce that 500 rand winner. And that winner is going to be announced in our comment section. So make sure that you keep your eyes glued on the announcement on our comment section. Thank you so much for joining us tonight for an insightful and packed show. Please do ensure that you join us every day 7 p.m. right here on the Private Property Podcast. My name is Dumi and have a great night.