 Welcome to episode seven of the property of the private property podcast. I'm your host Zaman Duman Komalo because it is day 22 of the national lockdown and we are bringing you your daily dose of private property podcasts and bringing different experts to help us in making the best decisions for our properties and for our property ambitions. Now on this evening's show I'm joined by a formidable woman and you'll get to hear from her shortly. Don't miss it all it is the founder of Petanini Properties and you know one of the things that we'll be doing on the show beyond bringing experts is also bringing on people who can share their property journey with us because if anything we want to hear inspiring stories from people who've you know gone from almost nothing to making quite a big dent in their property portfolios and want to learn from them you know find out how they're doing it how they did it some of their lessons that they've learned along the way and on Fridays that's exactly what we're going to be doing. So on today's edition of how I did it we've gotten Donbi Satoru who's going to be telling us how she went from just buying her first property to now not only owning a building but also having cash flow of over 100,000 rands in her property portfolio. Donbi good evening thank you so much for joining me this evening. Thank you so much Yaw thank you for having me and Yaw here I am. I think so Donbi I mean one of the the the things that stands out for me on your story is you essentially didn't really have you know a property background and I want I want to have viewers to first probably get a sense from you from when you first bought that property your first property in 2007. So if you can just share a little bit about your background and what prompted you to buy that first property in 2007. I must say my story is one of an accident how do I put it it's an accident you know what happened I when I started to work in government you know starting to earn money that you were not used to because I was in Jobek and I was already an intern in Jobek and earning about 3000 rand then boom I come to Bloomington I worked in government I earn almost 25,000 I'm like wow this is a lot of money so what happens then I started buying my own property where I live because you know the boom of have your own place to stay and don't pay rent pay for a bond something that belongs to you so in 2008 I bought my first property and I substantially lived in it it was mine because my my home then my mother and she said that she wants to move from a little north which is our hometown she wanted to move to Bloomington so now she bought a house in Bloomington but she was she did not just move immediately she bought a house and then she lived in Allo north in someone else's house and just rented but then there was a house in the house was empty so she said don't be you have to go stay there because the house cannot be isolated and be on its own so there I go and I met these other friends of mine I'm like you know what I'm gonna stay in my mother's house but now I don't know what am I going to do with this piece of property because now it's just standing there I didn't even know what communes mean at the time and then she just said you know my friend just turn it into a commune okay cool anyway I turned it into a commune and I went to live at home but funny enough my brother was at the university at the time and she said you know my sister I'm gonna live there with my friends and we're gonna all be students like we and we are all going to pay 1.5 and there were six of them the property was it's big it was really big so it had two bedrooms and one lounge but the lounge you could close it so I just turned it into a bedroom into a third bedroom and then six of these guys were staying in my house and there I I go wow and then they each paid 1.5 1.5 across I mean there I go making 9 000 without the effort was very little effort and I myself was paying a bond of 3.5 and levies of 800 grand at the time and and and that was it because they bought their own electricity and and the water at the time that's the only thing I paid in it was part of the levies and that's when I said wow wow somebody can actually make profit immediately this is amazing there has to be something in this property thing and and Domi did you find when you were buying that first property I mean you're mentioning how you probably just didn't know much about property and probably didn't do your numbers because your intention wasn't even to turn it into student accommodation did you for example when you were buying that first property where you're already trying to negotiate the price down and because you can already see these high returns I mean if your bond is 3.5 and the rental is 9 000 when you are buying that property was there something in you that said maybe let's also just negotiate the price down so that if one day I want to turn it into a student oriented out it can be lower were you already thinking that way or for you to just I'm going to buy a property I'm going to live in it to be honest at the time no I wasn't even thinking that I didn't even know that you can actually negotiate with banks to give you a better rate I didn't know I just knew that you buy a property but the the nicest part was at the time the banks were flexible with but some buyers so they they financed my bond 100% including transfer fees oh nice so the whole bond and transfer fees and everything was 100% financed and to me it was like wow I can actually buy something without even putting five friends in it so now you go from you know you go from buying a property that you're going to live in you become an accidental landlord because your friend and your brother you know prompt you to rent it out to shopping for your first building how did like take us how did that even happen I mean oftentimes when people get to thinking about buying a building they've probably bought a couple of you know properties they're not bullish but you almost you almost skipped a few steps and you're like no but but then okay after that one I bought a second one because I saw the cash flow there so I bought a second one which is a second property which I which I literally turned into a student that one I was conscious about I negotiated price I I I saw now there's money in the state so I it was when I bought it it was also a two bedroom it's an unsweetened and a one bedroom extra but then I went and partitioned it to four bedrooms and then I put students in it so there were like six to four six students in the house and it was making almost two thousand fifteen thousand at the time so now I was actually now conscious about it but here's the thing the the thing that made me want a building I got irritated by living I didn't know why I have to be living I didn't understand why I should pay leave it and there were a lot of problems this that is not happening body corporate it felt like I bought a property but I was still being controlled by body corporate I asked myself questions who has the bond is the boy in mind or that of a body corporate I was really agitated by the idea that my property that I say is mine I cannot do much with it unless I ask someone else about it and the whole point is to make returns in property not to just have a property and have a lot of things that are just as are blinding you and that's the journey that's what actually took me to to look for a building I looked for a building and to be honest when I was looking for the building I didn't know I didn't even know where I would get the money for it I didn't have money I just had two properties all eyes and I said you know what somebody is going to finance me I don't know who but the fact that you don't have you know a massive down payment ready to buy that property get into getting the way of you getting one I didn't even have a down payment at the time no not at all but um me and my oldest sister we started thinking we wanted to make extra cash because we were we were both working but we wanted an extra income so we bought a tent overseas which we imported to to to blue contain it was these nice big tanks that look like a little house so we started renting them out but in the renting our process we we eventually sold it because it was not really our passion the tent business was not our passion and accidentally we actually raised the funds that was needed for a down payment for a big building and how was shopping for um how was shopping for that building don't be I mean did you um did you have a sense of the kind of building that you wanted maybe you wanted residential or commercial um you know did you want one for example that had shops at the bottom because then you know that's potentially extra income or you just wanted fully you know tenant buildings through and through um the size of the building we're already thinking about those kind of numbers when you're shopping for that first building and I was when I was actually shopping for the building there I was conscious and I said I wanted you know I wanted a mixed use I want to be able to to to have the flexibility should one not be too functional then I can have something else that can give me money on the size so I I wanted a mixed use I I actually um at first I did the numbers adjust based on student accommodation and what it can give you back and and you know what I made this this this this this man um to the the CEO of of TAF he said no don't do that's not how it's done for you you must actually divide the the amount they're charging you divided by the numbers like this and so that you know exactly how much you're paying for each flatlet or whatever it is I mean for the number of flatlets and and shops that are in the building then you get a sense of what you you want you're about to pay and you must also give them the the maximum amount you're willing to pay per flatlet and yeah and don't be I actually just want us to to talk a little bit about TAF um you know for viewers at home who probably don't know uh what TAF is they've probably never heard of TAF uh perhaps if you could just you know share a little bit about what TAF does and how they play quite an important role in in your journey TAF is is is um is a home loaner for buildings I mean buildings finance yeah but then they're specifically focused on the urban development zone they do not finance out of the urban development zone which is mainly your central business district but if you don't know what urban development zone is you can just go and find out if you if the building you're looking for is within that area within the urban development zone their their main focus is to revitalize the city because I mean they've seen a lot of potential there of of of of of income streams especially in in in in the presidential and commercial space and I've seen it too with my own building because and in in Bloomington in the TAF portfolio in Bloomington mine my building specifically is doing well because it's it's correctly positioned and it it has tenants that are paying very very very well to understand so they saw the gap in the end they finance anyone with a credible obviously credit record you must have a credible credit record and everything of yours should be in order and you have you must have some sort of equity that you can meet them halfway with so yeah that's what TAF does basically if you're just joining us at home this is the private property podcast i'm your host zamantouma cumalo it's episode seven of the private property podcast and i've got on the show this evening don't miss it or who's the founder of pet nini properties and we're talking to her about her property journey and how she did it she went from buying her first property turned it into a commune bought a second one turned it into a commune and then got bolder and bought her first building and we're talking to her about her journey in the property space and how she went from you know just buying apartments turning them into communes to finally having the courage to take a bigger bite of that proverbial apple now don't be i mean i'd like to probably hear about some of the maybe challenges in buying that first building i mean as somebody who has ambitions of buying buildings and maybe even owning quite a few of them what would you say were some of the challenges especially considering how you went from you know servicing less than 20 tenants essentially because there was two properties to now owning a building that you probably have to manage and their tenants at the bottom um i mean their tenants who are your residential tenants they're probably commercial tenants because we're shops at the bottom what would what would you say were some of the challenges that you encountered doing that switch yes let me let me let me tell you out there is nothing more challenging in a building that not knowing the things that make it successful um when i came on from a student accommodation and a commune that worked well because there were a few tenants now here i come i come into a building number one number two i was i made something called construction i've never and at the time when i got uh because what what what tough does it doesn't just finance the building it finances the building and it gives money for renovations as well so it gives you a holistic finance so there i am i'm faced with having to manage construction and i knew nothing about the construction world all i knew was how to maintain a few things how to just do abnc a little bit i mean have people that can fix abnc but now i was faced with construction turning everything i mean i had to have a proper project and it was it was a project it was a project that needed a project manager but to be honest i met the the worst challenges in the construction space and to an extent that i was taken for a ride and robbed of uh all my renovation money before the renovations were even halfway complete and when that challenge came it just went boom right in your face you have a big bond today but within this big bond they there is also construction that is not still complete and for that to and those things now are running simultaneously you don't have the funds anymore to continue the renovation and the next minute you also have the three months grace period that you are given is over you have to now pay your bonds those are the challenges that you need to look at with with with clear caution construction is the most it's very very very important for you to know the basics to know exactly what is needed and to be there and to be proactive otherwise it can set you back to over a million that is one that is number one number two the the most the actually the backbone of of of property itself is the property management that is not done well you might as well have bought a a dummy a tree because property management actually the cash flow of the business it it it's the functionality of business it makes the business go and those were the two areas that that were a challenge until I I said to myself you know what I'm going to start teaching myself actively how to manage properties and that is where I started building my own portfolio so that I know exactly what is what happens in the property management space what is important what what needs to be done what needs to to to can happen because that is everything in a property investment if you have any questions for don't be you can ask them down below of course this is episode seven of the private property show with myself and we're talking to don't be about her property journey and you know so don't be one of the things that I think often comes up when people start talking about you know buying buildings and when you bought it and value is perhaps looking at the actual numbers um perhaps if you could if you're able to share with our viewers at home what how much the building costs because you're saying you don't really know much about the about buying a new building when you bought a building and yet you still went ahead with it you didn't really have the equity at hand but you still went shopping for a building almost trusting that you're going to come up with that equity component that you would have needed what were the numbers that you were looking at when you were shopping for that building so how much was the building costing perhaps if you could share what the what the what the building is now that you've had um you know sort of this year so people can get a sense of the potential growth that a building once it's been renovated and well run um could actually have um you know um where when when I I bought it bought the building it was um 2.6 m um what happened that tough does look at the numbers they are very important to them like I said all the CEO of tough at the time told me that you know what don't be that building is too expensive the one you wanted because there was one that I made before but I evaluated it based on the student accommodation and and how many students I can put there potentially what it could make instead of looking at the building because what they were selling me were the bricks on motard not the tenants in it you get it so how you evaluate it quick it's a this is a quick evaluation just divide the number of flatlets in the building with the shops and just divide that by by the amount they're selling it for that is what you're paying perfect you know and and when we did that that that's quick evaluation at the time he said and I told him okay uh roughly it would have caused 131 40 000 perfectly you know and and I knew that my max I could only go until 150 000 per flatlet I mean dividing the whole thing until not go further because you always have you need to have a ceiling because if you don't have a ceiling should mistakes happen you will not have somewhere where they they can get equity or get something out of the building because you will be so squashed in it even your tenants you'll charge them too much and end up with an empty building empty building because your bond is way too much than what it it is positioned to me you know because you need to know that you cannot charge certain prices in in maybe another other server rather than sent and you know you know I mean that comparison you always have to know that so if you cannot charge a magazine of price that you would charge at center why would you buy a place at a price that way that would potentially be a problem to you so yes they do look at the numbers now very very very it's very very important and they they also need to know how much uh the building is going to make even yourself you also need to be proactive and and and push whatever you can push the building to its maximum income streams because at the current moment I got um I would to be able to advertise on the building itself and I mean that gives you extra income on top of what you get from shops what you get from the the residential and and you know what I mean the next part of the thing is that the income streams are endless um should you have given extra funds you also can tap into the electricity and water prepaid space whatever it is and and and you know but those things are extremely important for you as a building owner to say you know what what can I do beyond that but the bond must not be way too much than what you can afford and don't be what I mean if you don't mind sharing with our viewers at home um what's the current value of that building um at the time it was super insane but the value now they they put it at 5.8 5.8 so that's nearly doubled the the the value and how after how long was that that would be 20 16 17 4 years because um it took a bit long to transfer because it was under any state late I don't know if viewers would like to know because that also is a problem you should it's things that you should take if the place you're buying is not under any state that could also prolong things like transfer transfers and whilst taking long it's also I mean the interest rates could have gone up and things like that but yeah right now it is that's actually relatively in line with one of the questions that we've got um and of course if you've got questions any questions phone don't be you can send them through and we'll pose those questions to her we're talking to her about her property journey how she's managed to navigate from going from student accommodation in one property then the second to now having a block of flats that has um shops underneath and this question comes from tutu vama say who asks how how is your portfolio structured is it a pty or is it a trust um at this current moment I have a pty what I do I put one the property every property in its own pty that's the journey I've learned and then I have a trust a trust where I put the shares of the property in if if you understand what I mean that's how I've structured it a family trust where the shares of the property are placed in and that's how I've structured it one of the questions we've certainly received quite a lot um this particular week on the private property podcast has been around structuring um and I think we're definitely going to bring on a guest who looks at structuring the different ways that you can structure that are quite creative that can continue against any kind of risk because there are different ways that work for different people and which models could work for you uh perhaps you don't even want to have any trust at all you just want a pty understanding what the benefits of um maybe only using a pty also having a trust that you put in place um to best maximize your property portfolio but also understand the implications of having a trust the implications of it being in a pty um what the tax implications of that are because there are quite a few different if you will be bringing on a guest who can help us navigate how to best structure our property portfolios so that we can get maximum value for them now don't be I think one of the things before uh you know I kind of let you go um is is to perhaps if if you were to start your property journey right now knowing what you've learned you know in property in the past decade what would you say would have benefited you in the beginning if in the beginning I should have learned what construction is that that that that that's very it's key I should have learned what that is um number two I should have also learned the different ways to structure property because right now the first property that that I bought obviously is in my name and for me to take it from my name to to my to a pty ltd then I have to pay transfer costs again um which obviously can be navigated because I'm busy with experts who are helping me do that but had I known from the beginning I would have just bought it in a pty ltd which I do advise yeah and we've actually got a another question here from a Howard um who's asking um if you have other shareholders and if so how are their shares structured and how is the shareholder agreement uh okay that's that's a that's a key part of that apparently the pty ltd is only myself right but the I own the into my my my my siblings all three of my siblings they are also shareholders but then I put them brother in in the trust as beneficiaries and everything yeah because for for me for the for the for the the property passion is only on me so when I need to do something I didn't want to involve them too much but then if I put them in the trust then they are the benefactors anyway from uh the their shares because until they invested into the the the the the the the property when we were buying and everything and when we were going down and things were not doing well they were there and they invested some of their money there my family members so tutu has actually come back and and he he actually wants us to to go a little deeper in terms of uh when you're dealing with the late estate or a deceased estate you are saying earlier that the building took a while to to transfer because of that can you just share with us you know some of the reasons why it probably takes longer or what what you find for yourself in terms of some of the delays okay for for for my mind specifically the the one that I apparently did the the the children um to never resolve their estate just to avoid tax issues I think whatever the the case might be they wanted to avoid something so they kept their estate in their father's name the the property in their father's name who passed on in 1925 or 1930 somewhere there 1920 so now yes who passed on in 1925 or 1930 so they kept it they kept the the the property in his name for that long anyways when it was time for them to they sold the property and it was time for them to actually do the transfer it needed to a real person uh so we it needed to be in a real person's name it needed to be in their names not in their father's name now they had lost the ID of the father so they needed to go and apply from high court for an ID and that potentially took four months five months and after they did get the ID then they had to be an actual transfer from the state late to their name those children that had to happen that also took long and and and the whole transaction to actually transfer the property from their name to mine it took two years and within those two years two interest rates the interest rates went up twice so what i when i could potentially pay less amount i had to pay i mean there's a bond i now had to pay on that new interest and many other things were affected because even the transfer costs were much more than they were at the time so it is very important to check those details for yourself so that you don't end up having to to to pay more than what you would have should something like that happen and don't be the last question for me this evening you know what tips would you want our viewers at home to always be mindful of on their property journey um first of all be mindful of the the the actual amounts that you're going to pay don't sugarcoat the the the the amount you're going to pay there's so many things that go into buying property make sure that you've done your total due diligence because some things just pop up so if you you are um if if if you are a person who likes who's very proper in due diligence ask somebody who's an expert to go and inspect the building you're buying they must inspect it because there's things like um what happened to mine was i found that when i bought the building it had a missing into central meter meter box apparently was stolen or whatever the case might be but i didn't know i i i when the property was transferred to me already i didn't know that that that wasn't there so when i went to to to sand leg to actually ask and to tell them the story that i bought the property like this and this was no i mean i wasn't aware of this but they said no due to that i had to pay a whopping 14 000 to replace that meter because it seemed like it was stolen so if you can have an inspector to do the inspection of the whole building for you before you can even sign an OTG ask for the period of due diligence so that you know exactly what you're buying and if possible negotiate with the with with the agency that you're buying from or the seller based on things like i mean based on things that may that are like that that just that may have come out from the inspection that your a professional inspector could have done perfect don't be thank you so much for joining us this evening this was the episode seven of the private property podcast with myself is a man doing well come out of course this is where we bring you different experts to help us navigate our property journey and on fridays or when some fridays will definitely be bringing you different people to share their property journey share with us how they've navigated some of the challenges that they found along the way on their property journey and for us to be able to learn from them and perhaps also grow our own property journeys if you've got of course any buying selling or rental needs you can always visit our website on www.privateproperty.co.za for myself as I'm going to come out of stay home stay safe and have a great weekend thank you very much