 The medallist and shareholder and marketing director of all of the estates, which recently acquired Pearl Valley estate, have been living in the beautiful Paul Frontrick Valley for the last five years. We are situated right in the heart of the Cape Wildlands. Security is our number one priority and it's something we work on every day. This has earned us the reputation of being the safest estate in Africa. The lifestyle that this area has to offer truly is country living at its best, which is five minutes away from the historic town of Pearl. Pearl really is an incredible area to explore with little gems like the spice root and fairview farms. But the biggest attraction is the excellent schools. Frontrick on the other hand is a major international tourist destination and also known as the culinary capital of South Africa with a diverse offering for every palate and occasion. Our recent acquisition of Pearl Valley is a major game changer for us. Our residents can now enjoy a wide range of amenities unmatched anywhere else in the world. There's the world famous Jack Nick, the signature golf course, which is consistently ranked among the top golf courses in South Africa and there are some beautiful properties on the course. Boulder V really is the ideal family environment. We also cater to equestrian lovers with facilities on offer for every discipline, from the two Hurlingham Standard Polar Fields to our state-of-the-art equestrian centers and miles of trails. Our horses live in Paradise too. Boulder V has its own wine farm and cellars producing award-winning wines which every resident can be proud of. I've been blessed to travel the world, but this is the place I come home to. I'm sure you can see why we call it the Valley of Life and this is my neighborhood. And welcome to episode 33 of the Private Property Podcast. I'm your host, Zamantouma Kumalo. This evening I'm joined by Yaku Khabla, who's the managing director of Property Enterprise and what we're going to be looking at is if you're looking at refinancing your property, these are the five things you want to consider. Yaku, we have you back again this evening. Thank you so much for joining us. Thank you very much, Zama. It's great to join you. I know that you're becoming quite the regular, I did promise our viewers at home, that we're going to be bringing you back to look at, of course, leveraging and structuring our portfolios efficiently, but before we get into that topic and we'll definitely bring you back for that one, let's look at some of the things that you've highlighted as important for us to be able to consider when we look at refinancing our properties. What would be that first item that you think our user at home should take into consideration? So yes, thanks, Zama. There's a couple of things that you can look at when you want to refinance property. One thing that I always recommend for my clients is that if you want to buy property that you want to refinance later, obviously there needs to be equity in your property. And for you to have equity in your property, it means you need to buy at a good price. So the first step that I'd like to give tonight is to, when you buy property, to make sure that you buy below market value, because when you pay a good price, it creates an opportunity to refinance faster and make that capital available in such a way. And maybe let's take it back just slightly for the user at home who might not even know how to determine whether or not they're buying below that market value. How do they go about actually determining that? There's a couple of ways to do that. One of the fastest ways to get an idea of what properties are selling for is to go on to private property and to look at what similar properties are selling for in the market. When you see what a lot of properties are selling for, it very quickly starts giving you an idea of what the market is buying. You can then provide this where you can get detailed access of a specific area or of a specific property or a specific complex event and see what similar properties have sold for and registered at the Deeds office. And I think it's such an important thing that you mentioned there, I think, you know, oftentimes, especially the more seasoned you become as a property investor, you start using different services, whether it's TPN data or perhaps lifestyle data to help you better understand the area that you're essentially wanting to invest in and buy a property in. And that does essentially give you that indication of what similar properties in the area or even the property next door, the one that you want to buy action and so forth. So I suppose that's one of the ways that we can go about establishing whether or not we're buying below or above market value. And then what would you say is the second thing that we should be considered? When you want to refinance, you need to keep in mind that that is a financing application that you are putting in. So there's usually one of two things that happen. Either you want to take a further bond or it's basically like taking a second bond on your property, which means that it's a full application that has to go through and a whole new increase in your bond has to be registered. But what a lot of clever investors do when they purchase a property, they actually already register the property for a higher value than the bond now so that you can only take a further further advance on the existing load at the latest stage when there's equity in the property. When that is then being done, it is critically important that your admin is up to date because there's a lot of things that the bank requires from you when you would like to refinance. They want to make sure that there's affordability. So they would like to see new facelifts and bank statements. When your properties are in entities, they would like to see the latest financial statement of those entities. And then usually the banks would also ask for existing rental contracts. So it's always good to have a good system in place where all of that documentation and all of that admin is kept up to date so that when you want to do refinancing, you can move swiftly and you have all the documentation ready for such an application. And Yaku, for those investors who perhaps are no longer working full-time, so they don't have documents like a pay slip and perhaps are now full-time entrepreneurs and not necessarily even entrepreneurs in property. But just doing other things. How would they go about ensuring that they're best able to take advantage of being able to leverage their particular property or the different properties that they have? Because I think oftentimes, certainly when it comes to property, sometimes it is slightly easier for salaried individuals to navigate trying to secure a home loan. But that isn't always the case, especially for people who don't work full-time are working in contract jobs. So where your salary isn't as stable as other people, how can they make sure that they say to you prove to the bank that they're good for the money that they're asking for? It's very often people presume that it's only salary earners that can get financing from banks and that's absolutely not the case. It is possible to get financing even if you are working on a contractual basis or if you have your own business or if you're entrepreneurial. But at the end of the day, we need to put ourselves in the shoes of the bank and ask ourselves, how did they look at this? I mean, banks are in the business of lending. So a bank's objective is to finance and or to give loans, but they want to make sure that the people that they lend money to will be able to repaid it. So how do we show the banks that we are able to repaid them? And that basically brings us to the third point of tonight's discussion and that is to look after your credit score. Make sure that you've got a good credit score and there's many things that you can do to do that. So obviously the income that you earn is the income that you earn. It's always best if that income can be earned on a payslip or if you can show that as a consistent income, because that obviously helps in your favor. But from a credit score perspective, there's a lot of other things that you can do as well. Make sure that you pay your bills on time. Don't let debit orders bound. I always joke and say that a debit order for a property invest is sacred because it affects your credit record. So you want to make sure that your debit orders always go off as it should. Make sure that your utilization ratio is low. In other words, that you don't seem like you are maxed out on your debt all the time because all of those things affects your credit score in a bad way. So you want to make sure that you do everything in your ability to make your credit score look as good as possible and also that you have affordability for any loans or refinancing that you want to do. And that issue of the credit score is quite a popular one. We did, of course, even have Michelle Dickens, the managing director of the Tenant Profile Network Bureau, who was helping us better understand the different things that go into how our credit scores are actually calculated. And there are quite a lot of questions from viewers at home around that. And we'll definitely be exploring the issues of credit scores if we have a bad credit score. How do we go about repairing it and also just repairing it not just for purposes of buying a home loan, but to ensure that you have a very good credit profile? And I will, of course, take in your questions and comments at home. So do keep sending them through. And we're going to take the first one, Yaku. This one is coming in from Elizabeth Liddell, who asked, how do you measure the value of a property when it's not fully built? The owner maybe started but couldn't complete then now wants to sell. It's a very, very good question. There's a couple of things. So it gets technical when a property is half bolt. Often it would help to get an expert in somebody that can determine how far the property has been bolt and what the costs would be to complete the property, because that's obviously one way to look at it is to see how far is it from completion? What would the cost be to complete the property and then to deduct those costs from or to deduct that from the market value to determine where the, where the, let's say the the area is in price where you need to look at that. Obviously, it's an inconvenience for you to have things to finish folding that property now. So that would obviously mean that you can buy it at a discount from that value then as well, usually. And we've got another question here from Bonz, who asks, do the financials and running off the complex affect your ability to refinance your property? It definitely can. You would see that often when you apply for a loan or even if you apply for refinancing, one of the things that the banks may ask for is to have a look at the financial statements of the body corporate. Now, the reason why they want to do that is to determine is the is the body corporate actually in a good financial position. And if they are not, it might affect your application negatively to do refinance or to even get a loan on a property that you wish to purchase. And, you know, it's actually quite an unfortunate one. I remember a few years ago losing out on quite a good property because the financials of that particular, you know, complex were not up to the bank standard. And even after having a very long back and forth and also just interrogating those financials, really seeing that they're not in the best place in the bank, decided that for them, it wouldn't quite make sense to to finance a property there because it would be quite a high risk for them. So it definitely does, you know, come into effect in the event where you want to refinance a particular property. We are taking more of your questions and comments from our viewers at home tonight. We're looking at refinancing your property and the different things that you should be considering, if that's what you want to do. Of course, I'm joined by Yaku Ho La, who's the managing director of enterprise, of property enterprise, rather. And, Yaku, we've got another question here. This one coming in from Lena Davis, who asks, can Yaku elaborate on buying at a higher value? How do you apply for a loan amount bigger than the price of the property? That's of course that question that you asked earlier and a lot. I know that's a trick a lot of business typically tend to use when they, you know, when they go and register that deeds at the deeds office to make sure that they able to free up a bit of just break that down for Lena Davis, Yaku. Well, that's a very, very good question. So a lot of people don't know about, don't know about this, but you can actually register the the registered bond value at the deeds office for higher than what you are buying the property for. That does not mean that the bank is going to lend you more than than the purchase price on that property. It doesn't mean that you're getting extra cash. All that it means is that the amount at which that bond is registered at the deeds office is higher. Now, that would usually happen. So when I usually ask for that to happen is I find my property deal, I submit my offer to purchase. Once the offer to purchase gets approved, now we need to now we need to get financing. Then my bond originator would go to all the banks and would try and get financing for me and start getting back with quotes. Then it would be up and forth to make sure that we see which bank can give us the best deal. And I mean, we look at the term, we look at the interest rate, we look at all of that. And once I'm ready to accept the deal from the bank, before I accept that deal, I put a request in that they please register the bond at a higher value. When you then get to the bond attorneys, you need to make sure that the value at which the bond is registered is actually at the higher value. It does mean that your bond registration costs. So in other words, that's the invoice from the attorneys for the bond registration could be slightly higher. It's it's usually very little that the price increased by. But it might be slightly higher, maybe by a thousand or two thousand grand, but that enables you to much easier refinance that property and for much cheaper because you don't have to get bond registration attorneys involved again, you want to refinance it. That's perfect. We're going to go to we're going to take a quick break, rather. And when we come back, we're going to be speaking, of course, to you, and looking at the different things that you should be considering when you want to refinance your property. We are taking more of your questions and comments at home. And remember, you can participate in the competitions that we are running of course, we are running that YouTube competition. We want you to subscribe to our YouTube channel. So go to YouTube dot com and make sure that you subscribe to the private property channel. And this is, of course, a great way for you to also catch up on all the previous episodes. Take that screenshot, share it with us and you stand a chance of winning that one thousand grand price. And it is a Wednesday. And of course, on Wednesdays, we ran property crush Wednesday. We've already posted the picture on our Facebook page and we're asking you to guess how much that property is going for. I know it's such a great competition to try and guesstimate how much a property price might be. And of course, when you enter that competition, you also stand a chance of winning one thousand rounds. We're going to go for a quick break and when we come back, we'll look at more on what to consider when you want to refinance your property. Welcome back to Episode 33 of the Private Property Podcast. I'm your host, Zaman Dhonwar Kumar. This evening, I'm joined by Yaku Khurbala, who is the Managing Director of Prosperity Enterprise. We're looking at refinancing your property and some of the things that you should consider before you refinance your property or when you refinance your property. And the three things that Yaku has already mentioned is to buy below the market value. The second is to update your admin and then you want to make sure that you look after your credit score. We are of course taking more of your questions and comments at home. So if you have any questions about refinancing your property, do send them throughout also running that competition. So make sure that you subscribe to the Private Property YouTube channel and you'll stand a chance of winning that one thousand round price. Now Yaku, before the break, we already went through those first three. We'll be taking of course more questions and comments from our viewers at home. Let's look at the last two things that viewers at home should be considering when they refinance their property. Thanks, Zaman Dhonwar. I think something that is very, very important when it comes to refinancing is to make sure that when you refinance a property that you actually don't keep that cash in your check account because in your check account it's not earning any interest for you. So you want to make sure that you basically take that money out of the bond by refinancing and then immediately putting it back into the bond but into an access or a flexi bond because that does two things for you. Number one, it keeps the cash accessible to you which means that when you need that cash it is accessible but number two, while it is lying in the access bond you are not paying interest on that money. So that's a great way for you to make the money available or to make cash or capital available for whichever reason you want to make that money available for. It might be that you want to build a property portfolio further. It might be that you just want to have cash reserves and keep it safely aside or it might even be that you want to use it at a later stage but up until then it is a great idea to keep that money in the access bond so that you don't have to pay interest on that money while you are not using it. And of course then let's look at that last final thing that you think that our users should be mindful of when they want to refinance their property. Great and that is to have cash reserves in place. You know and whether you are a property investor or whether you don't invest in multiple properties at the end of the day each and every person needs to have an emergency fund. You need to have reserves available for the unknowns in life. Usually when you work for a salary it's recommended that you have three months of salary in a safe place that's accessible in case of an emergency. Usually where they say when it comes to business owners that even becomes longer like six months but a lot of people ask where on earth or how do I save up three months or six months of salary when very or a lot of people barely can come out with their budget and a great way to do that is through refinancing because as we've discussed with the previous point you can refinance your property, make a lot of capital available and then take that capital and put it back in the access bond and immediately you have created an emergency fund or a reserve fund. Then for the property investors those who are investing in property and looking at owning multiple properties make sure you've got cash reserves for your property portfolio. Equity is not enough so you need to make sure that you've got cash. Cash is king. If you run out of money it is game over. So the personal rule that I live by is that you should have 10% of the value of your property in cash. So in other words for every one million grand property that you own you should have 100,000 grand in cash and you don't have to save up for that 100,000 grand. You can access that 100,000 grand through refinancing putting that money back in the access bond and you've created an emergency fund. That emergency fund can help you when there's when there's non-collections, when there's evictions, when there's vacancies or when there's sudden interest rate hikes and you don't have sufficient cash flows to cover those shortfalls. I was actually just about to ask you what the purpose of that 10% reserve would be and if you outlined it so well. We are taking questions and comments from viewers at home. We've got one from Azayashika who actually wants us to explain what refinance is. So we've taken it that people understand but he wants us to know, he'd like to know rather what do we mean when we say refinance your property? That's a very good question actually and a lot of people don't understand how refinancing work or what refinancing even is. So I'm going to use a practical example. When you buy a property, let's say you've bought a property for 500,000 grand a couple of years ago and you've got a bond. Let's assume it's a 30-year bond. So over the first three or four or five years, you really pay very little off on the bond. So let's say a couple of years later you still owe just under 500,000 grand on that property but that property has increased in value over time and that property is worth let's say 700,000 grand now. You can actually go to the bank and say to the bank, bank I've got a property that's worth 700,000 grand. I only owe 500,000 on it. I would like to borrow another 200,000 grand. The bank would then add that amount to your bond which means that your monthly bond payment would go up but it would give you access to capital. Now there's a lot of reasons why I love refinancing so much and we've discussed quite a couple of those points through the night but the reasons why I love refinancing so much is firstly it's tax-free because it's a loan. You don't pay tax on that money. So that's almost like selling your property at a profit getting the profits and not having to pay tax on the profits. That's the plus side, the negative side however is you've got a higher bond that you need to cover. Now you can reduce that bond again by putting that money back into the excess bond like we've discussed or as your property increases in value it may be that your rental income or your salary increases and you are comfortable to afford a bigger bond and then you can use that capital either to well a lot of people do it for debt consolidation you have to be careful to do that. It does help you to settle all your other debts and start on a clean page but make sure that you then don't get back to what put you there in the first place. Other people use it to expand their property portfolio to maybe buy another property. Other people do it to actually go enjoy the money and you also have to be careful with that and make sure that there's affordability and good reserves to do that. And then as we said some people just leave it there as a cash reserve and for a safety net. We've got another question here from Domfutti Mafisa who asks can a 55 year old apply for refinance on his or her bond and what is the possibility of it being approved? Absolutely, a lot of people that are slightly older remember when you're 55 you're only halfway so in our whole life still lying ahead of you. So a lot of the slightly older clients ask me this and ask would I be able to get a loan and would I be able to refinance? And the answer is absolutely. The banks still look at, they look at your income they look at the amount of years that you can still work and then I can also look at things like what would your pension be or what type of income would you have after you stop working. I've seen people that are 59, 60 year olds still getting 20 year bonds. So absolutely it's very possible. Another question here Yaku is from Bonds Sabakwena who asks what's the difference between a bond and a home loan? It seems that there is a difference. Well I think in the terms that we speak of a bond we refer to a mortgage bond which is a home loan. So you do get bonds which is such for as for example government bonds which people invest in which is something completely different. That is basically that's an instrument that gets issued by an organisation such as the government or a private company to raise capital. So when we speak of bonds we're not referring to those bonds we are actually referring to a mortgage bond which is a home loan. And of course then we've got another question here from Musashongwen who asks if you register a property at a higher value what determines the maximum you can register for the property? As what we have seen in the past practically is that you can actually register the amount you can register it at any amount. Obviously the higher you make that amount the more you're going to pay. You don't want to make it too high because if you if you're never going to get to that value to refinance there it's not worth it to do that. So we've never had or I in fact never had an amount rejected that I requested it to be registered at that amount because just because you registered the bond at a higher value doesn't mean that you're going to get the loan for the refinancing. You still have to apply for the refinancing. The bank is still going to see if there's value in the property up to the value that you want to refinance and they're going to look at your affordability. So there's no reason for them not to want to register the bond at a higher value. That's fantastic. So our viewers at home do keep those questions and comments coming in. We've got one here from Londolani Ramuda who asks how does refinancing affect the interest rate in the new registered bond? That's a fantastic question especially as we see interest rates at different rates right now. We are seeing them at historic lows and I'm sure some people might consider refinancing their properties at this current point whether it is to free up some cash flow or maybe use that extra money as you've said as a reserve for the next couple of months as we face some financial uncertainty. Will that new refinance bond be at the same interest rate or will they be able to get a completely new interest rate on it? There's a couple of ways that you can let's put a couple of different things that you can do under the concept of refinancing. Often what we do for our clients when they restructure their property portfolio which means they are moving their properties from their own name to an entity we actually sell the properties to the entity and we apply for completely new bonds. It's the exact same effect as refinancing but it's a new homeland that you are applying for at all the banks which is at new interest rates. Often it could be at a lower interest rate especially if your financial position has improved from when you've gotten the original bond. So that's one way of refinancing. Another way of refinancing is the traditional way which you go to the existing bank and you top up basically on the loan that you've got. The banks could then come back again, they look at your financial position, they look at your affordability, they look at a number of things and for that higher portion that you are financing so the extra 100,000 or 200,000 grand that you are refinancing on they might give you the same interest rate, a lower interest rate or a higher interest rate but then what a lot of people do is they actually move their bonds so instead of refinancing they cancel their existing bond and they take out a new bond without moving the property out of the name or if it's a person or the entity that it's in but they apply it all the banks again to see if a different bank could maybe give them a better mortgage bond and then they cancel their existing bond, take out a new bond at market value which also in effect has the same consequences refinancing and in that way because all the banks are competing for that loan now again it might be that another bank offers you a lower interest rate for them to get your business. And we've got another question here that asks can you compare the difference between refinancing and re-advancing? Yes so there's a lot of different terminology that gets used the normal terminology that gets used is the differentiation between a further loan and a further advance. A further advance is if you've got if I can refer to that example that I had you had a property that you bought for 500,000 a number of years has gone by let's say it's more years that have gone by and there's 400,000 grand outstanding on that bond you can top it up back to 500,000 grand and that's usually seen as a further advance because you are just topping it up to the value of the bond again whereas a further loan or refinancing in its full sense you are not just refinancing it to the 500,000 you are actually taking out a new bond or increasing that to a six or a 700,000 grand value and refinancing it all the way up to that so it's actually like a second bond that has to be taken out on the property. Yaku I think we're going to leave it there for this evening I've gotten quite a number of questions and comments around refinancing and I'm sure if yous at home probably want to know more there's definitely something that we need to explore again there's so many different ways you can go about refinancing your property and for so many different purposes and I think it's certainly something that we need to look at again and help the various home owners or investors in making sure that they optimize the various home loans that they essentially have Yaku thank you so much for joining us this evening thank you very much, I'm at Dugla and that is Yaku Khebalaku is the managing director for prosperity enterprise of course we've been talking at the factors to consider when you want to refinance your property if you're still watching at home of course do participate in the competition that we are running that is of course that youtube competition where you can subscribe to that youtube channel so go to the private property youtube channel and make sure you subscribe take the screenshot and share it with us and use that chance of winning that 1000 grand and it's still Wednesday so property crush Wednesday is still running you can guess how much that property that we've posted is going for and you also will stand a chance to win that 1000 grand prize the winner will be announced for property crush Wednesday shortly after the show for me it's been a great one I hope you're staying at home and staying safe we'll be back tomorrow for episode 34 Shunga is the people you can't help but become immersed in the culture you'll find people connecting in the most authentic spaces it's just got this vibe to it it's hard to think that only a few years ago these business parks and homes were mostly sugarcane the rate that this area has been developed at is truly mind blowing especially with the fast pace of life these days we're really proud ourselves for being that bright spot in a person's day you'll see everything from advocates and CEOs to creatives and students to pop into our spot for that short moment to escape there's just so much life and energy in this area and after a happy group there's nothing better than stopping in at Mount Hickam Country Club for a relaxed round of golf beauty and serenity that their state offers are really inspiring to me there's honestly no place I'd rather live that's my own thunder