 Welkom in het virtual property show gebrouw te jy by private property. In dit video gaan we kieke het installement sale method. How to buy property with no upfront cash en no bond approval. Now, a few years ago I read the book from Robert Kiyosaki en dit little book called Rich Dad Poor Dad changed the way I think about property investment. Now in this book he said he went and bought a lot of property, but in my mind I thought I'll have to get bond approval for all these properties en dit method dat I'll share with you today can show you how you can buy property without getting bond approval every time you buy property. I was fortunate enough to meet with Mr Robert Kiyosaki last year in Santon and that was a humbling experience, but when I met him and as I listened to his keynote speech at that event I also realised that this guy has got a lot of tools in which he can make money from property. Now one of the ways is the mortgage sale method, which is the traditional way of buying property with a mortgage, but then there's also the installment sale method, which is the method that I've been using for the last couple of years. And in this video I want to show you the installment sale method. Now when do you use the installment sale method? The installment sale method is best used when the outstanding debt on a property and the asking price on the property are close to each other, then you can use the installment sale method. Now in a declining market post COVID all around the world you can now use the installment sale method on a lot of property because a lot of property, the people would like to sell that property at the price that they owe on the property and in some cases the outstanding debt might even be more than what the market is currently willing to offer them. And so now you can do the installment sale method on any property where the outstanding debt and the asking price are close to each other. Let me show you. In South Africa there's no question, tough times ahead for South Africa. That's from investing. Now there's many articles like this, but I'm not going to focus on that for now. Let's rather focus on how you can use this installment sale method. The best way to understand the difference between the installment sale method and the mortgage sale method is to look at the comparison between the two. Now first of all a property has got a title deed because you can't move the property around. The title deed will state who is the owner of that property. Now if the owner bought this property cash, then the title deed will simply say this property belongs to person X. But if the person who bought this property took a bond against this property from a bank, the bank will put an endorsement against the title deed saying that there's an outstanding bond on this property. Now the mortgage sale method versus the installment sale method. First of all when you buy a property with a mortgage sale, then the first thing that they will do is you will have to apply for a bond immediately. But the majority of South African people struggle to get bond finance approved. And this method can allow you as an investor or a first on buyer to buy a property without getting that bond approved. Okay, so let me show you how it works. With a mortgage sale method, your bond, your new bond will replace the existing bond. And to do that they will then transfer the title from the seller's name to your name. And because they have to transfer that title that in the title deed you have to pay transfer costs. Now that's a lot of money up front which you need to pay immediately. Now also the bond cost because you are now cancelling the existing bond and registering a new bond there's legal fees involved in cancelling the bond as well as legal fees involved in registering the new bond and that must be paid up front. And then of course the risk of property ownership is high if you for some reason can't afford to pay this anymore then the bank can come after you and so the risk is quite high. Now if you lose your job in the next couple of years and you just bought the property today then this can become a big concern. Now with an instalment sale you don't transfer the deed immediately. So basically what will happen is the property will remain in the seller's bond and in the seller's title. You will just simply have an agreement stating that you will pay the existing bond directly to the bank and you will only get the title of the property transferred into your name as soon as you have settled that full existing bond on the property. Now with an instalment sale agreement basically what it comes down to is you as a buyer will go to the seller and undertake to pay off the existing bond on the property and the property will only be transferred into your name as soon as you have settled the full outstanding bond on this property. Now of course to protect you as a buyer what the attorneys will do is they will endorse this instalment sale agreement against the title deed and this endorsement is a legal way of protecting you as a buyer so that when you settle the full outstanding bond amount on this property then you will get title of this property. On the other hand it also protects the seller in dat if you as a buyer start to pay the existing bond and at some point you default then the property owner, the original seller can get the full title back of the property they can remove this endorsement sale agreement and they can sell this property to an outside buyer. Now that is how they protect the seller and how they protect you but let's look at the benefits for you as a buyer with an instalment sale agreement. First of all you don't have to apply for a new bond you can pay the existing bond that is a big benefit because not everyone can apply for new bonds in South Africa. The next one is you don't have to pay transfer fees up front in fact if you do the course with us we will show you how you can only pay 50% of that transfer fees and you only pay this when the property gets transferred into your name. Next one is bond cost you don't have to cancel the existing bond and apply for a new bond so there is no bond cost applicable up front. In fact if you sell this property later on even before registering a new bond then you can sell this property without ever having to register a bond on this property and then the next one is the low risk because with an instalment sale if you as a buyer for any reason default and you cannot afford this property anymore then you can simply cancel this endorsement and the seller can then sell the property to someone else. Now that is how you as a buyer is protected with an instalment sale. Let's say the outstanding debt on a property is 1 million and 50,000 rand the highest that the market can offer is a million rand meaning the seller will have to pay in 50,000 rand to get rid of this property now most sellers who can't afford a property anymore also don't have 50,000 rand to pay in to get rid of the property this leaves a big dilemma for the seller now we as investors will easily then take this property with an instalment sale agreement and let me show you why because the outstanding debt will not go away it still remains at 1 million and 50,000 rand but as a property investor we will then pay 1 million and 50,000 rand with an instalment sale instead of 1 million rand with a mortgage sale and the reason is because it is a win-win situation because now the seller doesn't have to pay in that extra 50,000 rand but we as an investor also gets a benefit in the cost, the cash flow remember Kyosaki in his book says cash flow is king and that is what property investment is all about so let's look at the cash flow in this deal if I buy this property and I pay this 1 million and 50,000 rand directly to the bank that means I don't need to apply for a new bond and that has got a lot of benefits first of all I will undertake to pay this property within 12 to 60 months and that's simply because it makes sense for the seller to do that but also I will probably keep it for around 3, 4, 5 years and then sell it before I reach the 60 months time limit then I will pay the municipal rates and taxes the building insurance, the levy, the homeowners the armed responses, maintenance and any other minor upgrades to this property so I will take full responsibility for this property and I will pay all the cost for this property exactly the same as if I owned it except I will not apply for a new bond I can simply pay off the existing bond that's the biggest difference now the difference comes in the cost first of all with a mortgage sale bond approval is needed that takes time and it takes affordability and a lot of paperwork with a mortgage sale method it's a lot of red tape that must be done with the installment sale method I can get the attorneys to act on this immediately the next one is 10% deposit if you buy properties in a business with an installment over for mortgage sale then you're most likely going to pay 10% or even 20% deposit that's 100,000 rand cash needed upfront bond registration fees for a million rand property is 30,000 rand transfer fees is 24,000 rand so the total upfront cost is 154,000 rand needed to buy a property, a million rand property with a mortgage sale with an installment sale method however no bond approval is needed endorsement cost of the installment sale against the title deed is only 4,500 rand so the total cost upfront is 4,500 rand so mortgage sale method total cost upfront 154,000 rand installment sale total cost upfront only 4,000 rand that's 150,000 rand difference plus I don't have to get bond approval that is why property investors and normal buyers want to buy properties with an installment sale now with the benefit for the seller is of course the 50,000 rand that you can get more for your property with an installment sale right now let's look at the next one these are four properties that I actually bought with installment sales and these are my own properties and I'll run you through the numbers the asking price on this was 450 I bought it direct from the seller for 380 after running the numbers the 380 gave me positive cash flow from my tenant so the sale price was agreed on 380 the outstanding bond was 245,000 so I paid in 135,000 rand to buy this property because this property is cash flow from day 1 the tenant will pay it off in the outstanding bond which is only 5 years left within 5 years and so basically I paid 135,000 rand for the property which is worth 450,000 rand and currently my tenant is paying this property all for me and I've got a positive cash flow so this will be paid off in 5 years since the date of purchase and there's about 2 years or 3 years left on that property this one was in the market for 620 it's worth 620 but my numbers which I ran using the spreadsheet gave me the purchase price of 570 so I rushed over there I offered them 570 they accepted my offer the outstanding debt was 545,000 so I only had to pay in 25,000 rand to buy this property I didn't have to get bond approval and this one added positive cash flow because the tenant paid 8,000 the total cost was 770 and so my net income per month is 254 and so that gives me a positive cash flow so basically I bought this property for 25,000 rand and my tenant is basically paying it all for me and this one will be paid off in 6 years since the date of purchase this one was worth 1550 I made an offer of 1360 they accepted and that amount gave me a positive cash flow so the sales price was 1360 I paid 1320 this couple immigrated to New Zealand so they really needed 40,000 rand to pay for the container and so I gave them that 40,000 rand so I solved their problem they were happy to get rid of this property because no one else wanted to buy it at this price and so I advertised it subject to a tenant and I got a tenant at 13900 which gave me 165,000 rand a month net income so the purchase price was 1360 the value when I bought it was 1550 and the gain which I got when I purchased it was 190,000 rand the tenant is busy paying it off and it will be paid off in 7 years in fact this one I just sold and I took my profit on this property right away so this one for instance the value was 680 I rushed there I ran my numbers and I made my offer at 570 because that would give me positive cash flow every month so my offer was 570 the outstanding debt was 570 I didn't have to pay in to the seller anything and so I got this property at zero cost and my tenant is busy paying it off for me so this one will be paid off in 6 years as well and I basically got this property without paying anything upfront and without any bond approval needed so this is a great deal so this is what we do and I can help you to do this if you want me to help you do this let me know so the way that we do it is we make money when we buy we make money every month and we make money when we sell so let me show you how I made money on these deals for instance this last one I made 110,000 rand capital gain when I bought it so if you just look at the numbers there I bought it for 570 it was worth 680 so I made my money when I bought at 110,000 rand capital gain although I didn't get the money the property is worth 110,000 more than the purchase price that I agreed then the 90 rand a month cash flow every month of course that is the difference between the rent income which I get and the total expenses which includes the bond, the levy and the rates so that's 90 rand a month and then of course this property will be worth well over a million so you can see there on the graph a million rand it will be worth a million in about 8 years since the date of purchase but it will be paid off which is the yellow line in around 6 years so basically this will be a paid off property paid off by my attendant and I got this property without applying for a bond so what is the return on investment when you buy property like this well the return on investment is infinite because you never had money in this deal you didn't apply for a bond and you are getting a property which your tenant is paying more for you and the scalability of this is incredible because you don't have to apply for bonds so that's what we can help you to do now to become what they call financially free for many people it's a very hard thing to imagine but let me just show you this example let's say a property a two bedroom one bathroom 6500 rand per month the average income from a household that actually lives in a property that rents out for 6500 rand per month is a more or less 32500 per month now let's say you've got five of those properties and each of them pays 6500 rand per month net income meaning you can basically live in one and rent out the other four and you can no longer have to work but now let's say you can do 10 of those and you can get 6500 rand per month that's 65500 rand net income now to do this all you need to do is buy 10 properties get tenants in that pay the cost of the property and let the tenants pay it off over time and that's how you do this so we can help you to do this and the difference for me personally came when I started asking a new question because my question always was why can't I do this you know, you might sit there and say but why can't you do this and I'm asking you to change the question from why can't I do how can I because the moment that I ask a different question how can I do this then the answer started coming and I can help you to do this as well so these are my actual 10 properties and my goal is to have these 10 properties paid off debt free in 6 years and what I can offer you is I can help you to do your first property with an instalment sale so basically the cause that we are presenting to you can help you to do your first property once you understand how easy this is you can then do your second property and once you get it right yourself then there's no limit you can decide how many properties you would like to own now let's just look at the financial crash and how big this opportunity actually is this is one of my actual properties which I bought the actual lightstone report in information so this property was worth 130,000 rand more or less in 2000 and it was worth 650 660,000 rand in 2018 now if you just draw a straight line and you take average on average then it's about 9% increase in a year for this property to grow now this bubble there 2008 that's when the financial or the real estate bubble or the financial crash happened that everyone talked about but as you can see property prices didn't entirely crash they just came down slightly meaning that just before 2008 property prices were higher than just after 2008 and that is the opportunity of instalment sale because the moment that the market declined slightly then there's people who got 100% loans who now owes more on the property and that's where you can do an instalment sale agreement and right now in a declining market that opportunity repeats itself so let's look at the big opportunity of 2020 remember what we said the South African economy will face its deepest contraction in 90 years now you can get a piece of this pie if you use the right tool and right now the right tool is the instalment sale method because you can get properties without applying for bonds so this is my question to you what would you like to do okay now if you ask this question why can't I then you will most likely go and google this and you will find a number of such results and you will most likely find a reason why you feel that you cannot do this but that's not what successful people do we look at the such results but then we go ask the experts and we don't trust everything that's written in the cloud so if you ask the question how can I then this is where we can help you now the property academy is offering a free instalment sale workshop we are working closely with Bruno Samauer attorneys Visit LR attorneys and SSLR attorneys and we'll give you this free instalment sale workshop if you register on the link by following the link below now you can also speak to me or any of the sales consultants about our online courses which you can do to do your first instalment sale agreement but the big thing is start by taking action now going back to this picture taking with myself and Mr Robert Kiyosaki you can see that there's a lot of differences between the two of us but there's one thing in common and you can see that when you look into our eyes both of us can see an opportunity and we are not afraid of taking action so my question to you is are you ready to take action if you are please click on the link for the free instalment sale workshop and I'll be happy to see you on the other side and help you to watch your first property deal buying it with an instalment sale agreement my name is Jeroen and I'm a proud member of the South African Property Investors Network I've helped a lot of people and I can help you as well and I'm not afraid of taking action so if you are ready then I'm ready and we can help you through the property academy with this free instalment sale workshop I'll see you on the other side