 Hi, I'm Clifton Smithers. I live in Belito, where my partners and I run a business called Union 3. As a family, we chose to move here about six years ago. What attracted us to the area was the safe and relaxed lifestyle of the North Coast. We're surrounded by so much natural beauty and we love that it's so casual. It's just not as intense as a busy city. In fact, that's one of the main reasons there's so many people moving into the area. There's some amazing lifestyle estates out there. We've got some Bali, Brettonwood Estate and Zimbiti to name a few. The Belito Lifestyle Centre caters to everyone's needs. There's also some smaller commercial centres like Tiffany's and Salt Rock. There's some excellent restaurants to choose from and there's a really wide variety of activities on offer. From mountain biking out on the trails to surfing at any one of the beaches, there really is something for everyone. This quiet little town really comes alive over the weekend. The live concerts in the farmer's market at the Michi Orchard is very popular. With the new international airport just 15 minutes down the road and the unmatched lifestyle that this place offers, it's no wonder that the North Coast is the fastest growing town in South Africa. My family and I absolutely love it, and this is unbelievable. It is, of course, ranked to buy. We'll be unpacking the ranked to buy proposition. I'm sure a lot of you at home have quite a number of questions. I certainly had a number of questions about how to go about identifying a good ranked to buy proposition. What are some of the things I should be looking out for? How I can spot a scammer? Because I think there are also quite a few people who are ranked to buy as a proposition. And perhaps this is an option that you as a prospective home buyer or even as an investor you want to look into. But before we get into that competition, of course, or rather before we get into that discussion, we are, of course, running our weekly competition, and that's that YouTube competition. All you have to do is subscribe on our YouTube channel. So find the private property YouTube channel on YouTube. Take the screenshot after the prize. Of course, we will be announcing two winners who are going to walk away with that $1,000 prize later this week. So on Friday, you extend the chance of walking away with that prize. If you have any questions, comments throughout the show, do send them through. And we'll be dealing with them with my speaker without any more delay. I'd like to introduce this evening speaker who is a director and founder of Rent-A-Buy. We'll be unpacking Rent-A-Buy as a proposition. Good evening, Mayor. Thank you so much for joining us this evening. Good evening and thanks for the invite. So I think, Mayor, perhaps let's just start with what is Rent-A-Buy. I mean, I think one of the things is not taking it for granted that everybody understands, because sometimes when we say Rent-A-Buy, some people might think, ah, maybe this is just an investor who's buying property in order to rent out. So sometimes people do get those two confused, but Rent-A-Buy, what exactly is it when we talk about Rent-A-Buy within the property space? Well, sometimes people would find me and say, Mayor, that buy to lead concept of you, but it's different to buy to lead because buy to lead is when you buy something and you actually take up a bond from a bank and you rent it out. So that's a buy to lead concept. So Rent-A-Buy, actually in 1984, now this dates me back, shows my age, but in 1984, I was born Mayor. So if you're talking about, I was literally born. So that was actually the date my son was born. So I bought my first television from Teljoy and I rented it in those days because I was not so technically inclined and every time those days we had the bunny ears and every time a bunny ear out of tune, you would get a like snowy signal. And then I would phone Teljoy and say, my TV is not working, come and fix it. And after four years, they actually phoned me and said, congratulations, you don't have to pay anymore. And I said, why not? They said, you've actually paid off your TV. But I didn't plan to buy it, but they said, no, we've got to rent to own concept. So 1987 went and 2007 came with the National Credit Act. And I was looking at the concept where banks are not giving people home loans anymore. And I said to myself, why can't we do something similar to what I did when I bought my TV? You rent the property and over a period of time, you actually own the property. And I thought, now let's put this together. There's a lot of research, as you told earlier, but overseas it's quite a big thing. And I thought, ah, man, somebody actually used my, and it's already using rent to buy. But I've been started unpacking it because I've got a legal background. I'm a property attorney. And I started looking at the concept, what do you need to do? Number one, you have to have a legal deed of sale. Now, this deed of sale doesn't kick in now. You actually put it almost on the lay by two years, three years, five years later, when you will introduce the deed of sale. So number one, you have to have a deed of sale together because that formulates the basis of your contract. Now you give a person an option on top of that. So you add two more pages of paperwork. And this option is I'm giving the option to buy the property as per this deed of sale, two or three or five years later. And the third document that you add is the exercise of the option. So you wouldn't get a knock on the door. So hello, my name is Maya. I remember two, three years ago, you gave me an option to buy the property. And I am now exercising this option. So you exercise it in writing. So it's a very simple document, but you can't just have kind of an agreement by shaking vans. And nowadays we've got to give the elbow. We don't even shake hands anymore. And we have to have a legal agreement. And obviously part of that is the fourth part of the document is your lease agreement. So obviously while you are waiting time to actually have a normal rent to my agreement. So in that agreement, people ask me, how do you structure that? Now let's use the example of a million round property. If you have a million round property, normally you would rent that in the market for seven thousand round a month. As the landlord, he would receive a seven thousand round, but he has to carry the rates and taxes and levies and all that. He would lose another eight hundred round. So if you could see as a buyer, you would say a buyer has a property of a million round. It's going to interest rate of prime currently. Most likely that bond is going to cost you nine thousand two hundred. So we say to the buyer that's not really to buy a property. Put your money where your mouth is and put down nine thousand two hundred round every month. If you rented it with a five thousand round. So now that extra two thousand two hundred he receives a better cash flow. We also ask the tenant to take over the rates and taxes because we want to put you in the same shoes as you were if you would buy the property. So the seller actually gets released on the property and all the obligations and the buyer takes over that obligation. So the next two years you are three years whatever we're into buy term will run. Every month you are actually putting some money away but you're paying it over to the landlord. It doesn't go to the attorney's trust account and while you're renting to buy you are building up and paying off on the capital of a purchase price. Two or three years later it all depends on your term. You can then go to the bank and say to the bank my property has increased in value. I bought it for a million. It's now worth one point three. And now I have already paid down some money and that can be regarded as a deposit that I've prepaid to the seller and therefore I want to apply for a home loan. But then we saw in the same time that people start approaching us for me to buy is that many of them come to us because they've got problems with their credit score. So we started a second service what we call my budget fitness. We see it as a gym. We want to get yourself fit. And that's why the fitness coming. So we actually give you a personal trainer and we ask the personal trainer to work with you on a month to month basis. They give you actually online classes and now people start to understand the whole concept of online. That's why we're talking tonight as well. But you can actually do a lot more online. You can actually train your budget online and yourself to improve your credit score because you want to go to the bank two years later, three years later and say to the bank, I'm fit, I'm strong, I'm healthy now, please give me a home loan. So rent to buy is very much an incubation period of getting yourself ready to own the property. While you fix the price now, you actually secure the property and we say that you can move in and you can become house proud. The person that lives in his own property has a lot more attention to actually look after the property than the person just renting. Because you're feeling like you're putting some money down on the purchase price already and therefore you look after the property much better. So that's what we call today the rent to buy standard concept. And then we also added rent to buy finance to the concept. So maybe you have a question or two now that we've explained the rent to buy finance. Do you have any questions on this or maybe comments? Well, I think there's kind of take it back a little bit to four years who are still, you know, still slightly not clear how to go about this navigating it. And I think one of the first things is you mentioned that you could get into this particular agreement for a period of three, four, but you're still going to go to the banks to secure that financing from the banks. Is there an option where instead of even having to go to the bank, perhaps you have that incubation period or that period be even longer and you want to stay where you end up essentially owning the property in its entirety after the period that you paid off. So you don't want to have to get to the stage where you are applying for the finance. What are the purposes? I think a lot of investors do tend to see the advantage of having a bonded property because they know how to use that bond facility in different creative ways. But perhaps other people are not necessarily exploring the investment route but simply just want to live in that home. So they're not interested in having multiple bond facilities and even using them as treasury, for example. So is that a viable option as well? Exactly. And I even see this now very much coming to the play again during and after COVID because a lot of people, particularly people that are self-employed, they know how much money they can make every month. But going to the bank and you beg the bank and you show them everything that you've got the bank says, I'm not so comfortable with your home loan, giving you a home loan. So my deal, what we propose is that go and find the seller that's willing to sell. Quite often you're going to find the seller that's in distress and he needs to sell. And what you do is that you actually take over that facility of the seller without going to the bank. You make in a private arrangement with your seller and say, I'm prepared to take over your property and I will pay you extra money every month. A portion goes to rental and a portion goes to the purchase price. And interesting enough is that one of my clients is going out now big time and he's buying a lot of commercial properties on this basis because he says and he's into the hotel business. And he says that at the moment people are struggling. They just want to give away the properties because they're particular hotels and guest houses and people just can't, they don't have income anymore. And he knows that he's a good businessman. He can take that business and he can turn it around. So the rent-to-buy concept is very much assisting sellers to get rid of properties and also selling install for a decent price rather than waiting for a sheriff to come around and knock on your door. So it's definitely a way to assist sellers and buyers to get the best out of a property. I had a case where a client of mine owned a property and he overcapitalized on the property. So everybody would do a comparative market analysis and find out, hey, your price is about $300,000 and too much. He then brought a client to mine that comes from Africa, that is struggling to convince a bank to give a person that he's seen as a foreign buyer. And we did a deal. You mean the other part of Africa? Let's not be those type of Africans who call other parts of the continent Africa. So this is a client. Yeah, I don't know if you're just right, but I always find it strange that we have this classification of African Africans. We're all Africans. But if you have a person that's seen as a foreigner in South Africa, this gentleman was then able to pay the monthly installments on 1.4. But he couldn't get a home loan from a bank because he's seen as a foreign buyer. And we were able to do a structure for him that effectively buys the property. He paid 2 or 312 grand cash to the seller. So he was happy with this transaction. And there we concluded the deal. And today he's paying off a property over a 10-year period. Everybody is very happy. And my seller got his cash that he was looking for. And the buyer wasn't required to go to the bank. And that type of rent-to-buy agreement is quite often we also do what we call an installment sale agreement. That dates back from 1981. And then if you were born in 19, you said you're not born there. No, I was born in 19. So that, the 80 Nation of Land Act dates back to 1981. So very often I use either a rent-to-buy transaction or I use an installment sale agreement. And this has got a lot more requirements and retake because you fall under the National Credit Act the moment you move into an installment sale agreement. But there's very good protection for the buyer and the seller in terms of an installment sale agreement because it's regulated by a particular act. And that contract is also raised against the title deed, which makes it also very viable. So we definitely say to sellers and buyers, and it's not only a buyer, only go and use alternative finance because if you can't sell your property because the banks don't want to give you a home loan, maybe they're looking at the 50% deposit. Start thinking of alternative, innovative ways that you can make the deal work because you have all the ingredients. You've got a seller, you've got a buyer, you've got a property. Just think of a property finance on a different structure and make the deal work. So there are so many solutions. And we're going to be looking at some of those solutions, but also what people should be looking out for when they want to enter into a rent-to-buy agreement. And of course we'll also be taking some of your questions and comments at home. So I'm going to start with you, keep sending them through. I'm of course joined by Mayor DeVal, who's the founder and director of Rent-to-buy. We're exploring that rent-to-buy proposition in the different ways you can navigate it in the event that you are interested in it. We're going to go for a quick break. And when we come back, we'll be looking more into rent-to-buy options. I'm your host, Osama Ndunga-Kumalo. This evening I'm joined by Mayor DeVal, who's the founder and director of Rent-to-buy. We're exploring Rent-to-buy as a method for you to acquire your property. And, you know, before the break, we're looking at what rent-to-buy is and the different ways that you can go about it. And now Mayor, I'm going to actually talk about the rent-to-buy finance, because I know that this is something that's also increasingly becoming popular. Perhaps I was explaining to viewers at home what that essentially is, how do they go about, you know, subscribing to it or accessing that rent-to-buy finance? Well, dealing with rent-to-buy for 10 years, I learned what are the requirements of a seller and a buyer, and we're trying to safeguard the seller and the buyer from both ends. But what I also learned through that time is that it's difficult to find a seller that's prepared to wait for a long time, for three or four or five years. So it's not very often. I do about five or six transactions like that the month, but every seller wants his money in his pocket much faster. So the rent-to-buy concept was changed for like a 360 degrees when a funder or a finance manager came to me one day and asked me what to do and I explained to him and he said to me, Mayor, I want to change your life. And I said, now, okay, do you have lots of stock? Do you have lots of units that are unsold that we can introduce rent-to-buys? He said, no, we've got money. And then obviously everybody starts to listen. So what we have now is rent-to-buy finance in the price range of 400,000 grand to 1.8. So how it works is that we would receive applications for a prospective homeowner and we would discuss the possibilities of finance. And then the main question is how much can you afford every month to pay back? So we do affordability calculation. We also look at the past history of the customer. Did they pay their accounts on time? And do they have judgments and credit problems and all that? Because obviously we want to deal with a person that's not under debt stress. I get a lot of people that come to me that reckon to me, no, but I'm now sorted out that I've made payments with my creditors. And we say that let's rather clean that out for you a little bit and maybe take three or four months longer before you actually engage into buying the property because otherwise you're going to be up to a year in stress in paying back your accounts plus your rental. So let's rather help you getting fit again. So now we bring back the budget fitness program again. So we're going to buy finance. The prices are 400 to 1.8 and it's available in Cape Town, Hotting and Bloom Fountain. So after we've pre-qualified the person we are then comfortable that they can pay back $6,000 or $10,000 a month. We give them a certificate and say here is your certificate to go out and buy. This is your budget in your wallet. So the client goes out and the nice thing is now they can go on to private property and they're going to switch for every property that's available in Cape Town, Hotting and Bloom Fountain. They don't have to find a seller that's got the patience of job to wait there for two or three or five years. They can actually go to the buyer and say and I have identified a property but they don't get involved in the property purchase because they just identify the property and bring the lead back to my team. We will then phone the seller and say to them, Mr. Seller, we do that and say we are representing a fund that buys properties. We'd like to make a cash opportunity to buy this property cash from you. Now obviously cash is key. So the moment that you know that you have an interested seller, we then prepare a deed of sale for cash and we buy the property the fund buys the property for cash. We then enter into a similar rent to buy agreement for a purchase that wants to own it in the long term for a two-year period. In the same time, we prepare the same option for future use. We prepare the option exercise, the lease agreement and then the fund buys the property and the seller gets his money and they're happy and go on with their lives. We then directly are focused to buy a tenant and we send that client to the gym again. We say we want you to stay fit. We want you to remain fit for the two years and we give you a personal training like the gym. In that time, we help you to pay off debt, improve your credit score and now you can buy the property back after two years. The amazing deal here is that we freeze the purchase price for you. So that purchase price is frozen. We only add if you buy from a property developer that included cost when the fund bought it. We only increase the price with £8000. That £8000 is cost that we paid to its evaluation of your property. We want to make sure that we pay you and make sure that the price that you pay is correct. We also make sure that we have building plans for the property. We also make sure that if it's a body corporate and a sexual title scheme, that sexual title scheme is managed properly. We try to protect the buyer in all kinds of ways by assisting him to find out that he doesn't buy more than his budget and that his credit score and everything himself. So that's a rent to buy finance and as I say, this is being selling like hotcakes but we do need to know that the buyer actually has a conservative view on what he wants to buy rather than to go and over commit to himself in the purchase price and therefore we still have a very conservative buying policy when it comes to rent to buy. And Mayor we are of course taking questions and comments from our viewers at home. So if you have any questions around rent to buy perhaps you're still not quite understanding or there's a particular issue that you'd like us to address do send them through. We've got one from one of our regular viewers, Bongs Sabapwe. And who asks, I can see the advantage for the buyer but what are the advantages for the seller? And this is for example Mayor in the rent to buy without the finance component. We already outlined for example, you know how difficult sometimes it is to find a seller who is willing to enter in this kind of agreement. Are there any advantages for the seller who would agree to get into this particular agreement? Well we, when the people approach us for rent to buy standard this is quite often when they struggle to sell the property and the property has been in the market for quite a while. So obviously the first type of property that you will find is the investor that's selling. It's not your family house because your family house you want to buy and sell and buy another property where you want to relocate your property. So you've got to identify the type of property to rent to buy a standard. So it's investment property that you want to offload. Quite often it's a vacant plot that we also want to offload and you bought a plot where you don't want to build now. So it's been burning you because you're paying the home loan all the time. The second one are commercial properties where the people struggle to get property finance. I've done a farm for 22 million rand. The smallest property I did for rent to buy was a 150,000 rand property in Kailitsha where the banks also didn't want to finance that purchase. So there are so many of the types of properties it's not your family house concept because they want to get the money and you want to move on. They would rather then switch to rent to buy a finance. So it's not every deal that is rent to buy popular but we do find it. One of the questions is if that kind of deal would land itself well to the rent to buy option. So we've got another question here. This one coming in from Richard Gardner who asks, is there any agent able to use the system for any sale where the seller is in agreement? Absolutely. But one thing when an agent comes into play is that the agent would like their commission as well. So what we need to do to, the agent needs to realise that their commission will be paid off over a period of time. Now many agents that see to me, may I rather cash my, or bank my commission now and know that I've got a new income of commission coming in because in part of this down payment on the purchase price we also work out that the agent receives a portion of the commission. Sometimes if it's a large enough deposit the agent can get a bigger commission out of the deposit being paid. So we try to make a deal that is financially viable and sustainable for the seller and the buyer and the agent. So yes indeed, the agent can definitely also make use of this because we want to, as we always say, if you don't close the deal now maybe another agent from another agency will come around with another buyer. So try to close the deal and you actually are still involved in the transaction. Another question here, this one coming from Malibu Makahane who asks, so what happens if you get to their rent to buy agreement for two years? But before the two-year agreement lapses do you then decide that you don't want to buy the property anymore? Well the option is a one-sided agreement and very much in favour of the purchaser. So you sign an offer and say I'm getting, the seller gives you an option to buy the property and you can walk away from it any time. But again, you have now wasted the time of the seller for two years and therefore in any option agreement we're always building that you pay the option fee and this is your extra money that you pay and you forfeit that if you walk away from the deal. That is the compensation or exchange for the seller because you've kept that person away from selling the property on the open market for two years. So you forfeit your deposit that you've paid. And we've got another one. There are quite a number of questions coming in from viewers at home. Do you keep them coming through? This one coming in from Wealway to Beja asks if it happens that you get fit for bond or for a bond before the two-year period is over, is it possible to move from the rent-to-buy agreement to securing that bond? We have only started two years ago with rent-to-buy finance and we decided to make it a fixed term for two years. The reason for that is that if you apply early to the bank, the bank will still look at your credit score and see that your credit score was a little bit two years or maybe 12 months or nine months ago was under pressure and our findings are that the banks will still penalize you and charge you prime plus one or two. And that actually shoots your application of the foot. So we say rather get yourself the fittest, the strongest in the best position to negotiate the best interest rate and that's why we decided to make it a fixed term for two years to actually get the benefit. And I must actually tell you that most of the clients that are on our rent-to-buy product and program actually appreciate the opportunity to get themselves super fit for negotiating the bank interest rate because then you can negotiate most likely an interest rate of prime less 0.5 than while we're getting a home loan of prime plus one or plus two. I've done a calculation that prime plus two will cost you 32% more for your home loan over 20 years. So rather stay with extra six months in the rent-to-buy concept and program and negotiate the best interest rate you will definitely save thousands over years. Another question here, this one from Kosinati Kumalo and he says, thanks for the good show. If I am on a rent-to-buy for a couple of years and later I decided to pull out what are the consequences? Well the nice thing is that the rent-to-buy gives you an opportunity to actually sell that property as well. So even in our rent-to-buy finance and rent-to-buy standard you can definitely on sell the property as well then you can keep the profit because remember you've locked down the purchase price from day one and now two, three, four years later so we found many investors who actually bought properties through rent-to-buy standard in the last 13 years I've been busy with. So they buy the property and they go into the property they repackage the property maybe they put in tenants and they make sure that they improve the value of the property and without actually then it's going to the bank at all they are able to remarket the property and sell it. The only thing is that you have to consider the requirements of size and you've got to take the property and you've got it passed on that sale again. So it's important that you can't skip the transaction but you're going to lose the legal fees that you pay but if you look at the profit that you can make you can actually almost like flip a property through rent-to-buy and actually and not even go to the bank. So you can buy it as investment again and resell a few years later. And the last question for this evening is one coming in from who asks is there a special discount that you get when purchasing considering that you have been paying rent for the two years? A landlord will most likely not give you a discount if you are knocking on the door today and say I am a tenant and I want to buy a property. However if you do buy a property directly from your landlord you most likely can do away with paying the state agent commission. So if any state agent introduces you to the property as a tenant have a look at your lease agreement that there is no commission involved in that even if you buy the property but you buy directly from your landlord you can actually then come to a lawyer and they can help you to prepare a deed of sale and you can most likely get the discount in the savings of your estate agent commission. And that can be 3, 4, 5% which is a huge saving. So talk to your landlord maybe the landlord will also realize that you've got an interested committed person here and you can do a deal and then you can save a lot of money in that way. Mayor before I let you go any 3 tips you'd like to share to our viewers at home who want to consider be buying the rent to buy option? Go do your research go on to private property and research every property that there is that you become an expert. The next one is make sure that you do not over commit yourself and the third one is your credit score. Do a credit check every six months make sure that there are no negatives on your credit score and that will power for way for you to be able to negotiate the best property deal. And those 3 tips are do your research use platforms like private property.co.za to find out as much as you can about property watching a show just like this one to get more information on that property is quite important is make sure that you do not over commit yourself and the third one is check your credit score regularly. Mayor we're going to leave it there. We do have a lot of questions and comments from viewers at home. I think we're definitely going to invite you back to further unpack and address some of the questions that they've had to ask. Thank you very much Mayor. We look forward. Thank you very much for opportunity. And that is Mayor Devalve who is the director and the founder of the property . We look forward to getting more into the property later. We will be exploring that further. Remember to participate in the competition that we are running. All you have to do is subscribe on our YouTube channel and you take a screenshot share it here and you have a chance of winning that 1000 grand safe we'll be back tomorrow evening. Besides the beautiful beaches sunny skies and how central everything is what I really love about I'm stronger is the people can't help but becoming immersed in the culture you will find people connecting in the most authentic spaces it's just got this barbed it's hard to think that only a few years ago these business areas has been developed that is truly mind-blowing especially with the first place of life these days we are really proud of ourselves in 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 serenity that the state offers really inspiring there's honestly no place other than that's my I'm stronger