 Sam and I need to have a long good evening and welcome to episode 336 of the Private Property Podcast. I'm your host, Usamandouma Kumalo. It's the Wednesday edition of the Private Property Podcast. If you're joining us for the first time, you are tuned into the only daily property show in South Africa with a leading property show catering to all of your property needs. It doesn't matter where you are in your property journey. This is where you can get resources to help you and certainly enable you to make better property decisions. And to all our regular viewers on Facebook and Instagram and on YouTube, welcome to it. You know how we do. We're certainly always in conversation every weekday at 7pm, where I'm always tackling a hot property topic with an expert who helps us get a better understanding on all things relating to property. And of course, talking about all things relating to property, you know that we also have a whole host of other shows that you can tune into every single weekday at 8pm. It is a Wednesday, so you can catch S.T. Klassen on the first-time homebuyer show later on. And of course, every Mondays and Fridays, Chad brings you the home shopper's show. We always take us through exquisite properties that you can find on www.privateproperty.co.za. And of Tuesdays and Thursdays, a warden in Farmer and Ballinua got pixels through the farming podcast and all things agriculture. And I know that many of us are always taking notes and implementing them in our very own backyards. And of course, there's myself, every single weekday at 7pm, we have an appointment and always, of course, great interacting with you across our social media pages. You can follow myself at Zamondonga Under School K across Facebook and, you know, certainly across Instagram and Twitter, as I always tackle all things relating to property. And of course, this, you know, Wednesday evening, and you can see a part of us already thinking it's Thursday. I don't know what it is about the end of the week, but I'm almost tripping on the Wednesday. But of course, we are still running our competition where we've now set an even bolder target of reaching 20,000 comments on the post that we have pinned on our Facebook page. And so do go there and engage with it with absolutely love hearing from you at home. And of course, we also want to make sure that we give away this money. Now all you have to do is interact with the post and you send a chance of walking away with 500 rounds in cash. Now the only catch is you need to be watching us live so that you can claim the money. And of course, if nobody claims the money, then it rolls over to the following day and makes, certainly goes into the money bag. I see the money bag is sitting at 1500 rounds. So we'll see who's going to walk away with that money this evening. I do hope that they're watching and they're ready to claim their prize. I think 1.5 can actually go such a long way, especially as we draw nearer and nearer to that time of the month where our money runs thin. So do make sure that if you've entered that competition, you're ready to raise your hand, should we call your name? Well, this evening, we're looking at something that I know a lot of people who already have rentals always want to know about. I've been getting asked this question quite a lot on my social media platforms with many landlords saying that they're struggling to track tenants and they still don't quite know how to increase the value of their rentals. And that's exactly what we are going to be looking at. In the short term, what can you do when it comes to your rentals and making sure that either you increase the value or at the very least maintain and don't make a loss because I think one of the other realities is that a lot of landlords have been losing money quite significantly and not just your DIY landlords, even the big landlords have been losing money in their portfolios. And then of course, looking at long-term interventions, what are some of the things that you can do in the long-term that will have a substantial change in the value of your rentals? I want to find out from you at home, are you a landlord and what kind of interventions have you already put in place for your respective rentals to make sure that you either increase or certainly maintain the value to share with us down here below and helping us get a bit of sense of what we can do as landlords to do just that. I'm joined this evening by Nigel Adrianse, who's a founder and CEO of the Enterprise Development Property Fund. Nigel, good evening and thank you so much for joining us on the show. Good evening Zama and thank you for having me. It's always a pleasure interacting with private property and all of your fan base and I hope that I'll be able to add some value to your people that listen to you every evening. And I think Nigel, I want us to actually just get straight into it before we even look at the do's and don'ts when it comes to the value of our rentals for people who are already in the property market or already property investors and especially because this is something that you in and you've seen the activity from last year and this year and during COVID and the difficulty that a lot of the property investors have been facing. I think firstly just any insight that you'd like to share for property investors, particularly when it comes to managing your portfolio in times of crisis or turbulent times. All right, so yeah, as we were discussing offline before this show started, the last 18 months has been horrific. We have all suffered. I don't think there's an individual that I know that has not suffered during this pandemic, especially those who are in the property game. We were talking about the big corporates even that are on the stock exchange and even they are suffering because they did not have enough reserves in order to keep themselves going and especially if you have retail tenants and commercial office tenants, it has been exceptionally difficult to manage your portfolio over the last couple of months. So yeah, it's been a difficult time, but I think there is hope. There is a the fact that we are potentially going to level two will open up even more opportunities and I think over the next couple of months as everybody is vaccinated, we will then go back to our better normal, not the old normal, but a better normal and that will then open up opportunities for us over the next few months. So I think definitely there is hope. There is light at the end of the tunnel and it's not a train coming. It is real genuine light and I think we'll be able to make it if we just hold on a little bit longer. Nigel, I actually love that framing because I think when COVID started and probably a good year into COVID, we called it the new normal. We wanted to go back to what we knew and I think we're now at that stage we're recognizing that there's no going back. That part of the system that we're living in was also just not particularly sustainable and so what does it look like when we even talk about a better normal? So if anything now some of the systems and interventions that we're trying out and re-jigging as much as possible towards that better normal. So I like that concept and it's the first time I'm actually hearing somebody talking about the better normal as opposed to even a new normal because I think even the status quo as it is isn't quite there yet. I think we're very clear that it's not quite there. So what can we you know actively do to work towards a better normal? Now I see the love that we're getting on our Facebook page. Many of you at home are watching. Rashika Kasirian is watching and sending those green hearts. Sharon Naidu is also watching. I also see Colin Janssen is watching. Nong Vo La Mutsi Neng is watching. One of the top fans, Bong Samokwe, and us also watching. Howard McAteani is also watching this evening. Do you keep the love coming? We absolutely love it and of course to the landlords at home I want to find out from you you know what have been some of the interventions that you've put in place when it comes to maintaining the value of your rentals because I think it's one thing looking towards obviously increasing the value and we're going to be looking at that briefly or certainly this evening but what have you just done to keep the rentals your rental value as constant as possible especially now? I was saying of A to Nigel that one of the realities is that as much as we talk about how it's a buyer's market it's actually also a renter's market where so many renters right now are spoiled for choice. They are seeing a lot of different rentals coming onto the market almost every second day you're seeing that the price is being reduced on certain rentals so as a renter you really are in a good position to be able to negotiate the rental that you may want with your particular landlord and I think it's been interesting to kind of see that play out which in some ways has also put some landlords in a very tight spot but it's also meant that they also need to be as innovative as possible and also just as active as possible when it comes to engaging with their tenants and so then Nigel I think when we look at in the short term because I mean I've painted the picture of where the market currently is right now as far as rentals and how renters are spoiled for choice so if you're going to overprice your your property you're just not going to get any joy you know renters are smart they're savvy they go on private property.co.zale and they really do go through various properties they watch the show they know that there are different ways that you can vet and negotiate when you're looking for a property so if you're a landlord in the short term you know what can you do to just maintain the value of your property or at the very least just make sure that you don't lose as much value as possible. I think one of the things that we have to realize is that there is we in a stage now where you are going to lose value there is no doubt about it but if you start calculating from an investor's perspective in terms of your yields and so on there are a few things that you can do that's going to help you to increase the value of your property from a yield perspective in the short term as well as in the long term. Now we're in the property game hopefully if you're an investor you're not there for the short term games because property isn't about short term games it's not a get rich quick scheme property is always and will always be a portfolio of investment that is for the long term and when we talk long term we're talking easily 10 to 20 years that if you want to make a real money in the property sector you've got to be in it for the long wall so even though I may want to talk about some things that you can do now that will hopefully enhance the value of your property as well as increase your net income because we're talking mostly net income here and not gross income because as you well know even the big corporates have suffered in terms of rentals they've had to drop their rentals commercial office blocks have some have shut down completely because people are no longer working from the office I know of mutual as an example we talk to all mutual on a regular basis and they've shut down their entire facility in Pine Lines where all their staff are currently working from home so I think we'll delude ourselves into believing that we can make big money in these times but if we start prepping now if we haven't already we can start making inroads in terms of from a medium to long term perspective what increase the value of our property so there are four general areas that you can help affect or change the income strategy of your business in my opinion the four main ones there are more but let's talk about the four main ones number one is increase your rent but obviously because of the pandemic and as you've well you know noted that the the the renter the person renting is actually in a very good position now because there's so much stock on the market at the moment so increasing your rent right now may not be the best idea however you can possibly increase other things and we'll and I'll talk a little bit about that now that's the second thing is decreasing your costs obviously you've got certain costs that you have to cover but there are ways to decrease your costs and therefore increase your net income which will also then increase your cash flow and to collectively that will then increase the value of your property from a yield perspective as an investor then the next thing is changing your strategy you could potentially change your strategy where maybe if you've got one property that is led by a family and it's maybe a four bedroom house you could then go into a multi-let option instead so you then bring in four different people and rent it out per room so that's maybe another strategy that you could use as opposed to having just one family and that will then increase your rental income by changing your strategy that's just one option then renegotiating your bond the banks are very open at the moment to renegotiating bonds because they understand people are struggling and or if you if your own bank doesn't want to renegotiate you can go to another bank and change your bond to another bank so those are the four big things that you can do in terms of changing the rental income or increasing your net income in order to add value to your property and as we go along throughout this discussion I will expand a little bit on each of those I am this evening in conversation with Nigel Adriansson as the founder and CEO of the Enterprise Development Property Fund we're looking at ways to increase the value of your rentals and and I see there's a hot conversation on our Facebook page that's going on with Callen I wouldn't say my landlord wants a 10% increase and you know many times in Hong Kong when I'm saying that move suggesting that they should move and I'm quite happy saying maybe try and negotiate with them first if they're not willing then you can always move and I think one of you know one of the big things is and we're even just saying that that this is actually that period where tenants are spoiled for choice as much as buyers are spoiled for choice when we talk about you know how buyers can you know access quite a number of different properties because there's a lot of stock in the market we're seeing the same thing with the rental market where if you know a tenant is unsatisfied with where they're staying perhaps a landlord wanting to increase you know rental I think a 10% rental escalation in this market is also quite an unrealistic ask just you know generally what we've been seeing if anything a lot of landlords have maintained their rentals and there have been tenants who've gone back to you know renegotiate and have been able to get an even lower rental than what they previously had so I think as a tenant you also need to assist what are similar properties in that same complex or in that same street going for and is your rental at that current average or is it you know substantially higher than what everybody else is paying because I think those kinds of facts on you when you want to talk to your landlord and want to negotiate and also want to move because there's some landlords unfortunately who are sometimes delusional and don't know to also do their own market research and see what their neighbors are charging and you know kind of stick there hidden the sand and thinking I'll ask what I'll ask and budget according to their finances as opposed to where the market is and I think that's one of the big things that I can see Nigel nodding and we'll talk about that right that it's so important as a landlord not to be budgeting according to your budget you really do need to look at where the market is particularly when it comes to setting up your rental costs I want to go for a quick break and see who the potential lucky winner of that 1500 is this evening I hope that they're watching so that they can claim their prize and when we come back we'll see more of your comments and questions and of course look at ways that we can increase the value of our rentals we'll be back just after this yeah you never and that lucky winner this evening goes to Solani Pillay Solani Pillay you are potentially walking away with 1500 grand I usually see Solani Pillay in the comment section I hope she is watching this evening and if they are watching drop us a message down here below you're going to be walking away with 1500 grand that's Solani Pillay and we'll see if they are indeed watching this evening and of course this evening we're looking at ways to increase the value of your rentals I want to find that from you at home if you are a landlord have there been any interventions that you've put in place to help your tenants but also actually to help yourself because I think beyond helping your tenants is about you as a landlord being proactive around what is happening in the market and you know where rentals are at we have seen that a lot of landlords unfortunately have not been able to escalate rentals in the percentages that they've wanted a lot of smart tenants have gone and when they look at that escalation clause actually say nope I'm not gonna sign on for 8% and this was even pre-covid so there are different ways that I think as tenants but also as landlords we need to be engaging each other now Nigel before we were announced that lucky winner was Solani Pillay talking about how as a landlord you shouldn't be budgeting based on your individual personal budget when it comes to setting the rental but you really need to do your market research see what the neighbors or if they're people if it's a unit in a sectional title scheme you need to see what everybody else is charging as opposed to thinking well my expenses come up to X and I want to you know make a mock-up of X therefore I'm going to charge this amount perhaps I think take us through that because I think there's still landlords that especially during these difficult times think well I still have my expenses so I'm going to leave the price where I want it to be and of course those are the same properties that we're seeing staying on the market for months and months on end absolutely and you know I've often come across landlords that have been so focused on getting the net rental income that they want and they completely lose the plot because you know they're completely unmarket related and their tenants will then move out and go elsewhere so I think there are a number of ways that you can number one secure your tenant and make sure that they don't move out and at the same time increase your net rental income by offering them certain perks to stay so for example number one the most important thing is the relationship building I way too often we see landlords who are we just don't care about their tenants sometimes even become slum landlords and their tenants then eventually say you know I've had enough here now I'm paying way too much I can get a better place elsewhere in the same area and my landlord is just treating me like trash so that's the first thing you need to do is build that relationship if you can build relationships with your tenants where your tenants believe that you actually care about them then they will more likely stay and when you say to them listen I really need to increase my rent because I you know I'm not getting enough money to pay my expenses then the tenant most likely will be accommodating so that's the first thing building relationships then number two cutting your costs to make sure that your net rental income will increase even though your rental may not increase so there are lots of ways that you can cut your cost you can renegotiate your the value of your property especially in these days renegotiate the value of your property with your municipality and that then would determine your rates will then hopefully decrease you can negotiate with if you're in a complex negotiate with the body corporate that they drop their levies you can maybe manage your building properly in a way that you don't pay too much maintenance you can do energy management water management facilities management there's a whole host of things that you can do where you can reduce your costs maintenance cost energy cost municipal costs and levies and so on in order to get a higher net rental income but if you want to increase your rental the relationship is important and always making sure that when you sign your lease agreement that you have an escalation clause inside of your lease agreement that is predetermined and agreed by you and your tenant it is very important that that that you have that escalation clause because when you get to the end of the lease and you haven't put that into your your lease then you will find yourself trying to negotiate with your tenant and he's wanting to drop the price because there are better units elsewhere so those are some of the the immediate things that you can do but then there's also medium to long term things that you can do things like changing your tenant profile so as I mentioned earlier you could potentially take a property where there's a family and when the lease comes to an end rather put four different people in the property and charging them a different kind of rental on a multi-let opportunity so that is changing your strategy from having your house being rented to a family versus renting it out as a multi-let to several different people you could also go to an AB&B strategy where instead of paying or renting your property out on a monthly basis which is normally a lower rent to a AB&B type opportunity where you renting out on a nightly basis and that will increase your rental significantly however the warning there is obviously in the kind of environment we in now to do AB&B maybe a little bit risky because obviously not many people are traveling but if you can find a niche market you could potentially make a lot more money on an AB&B opportunity versus a family living in your property and then student accommodation if you are close to a university you could convert your property into a student accommodation and in that way bring more people into your property and therefore bringing more rental into your property opportunity and I think those are such great tips Nigel and I think one of the big things it really is about as a property investor being able to understand that the current property that you have you can use it in different ways and you also need to be able to be adaptive in the event where for example you may have had a student accommodation unit and we talked about student accommodation last night and you are hard hit because your students are not going on campus and many are choosing to stay at home as they of course adapt to online learning perhaps then your property becomes a multi-late or you find different ways to still be able to collect rental as much as possible and I know that we have our winner Solani Pehle is in fact watching so congratulations to Solani Pehle not only she's watching she's raised her hand and you know sent comments down here below so congratulations there Solani Pehle saying thank you to each and every one of you this what is this for this beautiful congratulatory message I love and appreciate it and of course just sharing that with the many people who are showing her some love on our Facebook page of course because we are a family right and we're always happy when one of our own makes it so congratulations there Solani Pehle 1500 rs is on its way to you and I think one of the great things of course to your home you're watching you want to make sure that you go and engage the pinned post on our Facebook page if you want to stand a chance of walking away with that 500 rs cash every single day when somebody doesn't raise their hand which certainly increases we put that money in the money bag and the following day of course you can have another shot of winning so if you know you've entered make sure that you watch us in order to claim your prize now Nigel I think then one of the other big things that landlords are having to contend with right now and I'm only slipping it in because I know that there's some landlords who have you know been investing in property and you are already saying that property is a long-term goal and so if let's say you had started just a few months prior to lockdown you know excitedly thinking I've got my foot in the property ladder and and then a few months later you know COVID hits and you're not having to deal with your first major crisis how do you or what would you say to you know those at home who are now thinking of selling off some of the you know their rental units because of COVID and they're thinking I can't do this maybe they've even had you know vacancies that say for three months as a and they haven't tried to use different adaptive strategies you know what would you say then to people who are at this moment thinking maybe I should just cut my losses and and not do property anymore so there are many ways in which you can try and salvage the scenario that you're in so obviously every scenario is different so I'm going to try and be as generic as I possibly can so there are few strategies that you can implement like I've explained for examples multilets and student accommodation where you could potentially in a short term try and enhance your income so that you can still survive during these difficult times but then there are some medium to long-term strategies that you could implement in order to increase the the rental income that you achieve as well as enormously enhance the value of your property what I would say to the these people that are struggling and wanting to get out now I would say hold on hold on hold on because if you sell now chances are you're going to lose money because normally in these difficult times there are sharks out there who are wanting to buy your property on the cheap hold on guys and if you can't hold on come talk to me because we can help you re-strategize and try and put together a package where you don't have to lose your home or your investment opportunity and continue in changing the strategy bringing on partners there are many ways that you can salvage your scenario but what I would say is do not sell hold on as long as you can because you're going to lose money if you sell now there are two things that I'd like to say from a medium to long-term perspective how you can enhance the value of your property number one if you've got a property where let's say it's just a house but you've got land available you can develop the backyard in what they call a backyard development and there are funders out there who will help fund that type of development so you don't even need your own money where you can either put on one extra unit or even two units depending on which municipality you in they will allow you to build one or two more units in order to enhance your income and like I said there are investors and organizations out there that will help fund that type of strategy so that will then allow you to use your house and then either rent that out take one of the smaller units and live in that and make more money by a third unit where you can then rent those units out then number two maximizing the zoning that you have sometimes we'll find that somebody is sitting in a property where there's only a house on it but it's zone four so residential two or residential three you could then build on and there are funders again there are funders out there who will fund that type of strategy so you don't have to lose your house or sell your house or your property if you are in an in an area where your zoning allows you to build more then the third thing that you could do is rezone we currently busy working on a project at the moment where we bought a house in a certain area here in Cape Town and we subdivided that property into four ovens and we're putting 10 units on that property and again there are funders that will fund that type of strategy so instead of selling the property we subdivided it we're putting 10 units on it and we can now determine whether we want to rent it out or sell the 10 units and keep one or sell nine units and keep one as a as a long-term investment my choice is to hold on to all of them and rent them out because we will be able to find the funders that will be able to fund that type of strategy so again I reiterate if you are in a scenario where you are wanting to sell don't because you're going to lose money and there are ways for you to hold on to your property and even enhance the property investment value by adding certain strategies to what you already have. Of course we've gotten a great comment here on our Facebook page coming through from Carlos Scaltz saying always something new to learn when listening to Nigel Adriane say thank you very much there to Carlos and of course many of you to Lusmenia Bongani Mahbonda also watching on our Facebook page and before I let you go Nigel any final tips for our property investors when it comes to certainly navigating their property portfolio not certainly particularly for the remainder of the year because we're now also approaching you know festive season where we know that as landlords we do tend to struggle collecting rentals over that festive period whether it's you know December, December rental is always a struggle I've seen with many landlords sharing their own stories and oftentimes even January rental often being a struggle so any final tips for our property investors at home when it comes to managing their rentals for the remainder of the year. So unfortunately there's always a rider to everything I say and right now it may be a little bit too late for you to be implementing any strategies that's going to help you to make sure that you get your rentals in December. If you have not implemented a strategy at the beginning of the year already then it may very well be too late however there are some things that you can do just a few little things that maybe will help you to get your tenants to pay their rental in December or to even pay a little bit more so things like adding in a solar geyser giving them a you know a fridge as a bonus to say guys I know that you guys are also struggling and I see that you don't have a fridge in your home if you if you pay your rental I will buy you a fridge yes it costs you a little bit of money but at least you know you're going to get your rental income there are lots of those little strategies that you can play around with giving your your tenant gifts that you know to say thank you for for being such a loyal tenant and again that relationship building is so important you have to build relationships with your tenant don't be an absent tenant sorry landlord if you're an absent landlord that's when your tenants will take advantage they will break your stuff they will not pay rent they will you know they will abscond they'll just disappear on you if you are a present landlord then your tenants will most likely pay their rent and they will not disappear on you so that's what that's about all I can really encourage you at this point in time but for the medium to long term I would suggest that you build a strategy for your tenant throughout the year so that when you come to the end of the year you don't have those kinds of problems and that's a great place to leave it at this evening Nigel thank you so much for joining us on the show thank you for having me it's always a pleasure and that is Nigel Adrienne who's the founder at the enterprise development property fund wrapping up the Wednesday edition of the private property podcast with myself I'll be back on your screens on Friday tomorrow's Thursday so I'll be attending my law for property development and management lecture which is always a very heated lecture and and and of course I'll be back on Friday it is of course Wednesday so you can catch the first time home by show with Esther Klassen this later this evening at 8 p.m. until then hoping you're staying home and staying safe