JOHANNESBURG – There is never a bad time to invest in property. Even when the economy is on the skids, or when you have no money.
This is according to Sylvia Koketso Milosevic, a property entrepreneur who has built a sizeable property portfolio and now runs an educational company to help first-time home buyers who want to build up a similar portfolio.
“In fact, when the economy is bad, that is the best time to invest in property,” she says. “There will be lots of bargains. But when I first started, I made lots of mistakes. My company now helps property investors to avoid the mistakes I made when I was first starting out. So even though now is a very good time to invest, there are two things you must never do: never buy property that will not pay for itself, and never try to do this on your own.”
“These were exactly the mistakes I made when I first started out,” says Sylvia, “and so I created this company to provide advice, back-up and hands-on mentoring for first-time property investors.”
Sylvia was only 16 when she discovered the hard truth about the cost of living when her father was retrenched and the family lost their only income.
“It was really tough on us,” she says, “but it made me realise that a salary is not the only way to create income. That year my mother gave me a book on investing in property, and I decided that this was going to be my passion. And after I had ‘paid my school fees’ in terms of the mistakes I made, I decided that I should use my knowledge to help other people.”
Here are five tips from Sylvia’s seminars:
1. Always buy property at below market value. You will find these properties from distressed sellers, estate agents, sheriffs’ auctions, bank repossessed properties.
“You can buy a property at the market value sale price,” said Sylvia, “and it will give you a return in around seven to ten years. But if you are an investor, you want a return straight away. The only way to do this is to buy below market value and then sell or rent at the market rate.”
2. Try not to use your own money or take the risk onto yourself entirely. There are a number of tactics – from getting an investment group together, to making a deal with the seller – which means that you make a return on the property without having any money of your own.
“We teach people the various ways that you can buy property without having any capital of your own,” said Sylvia. “It can be done if you do it the right way, with only minimal risk to yourself. This is a huge benefit, as a lot of people simply do not have the capital to invest in property but are really desperate to get themselves out of poverty.”
3. Be careful of buy-to-rent if the market-related rental does not cover the bond and expenses.
“This was the first and biggest mistake I made,” said Sylvia.
“I had all these properties, but they were an expense and were draining my portfolio. I was having to pay in to make up the shortfall. I was working harder and harder in order to subsidise my investments.”
4. You have to be hungry, you have to follow the rules, and you must be persistent. “It’s vital that you keep up the momentum,” said Sylvia.
“There is no point in starting and then stopping when you hit your first obstacle. It is important to understand that obstacles will happen and as long as you learn from them you are on the right path to success. You need to really want to do this. It’s for everybody, you don’t need a degree, you don’t need capital, but you do need to have one attribute: you must be a self-starter who does not give up easily.”
5. Don’t go in unprepared or uneducated. Property investment carries an element of risk, and preparation and research are vital to avoid making a costly mistake.
“You will never stop learning,” said Sylvia.
“When I first started out, I was making all these mistakes and they were costing me. My knowledge was all theoretical, from books, and I had no practical guidance. Then I saw an ad for a property seminar, and I went to it,” she continues.
“It was being hosted by a British company, and it was almost as if they were talking to me. They listed all the mistakes I had made and told me how to avoid them. That was a turning point for me. I realised that South Africa did not have this kind of network – a property investment network and mentorship programme – so I decided to start one.”
“To date, we have had over 20 000 students who went through our workshops and many lives were changed for better thanks to this program.” “We have called it Wealth Alliance because that is what it is: an alliance of people wanting to create wealth through property investment.”