The biggest myth that we bust was that almost all South Africans still believe strongly in property as an investment class . In fact 74% thought that buying a property even in today’s uncertain economic climate was a prudent investment but an even bigger majority of 93% said that they would prefer to buy rather than rent if they could afford to. Overall, owning property had far more positive association than renting. Generally owning was associated with investment and assets, while renting property was perceived to be unwise and irresponsible by those in the survey.

So why don’t the respondent’s buy? The broad answer is that they cannot afford to buy, or they could not afford to buy the same amenities that they could rent. We know that banks that traditionally loaned money to home buyers are lending very cautiously at the moment and this comes out clearly in the survey. Applying for a homeloan is the most stressful event in the home buying process. A remarkably low 15% of tenants suggested that they preferred to rent because they could get better returns in other investments.

Other important factors that influenced the buying decisions of potential buyers were the price (67%), the proximity to work (44%) , the proximity to good schools (42%) , and the proximity to shopping centres (35%).

But one of the most interesting points to note was security. When asked what the most important factor which influenced the choice of area for both buying and selling the answer came out very clearly in favour of god security. Nearly 44% of respondent’s suggested that the crime rate, the security presence and the cleanliness of the area was the strongest influence when deciding on an area.

To sum it all up, nothing has really changed my view on buy-to-Let property investment. I will continue to look for small 2 bedroom units in good areas, within a secure complex. The banks and the state of the economy will continue to control the volume of tenants who become owners but we now have confirmation that there is huge pent up demand for affordable good housing. If you love the idea of owning property, you are not one of the crazy ones. If you can but don’t choose to invest in property, maybe you are…

If you choose to see the cup half empty it probably will be, but more than ever we need to take a good look at how we have prepared ourselves for retirement and the question of which asset class to trust still looms large.

I still challenge the perception held by many that it is not a good time for investing in property. The argument against property often makes a point that property prices are expected to remain flat for a while with very modest capital appreciation which I accept.

I have made arguments over the last 12 months about how good times are now for finding great opportunities in property, and have laboured the view that this is the time that you should be in the market, but there is another very important point. A disciplined property investor will pay little attention to the business cycle and focus more on yield and cash flow than what the ebb and flow of capital in and out of the market.

A few weeks ago I attended a talk by Jim Collins, the influential business management expert with top selling books to his credit like Good to Great and Built to Last, and I was inspired to borrow this story from his new book to share with you.

In December 1911 two teams of explorers pitted against each other on a journey to be the first to reach the South Pole. Both teams were determined to be the first to achieve this audacious goal, but they were vastly different in preparation and strategy.

Firstly, the English explorer, Robert Scott decided to take advantage of good weather to drive his team to the maximum to cover the most distance they could in a day (sometimes covering 45 miles on a good day) so they could rest and recover when bad weather would make the journey impossible. Scott had new untested equipment and ideas which he predicted would give him the edge and was confident that he would be the first to plant his flag at the pole.

Norwegian explorer Roald Amundsen on the other hand, paced his team to cover only a set distance every day regardless of weather conditions, covering no more than 20 miles a day. He learned from living with the Eskimos what equipment, food and clothing worked in sub minus conditions, and planned carefully to cover only a short distance every day to prevent his team from suffering from fatigue. So they kept moving slowly with skis, dogs and sleds, able to make progress even in the worst of conditions. On the evening of 12 December, after years of planning and more than 650 miles of journey through torturous conditions, Amundsen found himself only 45 miles from the pole. The weather was clear and he had no idea of Scott’s whereabouts, but instead of pushing through to the pole he covered only 17 miles and set up camp once again, refusing to be tempted or influenced by conditions to change his strategy.

Amundsen eventually got to the pole first and returned back to base with his team intact. Scott, on the other hand perished with his entire team, found eventually only a few miles from the safety of camp.

Jim Collins refers to this strategy in as the 20 mile rule and his research shows that companies that grow consistently perform better in the long run than those that adjust their plan according to market conditions. But in real estate investment this rule is even more relevant.

Think back over the last 7 years and remember how many unprepared adventurers dived into residential property investment and bought up houses in a frenzy while the conditions were bullish. At one stage in 2007 one in every four properties sold was bought for investment purposes and this fuelled an oversupply of housing especially in the mid-priced market. Off plan offerings were snapped up by investors with no plan other than to flip on to a willing buyer who would hopefully be prepared to pay more for the property on completion. The result was catastrophic for many who would have been significantly better off if they had a long term plan and stuck to it religiously. I am sure you know investors like Scott who perished in the financial crisis that followed.

Most people buy property as a pension plan to replace their income when they retire, and this is where property investment is a winner.

But apply the 20 mile rule.

Look at the end goal and decide how much free cash flow you will need to live off at that future date. Calculate the value of the debt free property you will need to own to generate that income at that future date and work back to see what you will have to acquire to make that happen. Work on yield or cash flow.

There is no wrong answer as long as you end up with a plan and you stick to it religiously, regardless of what the markets are doing.

For more information go to www.ipsinvest.com

PS Scott is completing a full investment report and this will be available in the next few weeks.

Buying a home is probably one of the biggest investments you will make. The good news is you can share the experience with professionals who really know what they are talking about. This is why we have introduced Property Leader – to help you every step of the way. And we’re not just talking about finance. We know about locations, valuations, and all the legal jargon. We are not just able to help you sell, we can help you buy too. Think of it as a partnership and a way to draw on our knowledge, a helping hand.

Know how much can you afford

We will provide you with a view on how much you would qualify for in order to ensure that you make an informed decision. We will require proof of income from you and upon receipt we will do a credit approval and will provide you with a Passport to Purchase (Approval in Principle) that is valid for 90 days. You are then able to negotiate the best price for your dream home, with the peace of mind that you already have secured your finance.

Sell your existing property…

We will provide you with a valuation on your existing property to enable you to sell at the right price and introduce you to the best estate agency in your area. Best of all we arrange reduced agency commission and we hold your hand throughout the process.

Find and buy a home

FNB Home Loans has a host of valuable information to ensure that you are up to date with the latest trends in the market. We are also able to supply you with area reports on suburbs you are interested in, and suggest a few others which suit your specific needs. Understanding your requirements allows us to match you with a specific property in your selected area(s). Again, we introduce you to the best estate agent in the area and hold your hand throughout the process.

View the latest Property Barometer information on http://blog.propertyleader.co.za, or speak to one of our Property Leader consultants through www.propertyleader.co.za about more detailed reports.

Start the paperwork

Provide us with the valid Passport to Purchase as well as the Offer to Purchase and we will process your application.

 Seal the deal

Buying a home is admin-intensive and we’ll make sure you know exactly what documents are required and when to make the deal happen for you. Once your ‘Approval in Principal’ (or AIP as it is referred to) is already complete, all we need from you is the following documentation 

- Copy of your ID

- Copy of your Offer to Purchase

- Proof of residential address like a municipal account

- Proof of income

 It’s a good feeling, knowing you have left no stone unturned when it comes to a significant investment.

For further information about Property Leader, visit www.propertyleader.co.za, call 0860 449 006 or e-mail us at propleader@fnb.co.za.

Property and business is all about creating wealth. Tony Robbins says that success in business, and property is a business, is 80% psychology and 20% implementation. To be successful you need to model the best globally, you need to know what they are doing, implement it and then you will get the same results. You also need to be able to recognise patterns, so that you can gauge world events and make educated and informed decisions for your future.

For this reason, I will be joining Roger James Hamilton, Global Thought Leader and creator of Wealth Dynamics, in presenting with other Thought Leaders to discuss a few critical steps that could determine whether your business or the business you are creating, will succeed or fail in the near future, and that includes your property business?

I truly believe that one of the greatest trends worldwide is Glocalisation – ‘thinking globally, acting locally’. This workshop provides you with the opportunity to learn from the best globally and not something I would recommend missing if you want to be part of the future.

I look forward to you joining me there and please find the details below about the full day workshop event, especially the piece in bold. Click here to secure your tickets now

I will be one of the guests on stage that Roger will be interviewing as part of the Changemakers forum. Being part of the Changemakers forum also makes it possible for me to make a special offer to my network – I have negotiated a special deal!

In other words you will get:

• 2 x tickets for the full day event,
• 2 x Wealth Dynamics Profiles,
• 2 x Wealth Spectrum profiles
• for only R497
• (or R1 697 if you choose the VIP tickets – only 10 still available)
• Amazing value

Fast Forward Your Business Events:

• Johannesburg, Grayston Drive Southern Sun, Sandton, 12 September 2011
• Cape Town, Seapoint Ritz Hotel, 15 September 2011

Bonus Value over R2000 includes:-

• 2 x FREE Wealth Dynamics Profile – value R725,
• 2 x FREE Wealth Dynamics Spectrum Profile – value R280
• plus the a FREE copy of Your Life Your Legacy e-book – value R75
• Click here to secure you tickets now

Limited amount of VIP Tickets at R1697 – including all the above PLUS VIP registration and “front row” seating for the event as well as a Cocktail Lunch with Roger James Hamilton- number of VIP ticket available are LIMITED

Click here to secure your tickets now

The Fast Forward program does that … and more.

What will our economy, technologies and customer’s habits look like in the next 5 years. They are changing rapidly and you need to be ready to profit from these and global changes taking place?

In the coming years, your customers will:

• buy differently,
• pay differently,
• be served differently and
• have entirely different expectations on what they want and how they want it.

And you’ll learn about what this means to your business or the business you work in, that almost no-one else knows about right now!

Find out how, if you don’t start taking action, your competitors will accelerate their businesses ahead by building their teams and harnessing resources differently, promote and partner differently and transform the way they make money.

Click here to secure your tickets now

During this event you will learn:

• How to take charge of your business and financial destiny.
• The Top 10 trends are that will make or break your business in the next 5 years.
• Discover where you are today and the specific steps YOU need to take to profit from the changes taking place – accelerate your business income and wealth.
• How Million and Billion Dollar companies use and create teams to propel their business and wealth (and why you never have to go at it alone again).
• Understand the cycles and patterns of business, property, the share market and your life no matter what industry, location or position you are in.
• How the wealthy solve the exact same problems you may be hitting your head against every day…effectively and instantly…and how you too can focus on the most important tasks that will lead

So What’s Stopping You From Achieving REAL ‘Business Success’, and Enjoying a HEALTHY 6 or 7 Figure Income?

Click here to secure your tickets now

To helping you create wealth through property and business.

Thanks

Scott Picken

IPS CEO

www.ipsinvest.com

1. I love South Africa, but I am concerned about the future of South Africa with what Malema keeps saying?
2. Saying that, I am not sure where to invest as there is allot of uncertainty in the global markets?
3. Where is better to invest, South Africa, USA, the UK or Australia?
4. I would like to have a plan B, but I am not sure what to do?
5. I am concerned about the long term value of the Rand and preservation of my wealth?
6. I have heard investing offshore is very difficult and more than 80% of people lose money? How do I trust who to listen to?
7. I don’t know the markets and so don’t know where to start?
8. I think I can get better returns in South Africa at the moment, but I know it is wise to not have all my eggs in one basket.
9. How am I going to manage a property so far away?
10. All I know is that to give me and my family peace of mind, I must do something!

If any of these are pertinent to you, then you should be attending our breakfast.

We continue to live in interesting times, as was seen by the Debt Deal yesterday. We had such positive feedback from our webinar, “Clem Sunter; the Global Economic Outlook, including the USA, Australia and the UK reviews and South Africa’s future prospects”, we will be repeating it live in JHB next week.

Scott Picken will be presenting, and he has a special guest, Richard Dunn, who is one of the leading experts in Australian Property. Richard will also be bringing some exciting investment opportunities from Sydney, Melbourne and Brisbane, including affordable opportunities from less than $300 000. We will also compare these to USA and the UK opportunities.

Join us for our live breakfast.

• Date: 11th August 2011
• Time: 7am (presentation starts at 7:30am) – 8:30am
• Venue: Bryanston Country Club
• Cost: R200 (breakfast inclu) and money back guarantee if event not of value
• Click here to Book

To helping you achieve wealth preservation, a plan B and peace of mind.

Thanks

Scott Picken
IPS CEO

I am a free market advocate. If you want more housing, create an environment that gives benefit to the individual who creates it, and make sure that the markets are well oiled, and you will get housing. The more you interfere with the market the less chance you will achieve that goal. When we build or buy houses, we create supply, which collectively, keeps the price of housing in South Africa relatively low. (Even though we are trying to profit from the price increases that inevitably come when demand outstrips supply)

I am not naïve to the challenges facing the growing gap between rich and poor, land owners and landless, but messing with our intrinsic right to own property is so counterproductive its frightening we actually are still having this debate. I can find no example where any place in the world has flourished under communal land ownership of any shape, please correct me if I am wrong. There is also few examples of government being capable of running any business efficiently.

I accept that the idea that a person could own land has not always existed. Feudal lords in medieval Europe distributed land in much the same way as in much of Africa where Tribal Chiefs still prevail. Tenure was traded for loyalty, soldier duties and taxes.

This changed in much of Europe starting in 1789 with the French Revolution where the lands belonging to the aristocracy were seized and redistributed. The Russian Revolution of 1917 and the Chinese Revolution of 1949 was even more radical doing away with private ownership altogether. Mugabe’s Zimbabwe is hardly an example, because there appeares to be no constructive purpose in the way that productive farms are still being stolen and destroyed, but the result of that is clear to see. So we now have the benefit of learning how badly these economies failed, and the faster they have reformed and privatised, the more they have developed.

When colonialists spread into the new world they bought, bartered and stole land from the indigenous people in the countries they occupied. But by cutting up the land giving ownership, thereby providing INCENTIVE to mostly hardworking and sometimes skilled immigrants, to farm, mine, or improve, FOR THEIR OWN GAIN, resulted in those countries flourishing.

In Africa today, there is a direct correlation between the amount of privately owned land and the size of GDP.

We can’t turn back the clock but we can learn from the past, and implement the best strategy to create jobs, housing and food for the people of Africa. The answer is for government to fire up the power of entrepreneurship. MORE land ownership is the answer, so get the land off the government balance sheets and put it in the hands of the people. Reform the tribal system to provide tradable title to the occupants. Give mining rights to the highest bidder so we can get the capital and expertise to unlock our HUGE natural resources, privatise the generation of electricity and rail infrastructure so foreign capital can help us dig the stuff out, process it and get it to the ports.

The rapid growth in GDP, tax revenues and employment that will follow will quickly reinstate this awesome county of ours to top position, as an example of true democracy, where state really is “for the people”.

Its a no Brain-er!

In other advanced countries such as Germany the portals would love to do the same thing but the deeds data is just not accessible, not for any price. In South Africa we are actually very lucky – information openness, strong deeds office technology  and  good private sector capability has made high quality computer modelling around property values not only possible, but also available to everyone.

Private Property has teamed up with Lightstone to provide awesome tools for property owners, buyers and investors. We have created our own computerised valuation product called “EstiMate”, available to property owners for free.

Each report contains:

• The current estimated value of the property, as generated by the Lightstone automated valuation model, confidence score for the above value
• Current municipal valuation
• Legal property details
• Owner(s) and bond amount registered
• GIS location and map
• Last sale date and price
• Recent sales of comparable property in the area
• Price and sales volume trends for the area

Report snapshot showing valuation estimate

Owners may register all their properties to get free estimates. These estimates are updated every 3 months and the owner will be sent a reminder email when a new report is available.

Currently it is only possible to draw a free report on properties you own in your personal capacity. We are not able to offer the free product for properties held in trust or other legal entity, primarily due to the difficulties in validating whether the user requesting the report is the valid owner. But all is not lost – you may draw a report on any property in South Africa at a fee of R50 per report, with all the features mentioned above. In the meantime we’ll continue working to get the free report to our savvy trust-based investors.

Click here to get a free report on your property

And for those who hold properties in trust or who want to pull a report on any property in SA:

Click here to buy an estimate report (R50 per successful report)

Look out for some mind-blowing new products on the privateproperty.co.za site in the next couple of months – there is going to be some VERY VERY cool stuff on there! I’ll update you when it goes live.

Cheers,

Paul

I got to thinking that maybe they are not so obvious. In fact I realised that they may be quite subjective as different investors buy for different reasons with very different circumstances.

So let me put 8 of my most relevant fundamental rules that should drive your property investment:

1. Cash flow – The market is not going to take off like it did in the last boom, and it is predicted that it will stay flat for the next few years as we recover from the excesses of the previous cycle. SO don’t try to speculate with high end residential stock. Rather look at property that generates cash flow – yield. That can be commercial or residential.

2. Location – cash flow is important but so is location, so be careful of the low end flats in bad areas. Would you live there? Are you prepared to go and sort out an issue with the tenant?

3. Buy good quality stock – If the building or unit is cheap, there may be a reason, and maintaining a poor building is always more expensive than you imagine.

4. Customers/tenants – all business is built around customers, so when considering an investment look at the potential to attract tenants. Let’s assume you have an industrial building selling for a high yield but purpose built for a particular business. When the lease is up and you start looking for new tenants will you have to change the building substantially to match the market needs? In residential property, this means buy near a commercial node, where there are always tenants.

5. Retail Value – finally look at the value. Any trader will tell you that good business requires that you buy for R1 what you can sell for R2, so why should property be different? Find a good buy, where the product is being sold for lower than market. There is lots out there at the moment.

6. Replacement value – how much would it cost you to build or replace the structure + land? If you can buy land down the road and build for less, it probably makes sense to do so. It is said a real estate bubble as a time where the market is paying more for second hand property than it costs to replace it. So beware if you are paying a premium over the replacement price.

7. Time – property investment is not an in and out business. It’s about creating long term passive income. Match your expectations.

8. Gearing – Don’t over extend yourself, you don’t want to be forced to sell when everyone else is doing the same. But gearing can get you great returns on your cash employed.

When we talk about fundamentals, its mostly about using common sense. Whatever your financial advisers say, property is a great way to build long term security, and you don’t have to give up your day job to do it.

If you don’t understand social media and get involved you will go out of business. Agreed it is not vital at the moment, but it is impossible to ignore the trends and by the time it comes it will be too late. Robert Kiyosaki (Rich Dad Poor Dad) in his latest book Conspiracy of the Rich, said the best way to build wealth was to follow long term trends and this is certainly one you need to know about!

The beauty with social media is that you can’t spend your way to the top. The only way to build a credible reputation is through time and consistency of you application. This is known as social proofing where you build a following (like your account in Ebay and the way you perform). One day we will all have a social proof, which will be like you ID for both yourself and your company. Your track record will follow you. This is awesome as those that are experts and deliver a valuable service or product will be able to charge more and those that don’t perform will go out of business or have to seriously discount their prices. No more developers selling properties and then building rubbish or dodgy estate agents getting away with murder. You will only be as valuable as your track record and with the transparency of the internet; everyone will be able to see your performance. As Steven Covey says, the 21st Century is the Trust Economy and everything is going to be determined by trust and your social proof will be your indicator or the factor it is based on.

The best way to be successful is to model the best, learn what they are doing and then follow them. It is no coincidence that the best in the world are putting a huge focus into their social media strategies.

Anyone think it is only for kids? By the summer of 2009, over one-third of US Facebook users were over the age of 35 and about half that group was over 45. Early in 2009, InsideFacebook.com reported that the fastest growing demographic on Facebook was women over 55.

The sooner you start the sooner you start to build that track record and most importantly your social proof. You need to be on Facebook, YouTube, Twitter and Linked In at a minimum and you have to start to learn about video as this is the future.

This was a friendly reminder to the property industry to start communicating, or seriously consider the consequences.

If you have any questions please contact me on scott@doubleyoursales.co.za. I would love to know your thoughts.