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All Posts By

Jaco Grobbelaar

How My First Property Made More Than My Entire Year’s Salary

By | Invest


I have always been interested in property and wanted to build a property portfolio. Although I knew that investing in property could be lucrative, I was not fully aware of how lucrative. This quickly changed after my first property investment.

I had ample time to educate myself on property investment as I did not have funds or financing capacity to acquire my first property yet and was not aware of all the ways one could acquire property without capital or financing capacity. My wife (girlfriend back then) and I attended seminars, read books and met with property investors. This part of our journey was extremely important as this preparation and education helped us build a successful property portfolio.

Read one of our previous articles, 5 Ways to Finance your Property.

I was in business for a while and then got offered a job with a lucrative salary for someone my age (R15,000 p/m or R180,000 p/a). I never wanted a job as I was very passionate about business, but when I received this offer, the first thing that went through my mind is that if I took this job, I would be able to get financing for my first investment property. Looking back today, I am very thankful for the jobs and bosses I had as the experience and exposure I gained were crucial for what we are doing today.

A couple of months after I took my first job, we pulled the trigger. We looked for a property BELOW market value and were fortunate to acquire our first property WAY BELOW market value. Acquiring a property below market value gives you protection against the downside of property investment and has so much upside potential.

In one of our previous articles, Ready, Set, Negotiate! we discuss why someone would sell a property below market value.

We bought an R750,000 property for R525,000, which was a profit of R225,000, even though we could not “cash in” immediately. The total amount of “work” to acquire that property was probably equivalent to one week’s work, but it made me more money than my entire year’s salary! I then realised that I WANT TO invest in property! We refinanced this property a few years later, and the funds made available were enough to acquire three more properties (deposits and transfer fees). I don’t like selling properties; I would rather refinance.

Property is a great way to invest and a great hobby to have while working or running a business. At that time, property investment was a hobby for me. Today I am in property investment full-time because it enables me to do what I love! Also read one of our other articles, 10 Things We Love About Property Investment, where we share ten property investment lessons we have learned in the last ten years.


5 Reasons To Build Your Property Investment Portfolio In 2020 Despite The Lows

By | Invest


The property market is at an all-time low, but these lows aren’t what you imagine. Things are about to get better! Because when everything is low, it creates opportunities for property investors.

South Africa has experienced some lows recently, including the low GDP growth, rolling power blackouts, the business rescue of SAA, the anticipated Moody’s downgrade, and pressure on household finances.

However, the new century brings great opportunities for Africa because of the rising demand for its natural resources, the need for its workforce, and investors’ search for new markets, of which Africa is a market of over one billion people. South Africa is one of the most promising emerging global markets and is the economic powerhouse of Africa. It has world-class infrastructure, innovations, sophisticated financial, legal, and telecommunications sectors.

In short, it’s not all bad news. South Africa and Africa still offer fantastic investment opportunities. And the best thing about hitting rock bottom is that you cannot go any lower. The only way to go is up!

In one of our previous articles, Here’s Why I Am Buying As Many Properties As I Can (While Others Are Selling), we discussed the opportunity that uncertain times and fear create for wise and patient property investors.

Here are our five reasons why you should continue building your property investment portfolio in 2020 despite the lows.


The supply of investment properties is higher than the demand, which means it’s still a buyers’ market. This is wonderful news for first-time buyers and repeat investors. Sellers are ready (or even desperate) to sell, so investors can negotiate great deals.

Adrian Goslett, the regional director and CEO of RE/MAX of Southern Africa, says, “I remain confident in the local property market and believe that we are near the bottom of a downward cycle that is poised to start a long-term corrective journey as we head into 2020.”


Property in South Africa has grown consistently over the last 40 years. Sometimes it grew faster and sometimes slower, but property prices have continued to grow. Rental income has also shown very consistent growth over this period.


Property industry experts anticipate lowered interest rates for mid-2020, which means you will pay less servicing debt and enjoy an increased disposable income.

In the year before the end of November 2019, the number of home loan applications increased by 9,7%.  In one of our previous articles, When Opportunity Comes Knocking, Open The Door!, we discussed the good news for property investors with this home loan approval growth.

The banks are also granting more affordable and easier access to home loans, which makes property an increasingly attractive investment option.


Low rental prices help investors to acquire properties at low prices. Paul Stevens, the CEO of Just Property, also added the following: “On a positive note, I believe rentals will start to increase in the second half of the year. This presents savvy investors with an opportunity to take advantage of the buyers’ market now, with the cautious expectation of yields improving going forward.”


Over the last five years, the JSE has effectively been flat. Even balanced funds used to save for retirement have struggled to stay ahead of inflation. However, property always seems to come out on top when your capital growth plus your net rental yield, which gives you your ungeared return on a property, is still much higher than returns on other investments.

Do not worry if the property market goes low; your property investments will continue to soar high!


How To Build Your Property Investment Team

By | Invest


“In a multitude of counsellors, there is safety.”

The rich surround themselves with experts. If you want to do something great, you are not going to do it alone. It is no different when building your property investment portfolio.

You cannot be good at everything, and you do not want to be good at everything as it will divert your focus. You need to surround yourself with a great team. I would not have been able to build my property portfolio without the following people.

Firstly, you need a Mentor in your investment team. You can also have more than one. Your mentor should specialise and focus on property investment. They should have achieved what you still need to achieve and have walked the walk.

You also need an Accountant in your team because you are going to build your property portfolio in entities and need financial statements and tax returns.

You also need the following Legal Experts in your investment team.

Firstly, you need an Independent Trustee who knows the laws around trusts and understands trusts. They need to ensure that your trust is always compliant and that it ticks all the necessary compliance boxes.

The second legal person you need is a Conveyancing Attorney. Read our article, 12 Guidelines on Submitting an Offer to Purchase, for the benefits of using your own conveyancing attorney.

You need a Bond Originator in your investment team who can assist you in obtaining the best financing. For more on this subject, read our article, 5 Ways to Finance your Properties.

You also need a Personal Banker. And if you can get private banking, get it. The benefits of having a private banker to get things done and save you significant amounts of time far outweighs the costs.

You need Estate Agents and Letting Agents who can manage your property portfolio. In our article, How to Manage your Rental Property the Easy Way, we discuss the role and benefits of a property management company.

Having a Handyman in your team is a must, and you’ll need them very early in your property portfolio already.

A Property Inspector also forms part of your team. They will give you a comprehensive report of the current condition of a property as well as the possible consequences of those defects in the future.

Look after your investment team. Pay them in time and referrals if possible. When you look after them, they will look after you!


5 Ways to Finance your Properties

By | Invest


“A bank is a place that will lend you money if you can prove that you don’t need it.” – Bob Hope



When using Other People’s Money (OPM), you need a good credit record. Although it is noble to have no personal debt, it is a disadvantage when you want to use the bank’s money to build your property portfolio as you need credit to get credit. Start with a very small credit card, overdraft, and a clothing account or two. Remember to check your credit score annually. The better your score, the better the financing you’ll get.


Banks compensate bond originators, so it won’t cost you anything for them to apply at all the banks for financing and assist with the negotiation of your term and interest rate. Don’t be afraid to negotiate and send the proposal back if you are unhappy with it. We often get better interest rates and terms simply by asking!


Even if I have a deposit, I prefer to apply for 100% financing. You can rather park your deposit or available funds in the access bond afterwards. Get a refresher on how to use your access bond to its fullest on one our previous articles: “Start Using Your Access Bond Today”.


This is an investment property. Your tenant is paying your interest, so why pay your bond off faster and use your own money when you can rather improve cash flow and use as little of your own money as possible? You can find out more about this on one of our previous articles: “The Only Time 30 Is Better Than 20”.


I often get better deals from banks other than my own. Remember, each bank’s strategy and risk appetite are different at different times.

Now that you’ve got these 5 easy strategies in your property investment arsenal, all that is left is to go forth and prosper!

When Opportunity Comes Knocking, Open The Door!

By | Invest



Although we live by the philosophy that any time is a good time to buy a good investment property, the recent home loan growth means there is a great opportunity for you to grow your investment property portfolio.

South African banks continue to show confidence in our property market and are currently approving home loans at a rate we haven’t seen in years! In the opinion of FNB property economist, Siphamandla Mkhwanazi, if this growth continues, the residential property will receive a nice boost.

Mkhwanazi says, “The progressively faster pace of growth in mortgage advances this year could be a positive outlier for future growth. While the property market has underperformed in recent years, the growth in mortgage advances this year has provided some support, injecting much-needed liquidity into the market.”

Mortgage advances have outpaced average house price growth in South Africa since June 2011. But what does this mean for you and your investment property portfolio? Well, for one thing, it means you should throw the door wide open to the opportunity that is knocking.

Let’s consider the good news for property investors with this home loan approval growth.

•    More home loans available to buy investment properties
•    Economic growth (good for us all)
•    Increased employment levels
•    Lower interest rates
•    Constructive lending
•    An increase in residential property transaction volumes
•    Banks are willing to finance bigger proportions of the purchase price
•    Smaller deposits required from banks

Timing is everything, and when the iron is hot, you better strike. So, our only advice to you is to take advantage of the increased home loan advances and buy!


Start Using Your Access Bond Today

By | Invest



Your access bond is a great way to save money and build up reserves for an emergency fund. You are earning the interest that is charged on your home loan on any money that is paid into your access bond account, which is usually much more than you would earn on any other fixed deposit account or even other investments.

The great thing about an access bond is that any money you pay into your bond is seen as a loan repayment, which reduces the interest charged since a smaller capital amount is now outstanding. This either reduces the monthly bond payment, or you can ask the bank to keep the payment the same, which will then result in the bond being paid off quicker as a larger portion of the bond payment is now allocated to capital instead of interest. The difference with an access bond is that any additional money you paid into your bond, you can access again when needed.

I always try and obtain a 100% loan from the bank when purchasing a property. I do this even if I have funds to put a deposit down. I do this because I can always pay those funds I had available into my access bond after the bond has been registered. It will have the exact same effect as putting down a deposit beforehand. The only difference now is that I have those funds available for future requirements or investments if needed.

There are four things you can do with the additional money you pay into your access bond:

  1. You can leave the funds in there to build up your reserve fund to healthy levels in case of emergencies or changes in the economic climate.
  2. You can use the funds to cover your monthly shortfalls, so you don’t have to pay shortfalls from your pocket.
  3. You can use the funds to expand your property portfolio and cover the costs, such as transfer fees, as well as deposits (if needed) required to acquire more investment property; and
  4. You can use the funds for your enjoyment if your reserves are healthy.


10 Things We Love about Property Investment

By | Invest



My wife recently reminded me that we’ve been investing in property for 10 years. So, to celebrate, here are 10 practical lessons that we’ve learned through our experience and mistakes about investing in property for the past 10 years.

  1. Small Action is Better than No Action

Possess the land little by little. When you take the right small steps continuously, you will get BIG results!

  1. Have Cash Reserves

If you run out of cash reserves, it is game over. You stand the chance of losing everything that you’ve built up. It’s as simple as that.

  1. You Make your Money When you Buy

When you buy a property below market value, the chances are that you will make a great return on your investment.

  1. Use your Own Conveyancing Attorney

The service I get with my own attorney is always better, and the costs are significantly less.

  1. Apply for Financing at Multiple Banks

Don’t assume that your bank will give you the best financing. We’ve often gotten a better deal from a different bank.

  1. Register your Bond for More than what you Bought the Property for

When you refinance in the future, you do not have to apply for a second bond; you can merely take an advance on your existing bond, which is much easier to do and cheaper.

  1. Renovate (Not too Much and Not too Little)

Don’t overcapitalise on your investment properties and spend more than what is necessary. Also, don’t delay fixing problems or allow your property to deteriorate.

  1. Avoid Property Registration at Year-End if Possible

People often move at the beginning of the year. If you purchased a vacant property that is only going to register at year-end, be aware that your chances of having the property vacant into the new year are higher.

  1. Rather Accept Lower Rent than an Empty Unit

The math is simple… Having your unit vacant for a month or two is much worse than dropping your rent and immediately placing a (good) tenant in your property.

  1. Be strict on Rental Collections

Debtors will always pay the creditors who shout the loudest first. If your tenant pays late, take decisive and severe action.


Make the Most out of the Lower Interest Rate

By | Invest, Rates


What better way to start a week than with good news on the property investment front?! This past Thursday, the South African Reserve Bank’s Monetary Policy Committee announced a cut in the interest rate from 6,75% to 6,5%.

Now, you might say, “Why is everyone making such a fuss about such a small cut?” Let me tell you… The last time the benchmark interest rate was cut was March 2018 and last week’s cut, combined with the recent petrol price cut, is a relief for salary-earners and property investors alike and also good for market sentiment.

The first big win from the interest rate cut is the lower prime lending rate, which is usually the lowest rate at which banks start lending to clients. Right now, the lending rate is 10% instead of 10,25%, and over time, this means better cash flow for property investors.

If you are an existing property investor, you will save ±R16 a month per R100 000 borrowed. Therefore, on an R1 million loan, you will save ±R166. This might not seem significant; however, for a 20-year loan this becomes an R40 000 interest saving!

The second win from the interest rate cut is for first-time property investors. The lower interest rate means borrowers should find it a little easier to qualify for a loan.

Lastly, with most people’s budgets under pressure, the lower interest rate provides a bit of breathing room and makes property ownership more affordable for everyone.

And although the interest rate cut won’t solve all our problems, it’s a great opportunity to further your property investment portfolio. So, go ahead and make the most out of the interest rate cut and win, win, win!

5 Tips to Buy Investment Property

By | Invest




I used to focus on how much I could earn in a year. But my financial priorities have changed completely. These days my focus is on how many GOOD assets I can acquire in a year because they grow in value much faster than my earnings can.

I learned that it is possible to buy an investment property with very little of your cash and still buy another property soon after.

And if you also want to experience the unstoppable snowball effect that comes from buying good assets, here are our top five tips:

You make your money when you buy. If you buy a discounted property, you make an immediate unrealised profit that you can access sooner.
The less of your money you use, the better. Remember, even if the bank does not give you 100% financing, you can obtain the deposit you need to put down from other sources.
You CAN do this. This does not mean you can access those funds immediately, but it does mean that you can access those funds in the future when you refinance without having to register a second bond.
Do not buy in your name! Not even one property. Every property in your name is debt that limits your capacity to obtain financing for future deals.

Since the bond is registered for market value, you can refinance the property to that value after six months to make cash available. Use this to pay yourself back what came out of your pocket and use the rest to build your reserve fund in an access bond. Or just go ahead and purchase your next investment property!


Did Someone Say Tax Benefits? Sign Us Up!

By | Invest


Investors are often advised not to buy property in a trust due to the high tax rates, but the ‘advisor’ often does not understand trusts or how the trust-related taxes work.

In a previous article, Should You Buy Property in Your Name, a Company or a Trust?, we discussed which entity to buy property in. However, this article focuses on the tax advantages of trusts.

The income tax of a trust is 45%, and the income tax of a company is 28%. The difference is the conduit principle that only applies to trusts. The conduit principle is one of the biggest advantages of using trusts and is explained as follows by the South African Institute of Chartered Accountants (SAICA):

“If income accrues to a trust and the trustees award it to one or more beneficiaries in the same year, the income retains its nature in the hands of the beneficiary.”

This means that whatever profit is made in the trust, whether it is capital or income in nature, can be distributed to any of the beneficiaries and the beneficiaries will pay tax in their personal capacity.

Let’s look at two examples.

Capital Gains:

Let’s assume an investment property is sold and the capital gain is R400 000.

Scenario 1:
You own the property in a company which has a tax rate of 28%. Therefore, the capital gains tax will be:

[R400 000 (Capital Gain) – R0 (Capital Gain Exclusion)] x 80% (Inclusion Rate) x 28% (Income Tax Rate)

Total Capital Gains Tax = R89 600

Keep in mind that if you want to distribute these profits to yourself, you will still need to pay an additional 20% dividends tax on what you distribute.

Scenario 2:
You own the property in a trust and let’s assume you have two children who need to go to university soon and you would like to use this profit/gain to pay for their studies. Both children don’t earn any other income yet. The capital gains tax will be:

R400 000 / 2 = R200 000

Child 1:
[R200 000 (Capital Gain) – R40 000 (Capital Gain Exclusion)] x 40% (Inclusion Rate) x 10% (Estimate Effective Tax Rate After Rebates at an Income of R160 000) = R6 400

Child 2:
[R200 000 (Capital Gain) – R40 000 (Capital Gain Exclusion)] x 40% (Inclusion Rate) x 10% (Estimate Effective Tax Rate After Rebates at an Income of R160 000) = R6 400

Total Capital Gains Tax = R12 800

It’s clear that even though trusts have a higher tax rate, you pay the least tax because of the conduit principle.

Net Profit:

Now, let’s assume your property portfolio generated a net profit (rental income minus expenses such as interest on mortgage bonds, rental agency commissions, levies, rates and taxes, maintenance and administration costs) of R400 000 for the year.

Scenario 1: 
(The above assumptions for capital gains tax still apply)

R400 000 (Net Profit) x 28% (Income Tax Rate) = R112 000

Total Income Tax = R112 000 (plus the additional 20% dividends tax on any profits distributed)

Scenario 2:
(The above assumptions for capital gains tax still apply)

R400 000 / 2 = R200 000

Child 1:
R200 000 (Net Profit) x 10% (Estimate Effective Tax Rate After Rebates at an Income of R200 000) = R20 000

Child 2:
R200 000 (Net Profit) x 10% (Estimate Effective Tax Rate After Rebates at an Income of R200 000) = R20 000

Total Income Tax = R40 000

Once again, it’s clear that even though trusts have higher tax rates, you pay less tax because of the conduit principle.

The conduit principle allows you to distribute to any beneficiaries, not only your children. You can also distribute to your spouse or parents if they are on a lower tax bracket. And if you don’t have children yet, your tax challenges will usually only come later once your property portfolio has existed for some years

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