How I Flipped My First Property at 22: My South Africa Story 

Thanks so much! Really appreciate this! It's something I really appreciate myself in youtube videos. We all learn better and are better prepared with the real life information 😊! Thanks

My chat please try sharing more on low cost investments etc. I'm a 1st year student and I've been using change from my travel pocket money to invest so just R100 and less investment information would be so great!!!!

Completely agree. If you want generational wealth, for not only your kids, but their kids too. Property is definitely the way to go 🙌

Yeah. I think it's more difficult to enter the real estate game in Cape Town than the rest of South Africa.

this is the way to help our fellow south africans! thanks for the positivity!

Really appreciate this! Thanks so much 👍🏻!

Thanks for the kind words, I really appreciate it! Will do so :)

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Much appreciated 😊🙌

😊🙌🙌 Thank you!

Appreciate it! Thanks man

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Glad it was helpful!

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Glad you liked it!

Any time! Glad you enjoyed :)

Glad you enjoyed!

So glad you enjoyed 🙏

Most welcome! Thank you 👍🏻

Thank you!

It is such a great investment class. You are able to leverage money based on the value of the property, provides (ideally) a steady income and hopefully asset growth as well. Great idea to hold onto it for rental 👌! Our eviction laws are a bit difficult compared to the rest of the world, but hopefully you have a good tenant 👍🏻 Haha I think we all wish we'd done more when we were younger 😂 me too. I guess we can only do our best now 🤷🏻‍♂️😄 Thanks so much!

@@CasualCash still waiting for a video on how to submit your sars tax return online using eFilling for beginners

What a great video…thank you for sharing

Thanks so much! Really appreciate it

Thank you!

Thank you 😊

😂🙌 Thanks!

Best of luck 😊👍

Thank you! So glad you enjoyed it! Hope to see you on the next ones 😊🙌!

I think if you have the means to, it's really beneficial over the long, and sometimes short term as well 😊👍🏻! Thank you

So when I applied I used a company called Ooba. They take all of your details and search for the best bond amounts from all of the different banks. But they did take all my salary details, credit score etc. I think it will be harder without a salary. However, if you find a property, and find a partner to finance. Then you can do it that way as a partnership 😊

That is a way that you could look it at. Which looks at the asset value growth. So for example if you bought it cash, that may be your return. Another way to look at it, which many investors do, is to look at the return which your money earned that you put in. For example that R5000 deposit (Plus purchase fees) which you could have put somewhere else. If you look at the monthly costs as living costs (you would have paid for the same amount if you didn't buy) then the return would be only on the cash you invested. Which on for example R5k would be a much larger return per year. That is the power of leveraging and debt in property as well. In that case the return is 491K %. But it depends which version you use, both are right in their own way 😊

best of luck G, dont forget to also tell us your experiences when u make the dough

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Amazing to hear! Great to listen to your story, and I think I saw you in the Casual Cash Club too 😊👊! Really looking forward to chatting more and following your story too!

Hi Luzuko. Congratulations on your graduation 🎉. I'm a financial advisor and would love to talk to you and your friend about your finances.

The best way in that scenario is probably to get in touch with a real estate agent in the area. They will be able to look up the owners details on their systems and get you their contact details. Perhaps they can even help with the sale if the seller wants to give them a commission. But either way, that's a good process. But if it has been abandoned the owners can't be found of contacted, then you will have to contact the council and they might arrange the repossession and sale 😊 hope this helps.

I agree. His calculations are wrong

He purchased on a new development I believe where after purchasing, the developer builds his 2 bed apartment, he chooses some finishes and simply moves in after that.

The bond taken out gets paid to the developer who then undertakes the construction of the property. 😊

lmao, you will never get an honest answer to this because the people that actually make profit are ones that are already rich and are not financing through banks. Your instincts are correct, after all the costs you mentioned, there simply is no noteworthy profit.

Awesome question. It will depend how you look at those costs, but I will give you my view. Many property investors/developers and flippers will live in their property investment. This serves a couple of reasons, the first is to reduce capital gains tax (as it gets classified as a residence) and the other is to offset general living costs, such as paying rent on another property during the process. As I lived in the property some of those costs are general living costs. For me I classify levies, utilities, municipal fees as living expenses. If you were renting the same property or paying the same amount in rent, they would be factored in the rental. The numbers which affect the investment return would be the bond interest and buying and selling costs. That is the asset return that you would not see if you were renting or did not buy the property. The final amount I show, the R172K, includes in it all of the bond interest, as well as certain buying costs and includes the selling costs and the bond repayments to the capital amount. These costs will vary over the years. Interest varies with interest rate changes. Levies change every year from the complex budget. Municipal fees change based on property valuations from the city. So it will be hard to get exact amounts. But I can say that the investment return based on the above considerations, is very much the R172K shown. If you didn't live in the asset, the return would be different. That is the choice of the individual investor. 😊 But many i know choose to live in the asset to reduce living costs.

:) Thank you!

Thanks so much! Usually the levies will be included in your rent as a total cost, because the landlord will have to pay the levies. So normally the landlord will charge more than their expenses. So typically you are still paying the levies, just through your rent 😊 and of course you won't get the gains on the property. Renting definitely has its perks though 😊

@CasualCash if you compare like for like, in the suburbs, in the same complex and same unit size, the rental amount is less than the bond repayment. Especially now. The only way the owner can cover his levies with your rent is if he put down a big deposit for the property. Otherwise he will remain cash flow negative for years before the annual rental increases make him break even

@CasualCash a typical example is: a R800 000 flat nowadays costs roughly R10 000 in bond repayments, levies excluded. The same flat will be rented out for about R8500. That's a 1.5k saving off the bat for the renter. Plus the levies saving, plus maintenance and insurance and municipal rates savings. All that disposable money can be pumped into a unit trust.

Hi there, That is an absolutely great question that relates to capital gains tax. And it is a complex topic. But luckily quite simple as it relates to this specific deal. Simply put, capital gains on a primary residence are excluded up to a rate of R2 million. So in this case, there would be no capital gains tax. However, if you do house flipping as a business, ie flipping say 20 properties in a year it would be classified as income tax and your personal income tax rate would apply. Like I said its a complex topic (as tax often is). But in this deal and all deals under R2M there is no tax on the sale itself 😊

@@CasualCash thank u very much

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So when it comes to interest rate it is completely determined by the banks. And the biggest factors will be your credit score and repayment history. For me I started working on my credit score at 18, first with store cards (Edgar's etc) and later by maintaining a well run credit card. It's good to maintain a well run credit card, but not to get carried away of course. What is also factored is payment history. For example paying your cellphone contracts, or streaming platforms, even your rental payments. If you always pay in full and on time it goes towards this. So those are quite important 😊 you can always retrieve your current credit profile and see where you can improve. That will better your interest rate.

Great question! 😊 So the tax you would usually pay is capital gains tax (in this situation). However there are a number of exclusions to this. For example, there is an exclusion on the first R2M of gain or loss on your 'primary residence' which means where you live. That's why many property investors and those who flip individual properties will live in the properties in order to reduce or remove the tax (depending on the property). So this property is far below the exclusion amount. So there is no capital gains tax paid. The only major tax was Vat on the agents fee. But not on the sale of the asset itself. 😊

Great question! 😊 So the tax you would usually pay is capital gains tax (in this situation). However there are a number of exclusions to this. For example, there is an exclusion on the first R2M of gain or loss on your 'primary residence' which means where you live. That's why many property investors and those who flip individual properties will live in the properties in order to reduce or remove the tax (depending on the property). So this property is far below the exclusion amount. So there is no capital gains tax paid. The only major tax was Vat on the agents fee. But not on the sale of the asset itself. 😊

Interest over 7 years were about R366 943.08. The guy made a loss of R246 943.08 and he is not even aware of it🤣🤣

That is absolutely incredible man! Congratulations, those are some amazing numbers and total figures! Really inspiring, you should actually make a video breaking down all the details of them 🙌 I would love to see it! Thanks for sharing, hopefully other people can also read this and be inspired!

That is correct 😊. Remember that while you hold the property you also pay down the bond. That profit is indeed the accumulation of interest, bond payments, capital appreciation and the agents fees. That R172K is inclusive of everything that you mentioned 😊

You are correct. This dude does not understand the basics of property investment. He sctually made a loss on the property but he does not even know it🤣🤣🤣

Hang on tight, never sell. Move money elsewhere instead.

Is it not getting more expensive rising in value?

I wish I had fixed my interest rate 2 yrs ago. The pain is real and not being covered by my rental income. Sigh...

Your residential property is never an investment. Only properties that you rent out are investments

If the value increases it is an investment 😊.

i have the same question in mind.

Yes it does take into account interest. The final payment that is received accounts for interest added every month, and capital payment deducted every month. So the remaining payment is inclusive of total interest charges 😊

No it does not. He paid interested to the amount of R366 943.08 over 7 years. That left him with a loss of R246 943.08 which he is not even aware of🤣🤣🤣

Yes

That is about right yes 😊

@@CasualCash okay nice, is there a way to invest with you ? like we pay, you manage the flipping, and we split profit at the end ?

What is bond ? When you have rich parents?😂

Haha, I think we all wish that were the case 😂

Im not attacking. Just interested to know , if its too personal i understand completely

Ah yes the bond, i have low credit and low income. lets carry on watching.

172000 sale 7 years devide by is around 2k a month you received for that property

Absolutely right! 👍🏻 It is not a requirement. Although from what I understand the bank can make it an individual requirement of a bond and it is at their discretion. I'm not fully aware what criteria they use or if they still implement it? Do you perhaps know

@@CasualCash I can absolutely find out if that is the case. Let me ask the relevant person and get back to you. I do know, however, that you are allowed to cancel the life insurance policy after bond has been secured and transfer has taken place.

Because I was living in the property it forms part of your living expenses. That way you save money on renting somewhere else for example. So levies, utilities, even bond cost (to an extent) become living costs. Many property investors or while renovating might do this. Whereas the value created in the property (the asset value) becomes the investment return. 😊

@@CasualCash No property investor worth his salt would follow your model. Your model guarantees you to stay poor

The assumption here is that rental would he R2,300 less. Those units of the same size in the complex were being rented for R7.2k pm 😊 So it's a saving on a normal rental, and the capital appreciation. Landlords don't rent out just based on bond repayments. It is all costs included (incl levies, rates etc) plus their profit. So I know from seeing in the complex those units were renting for R7. 2k 😊

Great question! 😊 So the tax you would usually pay is capital gains tax (in this situation). However there are a number of exclusions to this. For example, there is an exclusion on the first R2M of gain or loss on your 'primary residence' which means where you live. That's why many property investors and those who flip individual properties will live in the properties in order to reduce or remove the tax (depending on the property). So this property is far below the exclusion amount. So there is no capital gains tax paid. The only major tax was Vat on the agents fee. But not on the sale of the asset itself. 😊

@@CasualCash Ah alright sweet! Thank you for the response 😌🙌🏼

You forgot to account that loan repayments bring down the owing capital amount 😊 👍. It doesn't just dissappear. Also technically you minused the amounts the wrong way around. 😊

@@CasualCash Thank you for sharing this video, but I have to express my concern regarding the insufficient information provided. It's important to present a complete breakdown of the pricing and profits to help viewers make an educated decision. By offering more clarity and value, you can assist others in understanding the actual amount of profit made. I suggest considering a part 2 or elaborating further to address the confusion caused by the video. Let's strive to provide comprehensive information and empower viewers to make informed choices. Thank you.

I agree with casual cash, you have missed the point of real estate investing using debt. This method is basically an interest rate swap or return pick up strategy with real estate as the underlying asset. You borrow for lower than your yield and the difference is in fact the profit. Perhaps you have defined profit differently.

@@user-hh6nl6wr8v uh…wrong

Yes he did suffer a loss when he sold the property. It is all about how much money goes out of your pocket vs how much money come into your pocket. He is ignoring 7 years of money that went out of his pocket paying off his bond. He also does not seem to understand the concept of the time value of money. Property Investment 101

I know, prices there are crazy 🤣🤣

Hi

@@CasualCash Hi

It's very important to build a good credit rating and a stable history of income and payment history. That will assist in getting a bond 😊

It can be 😄

Definitely not bad I think. I've seen some 1 bedrooms that go for over R10K a month. And at least you control how much you pay a month with a bond, rather than what the landlord decides to increase 👌. Thanks so much 😊

he just conviently forgot about the time value of money (inflation)🤣🤣

Depends what you mean but yes I have an aquarium channel 😄

Haha its something so normal to us I don't even think of clarifying, but you're completely right 😂. Sounds strange to non-msanzis 😄

Thanks for adding this. I had always thought that it would have related to credit score, as to what interest rate you receive. But I guess these are the kinds of things we have to consider here. I hope that's not the case.

Also, 7y ago, prime lending rates went up, haven't they?

I’m not sure where you got the info that there are differential interest rates based on race. It’s definitely to do with credit score and financial worthiness.

I'm 32 now, I did this property transaction at 22 years old 😊

@@CasualCash oooh lol I get it now. I'm 28 started a year ago similar to what you did with your first apartment. I know I will learn a lot from you.

correct. Thus guy does not know anything about property investments🤣🤣

Haha you could definitely look at it like that yes 😄!

Those monthly costs are personal costs basically as 'rent' for me to stay there. Otherwise I could have rented it out for roughly R7K a month which would still make a good profit. So those are personal costs for me for somewhere to live, not part of the investment 😊.

@@CasualCash Dude all you did was to rent the property from the bank for 7 years. You did not make any investment or profit🤣🤣🤣

I see you've left quite a lot of negative comments on the video. Thank you 😊 helps with the videos reach. Maybe watch some more of the videos on the channel and see what you think overall 😊 Hope you have an incredible day 👍 wishing you all the best.

@@CasualCash Perhaps you should enroll in a property investment course to learn the basics😂😂😂😂😂

I've actually studied property investment and development at 3 different universities (Wits, UJ and UP) and worked on some of the biggest developments in the country 😊. There are a lot of comments here where people think they know what they're talking about, but they're actually just missing things they don't understand because they haven't worked with it. Including why monthly costs don't contribute towards capital gains and the valid reasons why they're offset. And that's fine. 😊 Anyways I won't comment anymore to you. You're welcome to reply with something you think is clever or funny if you want 😊 thanks for the engagement.

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Yes absolutely correct. He totally ignored inflation and the time value of money

Thanks so much, really appreciate it 😊🙌. So it can get a bit hectic between the comments and social media inboxes these days. Very hard to keep track of everything. These days I usually keep to our Patreon inboxes. It's just $1 but it helps me to see the people who really want to chat and ask questions and talk through strategies etc. As you can see I saw this after 4 weeks 😂 But yes, that would be the best way 🙌

spit that, thats a good question. Imma copy paste your comment to it can have some light

Interest of 4.35 percent effectively. Calculated as (1+r) ^(1/n). Where r is total return = 0.35 n = number of periods So it’s 1 plus total return to the power of 1/time. You can test it by doing a manual compound interest calc if earning 4.35 % per annum for 7 years. Using compound annual interest for real estate has little value as the change in value is not really linear or straight but this could be used to look at what other investments would have earned vs putting money in real estate