South Africa
Building wealth through property investment
YDL's vision is to help you become financially free through investment property. The focus of our Property Partner Programme is on understanding your wealth creation needs, and on marrying these with the very best, hand-picked, property investment opportunities. In so doing, we act as your independent guide and provide you with services that match your investment needs. These include:
- A free upfront consultation to establish your property investment criteria
- Sourcing investment properties on your behalf at substantial discounts
- Structuring advice
- Financing
- Management
- Renovation and maintenance
YDL has a sound investment track record and has helped thousands of investors - both locally and internationally - to build sustainable wealth. Click here to view some of our case-studies. Its expertise includes the management of a number of European property funds. Through the years, it has become closely associated with the Financial Mail and Nedbank through the provision of joint property investment education programmes.
If you are interested in speaking to us about property investment deals - sign-up now for a free consultation!
Target investor profile
If any of the following statements apply to you, then YDL's Property Partner Progamme is for you:
- I don't have the know-how and networks to give me the “inside track” in order to seek out and take advantage of property investment opportunities
- I'm in a full time job and do not have the time to find and purchase property investment bargains
- I don't want the hassle of finding, managing and renovating investment properties
- I want to add to my property portfolio, but can no longer find properties at the right prices in order to achieve great rental yields and positive cash flow
- I want to speculate in order to generate capital with which to purchase more properties to add to my property portfolio. As the banks are no longer offering 100% bonds (in most cases), I need to generate capital to get back into the game.
- I want to take advantage of the current market conditions by buying distressed properties at discounts of 20% to 40% of their current market value
Why now? Is this not the wrong time to enter the market?
This is the ideal time to buy. But, you'll need an expert guide to help you navigate the terrain and to pick up the best possible deals that match your property investment criteria.
The growth rates in the SA residential property market have slowed considerably since its record levels of 2004. This was, amongst others, a result of a slowdown in the economy, higher inflation, a substantial increase in interest rates since mid-2006 (which have since eased due to a succession of rate cuts since December 2008, totalling 500 basis points), pressure on real household disposable income, increased household debt and debt servicing costs, as well as tighter lending policies as a result of the economic slowdown, coupled to the implementation of the National Credit Act.
The above created a very strong buyer's market, and has - over the last 18 months or so - allowed for properties to be purchased at substantial discounts.
According to ABSA House Price Index, nominal prices were flat during 2009 (0.4%), whilst contracting by 7% in real terms. Nominal year-on-year house price growth rebounded during the last quarter of 2009 and the first quarter of 2010, with prices for some categories of housing increasing for the first time in real terms in the first quarter this year since late 2007. House prices increased in all segments of the market in the first quarter of 2010. However, base effects may cause a gradual slowdown in year-on-year house price growth in the second half of the year. Nominal price growth of 5% to 8% is predicted for 2010 (in real terms, prices are expected to be positive by around 1% or so).
The question is thus whether discounted opportunities are still available, and if so, for how long?
In a Financial Mail cover story (Deals in the making; 5 February 2010), Ian Fife observed as follows (selected extracts):
(This year) "there will be more opportunities for deals (both development and existing property) as banks gain more confidence in the upturn and want to clean up their books.
Most of the new bargains for developers and investors have yet to appear. But Levitt says deals have been appearing in the market since 2008 from banks offloading their troubled assets. Many of these have been residential property, whose cycle is usually ahead of the broad economic cycle. Many sold at up to 40% discounts to their 2007 peak prices. What remains to be cleaned out are the bigger residential and commercial projects whose defaulting debt makes up part of the R190bn that banks have lent on commercial property.
Levitt says small-time investors will be able to continue building portfolios of distressed residential properties this year. But there will be no need to rush - the economy's slow upturn and the banks' increasing confidence in their profitability will keep the deals flowing through the year."
YDL's experience has been that, although distressed deals are still flowing, the discounts have eased. Eighteen months ago, we typically bought investment properties at discounts of 40% to 50%. Today, the average discount is 23%, although we from time to time do deals at discounts of around 40%.
Taking cognizance of our view that property is fundamentally a long-term, steady, conservative, income investment, a gross discount of around 20% or so still provides excellent value from a buy-to-let point of view. Apart from the generation of immediate equity, most deals are done at an income yield of around 10%, meaning that - at an 80% or 90% LTV - such investment properties are either cash flow neutral or slightly negative in year one. Normal purchases in the Northern Suburbs of Johannesburg are typically done close to market value, or perhaps 5% or so below, and at yields of around 4% to 5%, meaning fairly substantial negative cash flows for the first few years.
And, investors are expected to benefit from capital appreciation over the next few years, although at lower growth rates than before. This - according to Ian Fife - will be an once-in-a-lifetime opportunity for some. His view is that “SA property is still in long-term recovery, its rents and property prices are well below global levels; and investors may be rewarded over the next decade.”
YDL is actively involved in the market and is constantly looking out for distressed sales and/or below market value deals. Opportunities are available across all price segments, depending on the appetite, financial capacity and risk profile of the investor.
However, for those wanting to take advantage of this opportunity, time is of the essence. Property auctions, for example, are filling up and are beginning to attract not only inexperienced investor buyers, but primary home buyers as well, many of whom are ill-equipped to bid at auctions. In fear of "missing out on bargains", many buyers are therefore raising the bids to levels where they are no longer bought at bargain prices. Whether this trend will continue only time will tell, but YDL has already identified that the real bargains are becoming more and more difficult to find. The time to jump in is therefore now.
How YDL can help you find property
YDL is actively involved in the property investment market and is constantly looking for distressed sales and/or below market value deals. Opportunities are available across all price segments, depending on your appetite, financial capacity and risk profile. To help you take full advantage of this, we will:
- Meet with you for a free consultation to understand and refine your property investment strategy.
- Source investment properties for you that match your specific needs. And, we'll help you along the way with services such as home mortgages, structuring (do I buy in my own name, a CC, Company or Trust?), management and renovation.
This will allow you to tap into our market expertise, including when to buy, what to buy, and in which areas to buy. The key consideration is the purchase of investment properties at well below market value as this effectively locks in future profit, especially given the current gradual recovery. YDL has packaged a methodology for accessing such property investment opportunities, which are found through networks, our database, agents, sourcing agents appointed by YDL, auction sales, sales in execution and properties in possession.
Fees
YDL acts as an investor agent with your interests at heart and is incentivised to find the best possible deals for you. YDL earns a commission for sourcing properties on behalf of investors.
Unlike estate agents, YDL - as an investor's agent - works on behalf of the buyer and commission is paid by the investor.
Commission structures vary, depending on the nature of the investment, and how it was sourced. For example, some of our products attract commission not on the sales price, but rather on the amount of "discount" at which the property is purchased. This commission is calculated on the difference between market value and purchase price. Our incentive is therefore to buy for you at the greatest possible discount. Simply put, the greater the discount we get for you, the more we earn. Properties will be independently valued to determine their market values.
Management profiles
Anton de Leeuw M Com LLB
Anton holds a Master of Commerce as well as a postgraduate legal degree (LLB) and is admitted as an attorney. Anton is a leading property investment commentator and regularly appears on television and the printed media as an expert commentator.
Through its programmes, YDL has assisted significant numbers of investors to make substantial property investments.
Anton owns a substantial private international property portfolio, comprising investments in the UK, Northern Ireland, New Zealand, Poland, Slovakia and South Africa.
Tel: 011 465 7356
Mobile: 083 408 9988
E-mail: anton@ydl.co.za
Deon van Druten BA LLB
Deon holds a postgraduate legal degree (LLB) and has been involved with YDL for the past 4 years in a marketing capacity.
Deon is a specialist property renovator and has developed and renovated numerous residential properties. Over the past few years, Deon has consulted to many property investors and speculators on strategies to maximise their returns.
In addition to Deon’s South African property portfolio, he is invested in Slovakia, Poland and Northern Ireland.
Tel: 011 465 7356
Mobile: 083 653 7185
E-mail: deon@ydl.co.za
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