Now is the time for investors and property buyers looking for newly constructed properties to purchase greenfield developments. As from here on out, it is going to get significantly more expensive due to soaring raw material prices. This is according to Chris Renecle, the MD at Renprop, a Johannesburg based developer and rental manager.

“On new builds or future builds there will be an inflationary increase so buy now at current prices. In the coming years, you will be paying significantly inflated prices,” says Renecle. He adds that more and more inflationary pressure is going to be brought to bear on new residential property builds in the future thanks to much higher input costs due to the fallout around the Covid-19 pandemic.

“Construction prices have already increased dramatically with raw materials prices, such as concrete and steel, all on the up. In fact steel prices have gone up some 50% in the last year, despite demand for new builds in the residential market being generally low,” says Renecle.

According to the CRB Commodities Index1, steel rebar prices were 60% higher on May 12, 2021, than they were the same time last year. They were sitting nearly 30% higher on June 27, compared with last year.

American-British information provider, IHS Markit2 predicts that steel prices will remain elevated and supply chain disruptions will delay price declines into the second half of 2021. Steel of course is just one of the raw materials that is expected to come under increasing inflationary pressure.

Renecle says there is also a shortage of bricks, aluminium, and glass because of production slowdowns due to the Covid-19 pandemic. All of this creates a price premium with the costing of all recent development tenders for Renprop being considerably higher than they were previously.

Mining vs construction

Another problem for the construction sector is that it is competing with the mining industry for raw materials such as steel.

The mining sector, which is experiencing a boom at the moment, is snapping up all the available steel that comes to market, while at the same time there has not been enough local steel production to keep up with the demand.

While there has been little activity as far as new developments in the general commercial property sector is concerned, residential real estate is still experiencing pockets of demand. 

“But even though demand isn’t where it should be at the moment, this won’t keep prices from rising,” explains Renecle.

His advice to those wanting to get into the residential market is to do so while they still can. This is particularly true for those wanting to purchase investment properties as expected higher prices are going to eat into any potential future returns.

As it stands, Renecle says the properties that are best placed at the moment to provide strong rental returns for investors are those priced between R800,000 and R1m, particularly two-bedroom, one-bathroom apartments with open planning living.

Renecle says this price range is the sweet spot at the moment, based on rental demand and generally provides the strongest rentals for investors.

New developments

Renprop, which recently introduced a rental guarantee product that delivers an 8% net return to investors that beats money markets, says there is healthy demand at two of its new developments, which are both in the R800,000 to R1m price range.

These include Fern Valley Apartments in Ferndale, which borders Bryanston, where two-bedroom units are selling from R799,000 and Brooke Manor in Rivonia, where the group is selling two-bedroom units from R979,000.

“Both new developments have rental guarantees in place, which offer comfort to investors in difficult times. This means the developer guarantees a rental income for an investor buying a property. Typically this is set between 6-12 months depending on the value of the property and mitigates the risk for investors wanting to enter the buy to let market.  At the same time investors do not have the hassle of finding their own tenants with Renprop securing them and making sure investors earn rental income from day one after transfer,” concludes Renecle.

References:

1. https://tradingeconomics.com/commodity/steel
2. https://ihsmarkit.com/solutions/steel-forecast.html

MultiNET’s new approach to sharing wealth means home loan consultants could earn R20 million on average more than their counterparts in the market. Over the years, those companies that have played a disruptive role in their respective market spaces have been the ones to catapult us forward. Apple and the smartphone, Nikon and the world’s first digital camera, even a certain insurance company and its telephonic underwriting process, are just three examples of how industries have evolved.

And the home loans industry is no different, as MultiNET, SA’s only independent home loan origination company, is disrupting its industry by giving their consultants the opportunity to earn 293% more than the current market norms. This equates to an average earnings of R58 000 more per month, and over a 30-year career of a home loans consultant, would be worth over R20 million.

“The idea comes from looking at the same industry we service, real estate,” explains MultiNET CEO Shaun Rademeyer, “We realised that in the real estate industry, the agent is the key to success, and earnings moved over the years from 50% of the commission to upwards of 90%. “We have looked to evolving the origination industry to make use of the same key element, the consultant; the person doing the loan application.

This person is normally well experienced in the financing of home loans with several years of detailed knowledge and expertise ̶ many actually come from a banking background where they helped build the mortgage industry as we see it today.” These experts are mostly found through referrals, either by estate agent or via friends and family ̶ they are normally the go-to-person when customers ask, “What is the best way to get a home loan?”

However, this same person who is so integral to the success of the business is also settling for the smallest slice of the pie. “We have asked why, and the answers that come back are brand loyalty, a guarantee of a salary even though most are commission-only earners or the culture the company creates. However, in the end these talented individuals are small businesses in their own right that should start looking after their own interest and the interest of their families vs the financial gains of a few within the business.”

In 2018, MultiNET decided to change the lay of the land for the consultant and launched a unique offering to the home loans market that is built off the company value of sharing the wealth with the individuals who are its backbone.

“At MultiNET, we keep the cost of running the company low whilst still providing systems, support and building a brand to support the home loans consultants and aggregation businesses,” explains Rademeyer, “The efficiencies within our organisation have provided us with the ability to match the real estate industry strategy and disrupt the market the same way as high commission split brands like Property.CoZa, Keller Williams and Re/Max did for the property industry.”

Alister Smit, a consultant who recently joined MultiNET, says when he first heard about the offer he was extremely sceptical. However, after joining the group he realised that for years he was working towards making other people wealthy, much to his detriment, and taking away personal time and resources for the future.

“The world is getting smaller, and more and more people are looking for personalised service, the type of service that comes from employees who are invested in the companies they work for. We believe that our consultants and business partners are the backbone of our industry, able to give that personalised service, and their reward is the earning opportunity we provide,” says Rademeyer.

“And this is just the start; we are committed to finding new solutions within our industry for all stakeholders, supporting the development of previously disadvantaged segments in the market and spreading the financial benefit with the broader players in the industry.” About MultiNet MultiNET is the only independent bond origination company in South Africa.

They are committed to evolving the origination industry through cutting-edge innovation in systems, processes and the development of people, specifically supporting the development of previously disadvantaged segments in the market. For more information, please visit multinet.co.za

Cape Town get ready: ‘There is never a bad time to buy property…there are only bad investors who don't know how to take advantage of the opportunity.’

With pivotal elections on the horizon and a daily news stream fraught with negative economic sentiment, it is no surprise that South Africans are tiptoeing around potential investments and adopting a ‘wait and see’ approach.

Yet with recent claims from the City of Cape Town that homes in Cape Town have increased in value by 34% in the past three years, there is undoubtedly no time like the present for would-be property investors.

Wealth Alliance, an organisation that empowers individuals to change their perspective on traditional wealth creation, offer property investment seminars, masterclasses and mentorship programs. These programs will now be available in the Cape Town area, starting with ongoing free seminars* for anyone interested in the key to building wealth through property, regardless of industry experience.

These programs are carefully designed to assist entrants in the property sector, and therefore cover key aspects of the property market:

• Areas in South Africa where you’re likely to find the best property deals, and which finance strategies will help you finance your investment;
• Best Cape Town neighbourhoods to invest in as well as informal settlements ripe for investment
• Various investment strategies including back-to-back deals, capital flips and how to invest in property without any of your own capital
• Different types of properties to invest in, from residential to Airbnb and commercial
• Building your network, finding and financing property deals

According to property specialist and Wealth Alliance co-founder, Sylvia Koketso Milosevic, ‘there is never a bad time to buy property…there are only bad investors who don't know how to take advantage of the opportunity.’

As an entrepreneur who has boldly entered the property market and reaped the rewards, Sylvia now actively shares her learnings and provides people with practical tips and advice.  Drawing inspiration from Napoleon Hill’s legendary bestseller, ‘Think and Grow Rich’, she runs a series of dynamic property investment seminars and training sessions. The seminars apply the 13 classic principles of ‘Think and Grow Rich’ to the local property market, and demonstrates how new investors can successfully negotiate the property sector.  

“While it is certainly a difficult economic environment for investors right now, we believe that with the right tools and knowledge, South Africans can benefit from the current downward trajectory in property prices - and turn their financial goals into reality,” she says. “We teach our students that by applying the right strategy, regardless of the market conditions, they can achieve outstanding returns.”

According to Milosevic, “investors should combine strategies that will have you making money from day one, so it doesn’t matter if the market declines, you are still making money every single month, down the line, until there is an upswing again.”

Moreover, declining house prices are not necessarily so negative - as it allows first-time homebuyers to enter the housing market at cheaper prices. They can then benefit from the uptick when it comes. Notably, the recent budget speech highlighted some positive socio-economic investments on the horizon which speak to a brighter future ahead for savvy investors.

Regardless of the current political status quo, however, it is critical that potential investors arm themselves with the knowledge and know-how to turn property into smart investments – despite difficult macroeconomic conditions. “We are thrilled to be able to share our knowledge and experience with potential investors in and around Cape Town, and to unlock the infinite opportunities that lie within the local property sector,” says Milosevic.

Wealth Alliance seminars are now available in Cape Town, Johannesburg, Durban, Polokwane and Venda, with new markets to be launched soon. To find out more about Wealth Alliance and to book for a complimentary Think and Grow Rich property seminars visit http://www.wealthalliance.com and http://www.thinkandgrowrich.co.za/ 

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**Title: The Valuable Role of Real Estate Agents in Property Transactions**

Introduction:

In the dynamic world of real estate, the role of a real estate agent extends far beyond the time they spend with the homeowner. On average, for every hour a real estate agent interacts with a seller, they dedicate approximately nine hours working diligently behind the scenes. This level of commitment is driven by the fact that agents operate on a commission basis, meaning their payment is contingent upon successfully closing a sale. In this article, we will delve into the essential tasks performed by real estate agents and shed light on their invaluable contributions to property transactions.

Market the property effectively:

Real estate agents invest significant resources into maximizing the exposure of their listings. They employ various marketing strategies, such as placing advertisements in magazines and newspapers, printing flyers and brochures, capturing professional photographs of the property, and securing prominent placement on popular property search portals. Furthermore, they leverage the services of public relations officers to engage with targeted media, harness the power of social media platforms to showcase listings, and organize show days to attract potential buyers. These efforts ensure that the property receives extensive visibility and reaches a wide audience.

Facilitate buyer interactions and negotiations:

A substantial portion of an agent's time revolves around establishing connections with potential buyers and understanding their specific requirements. Agents must possess an in-depth knowledge of the properties they are marketing to effectively match buyers with suitable homes. Once a potential match is identified, the agent plays a pivotal role in managing offers and counteroffers. Skilled negotiation during this stage can yield significant financial benefits for sellers, as agents have the expertise to navigate complex negotiations and secure favorable terms.

Thorough research for informed decisions:

Real estate agents dedicate considerable time to researching property sales data and market trends to stay informed and provide accurate insights. By conducting comprehensive comparative market analyses (CMAs), agents can determine an optimal price range for a property. This analysis incorporates factors such as the average price per square meter in the area, recent sale prices of similar properties, and the prices of comparable properties currently on the market. This thorough research empowers agents to price a home competitively and attract potential buyers.

Attendance at inspections:

While homeowners may not always be present during home inspections, a reliable agent will be there. Attending inspections enables agents to gather vital information about the property, allowing them to better assess its value and establish an appropriate asking price. This firsthand knowledge gained during inspections bolsters their ability to represent the seller's interests effectively.

Ensuring a smooth transaction:

Real estate transactions can be complex and emotionally charged, leading to potential complications. However, experienced agents endeavor to shield clients from unnecessary stress and drama. Agents work tirelessly behind the scenes to streamline the sales process, proactively addressing any issues that arise. Their problem-solving skills, positive approach, and commitment to finding constructive solutions contribute to a smoother experience for all parties involved.

Collaboration with fellow agents:

Real estate agents maintain extensive networks with other professionals in the industry. They frequently collaborate with their peers to match buyers with suitable properties. In cases where a particular agent does not have a property that meets a buyer's requirements, they willingly refer the buyer to another agent who can better fulfill their needs. This cooperative approach ensures that clients receive optimal service and increases the chances of successful transactions.

Conclusion:

Real estate agents play a crucial role in property transactions, dedicating numerous hours behind the scenes to serve their clients effectively. From comprehensive marketing efforts to skillful negotiation, meticulous research, attending inspections, and ensuring a smooth process, agents provide invaluable support at every stage of a sale. Their expertise, commitment, and extensive networks add significant value to property transactions. For professional assistance with buying or selling properties, reach out to Morné Prinsloo at RE/MAX MASTERS