Ben Malapile started his property investment journey when he was only 20-years-old, but his voyage did not begin with actually buying a property.
Rather, it started with him reading a book that ignited his passion for business and investment; the book was ‘Rich Dad, Poor Dad’.
“That book taught me about financial freedom, how to be financially literate, and to invest in income-generating assets such as property,” he says in an article that delves into the start of his journey.
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When he was 21, Malapile registered his first company – a real estate investment firm, but it still took him three years to buy his first property. This feat was finally achieved on December 1, 2020, when he bought a distressed sectional title property that he fixed up in order to let out.
Less than a year later, he added a second property to his portfolio – one that, due to its location near a college campus, he turned into student accommodation.
Now, in 2023, the young investor’s portfolio is growing nicely.
“In 2021, when the year ended, I had four properties with a total of 16 tenants – five of them being students and the remainder being normal tenants. In 2022, I spent the year optimising the portfolio, tweaking a few things here and there, and also managed to add another property to the portfolio.
“Not only did the property double my portfolio value, but it added 10 more tenants to it, increasing the total number of tenants to 26.”
Positives and negatives
Malapile’s journey has, however, not always been smooth sailing, and he has learned a number of valuable lessons along the way. One of the negative factors, he says, is that, being a young landlord, tenants are often the same age or older than his parents. For this reason, it can be difficult to have tough conversations with them about rent.
The positives he has experienced include that some of his properties have already grown more than 20% in value within the first two years of purchasing them.
“Two years of bond repayments are done, and there are 18 more to go. When I get to my mid-40s, they will all be paid off.”
Get a good mentor
If you are looking to follow in Malapile’s footsteps, he has some valuable advice to share. One piece of this wisdom is that, if you are not comfortable collecting rent and having tough conversations with tenants, make sure you hire a property manager who is on top of his or her game.
He also warns that property investment can be “very punishing” when done wrong.
“If you don't run your numbers thoroughly and know which type of properties to avoid, you could be buying properties that can cost you thousands on a monthly basis and cause you endless headaches. This is where having an experienced coach or mentor comes in handy. They show you the ropes and give you tips on what to look out for.”
Extra tips
If you are buying a property using a bond, then you must make sure you have a good credit score. You can check it for free on www.clearscore.co.za
Other tips he shares include:
- Get pre-qualified and know exactly what you qualify for before you start shopping
- Make sure that you save up some money for the once-off bond registration and transfer costs
- If renovations are needed on the property, save up some money for that too
Once you know your credit score and buying power, you can start shopping. But, before making any offers, make sure that you run your numbers thoroughly.
“Remember, as a property investor, you buy with your calculator, not your heart.”
Make good choices
Malapile says Covid and lockdown showed us that, no matter what happens in the world, people will always need a place to sleep. This bodes well for investing in residential properties.
Commercial properties, however, took a big knock during Covid, especially on the office side of things. Working –from-home trends have not made it any easier.
“With companies no longer requiring their staff to be at the office every day, commercial office spaces are no longer collecting as much revenue as they used to.”
With the current interest rate at 10.75%, coming from 7% two years ago, he says bond instalments have gone up drastically. This will push some homeowners to sell their current properties for smaller ones.
“Some will be forced to sell and consider renting rather than owning, thereby increasing the pool of renters and creating a demand for rental properties.”
He adds that the current interest rate also makes it harder for some properties to sell because the pool of buyers has now decreased.
“This creates an opportunity for new investors to get bargains when buying property due to the smaller pool of buyers.”
There is an obstacle though, and this is that the interest rate could continue climbing.
“So if new investors don't budget for that upfront when they buy, they could be in for a nasty surprise after a few years.”
Furthermore, Malapile says some tenants are also struggling to make ends meet due to the rise in the cost of living, as well as recovering from Covid. As such, some tenants are either not paying their rent on time or not paying it at all. Therefore, landlords and new investors must make sure that all potential tenants are screened thoroughly before accepting them as tenants. Evictions can be very costly and time consuming.”
Landlords must also be careful about increasing rents, this article states.
Get educated
“The more you learn, the more you earn. Make sure that you educate yourself as much as you can before committing to an investment”
Part of this, Malapile says, is getting a coach or mentor who has done what you intend to do.
“If you can't afford to get a coach or mentor, or are not yet ready to invest but want to learn as much as you can, then subscribe to my YouTube channel where I share insightful property tips for sellers, buyers, and investors.”
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