South Africa

[Zacharias Salva]

On my long drive from Kansas City to Texas, I happened to listen to a TED talk on the subject of investment in Africa, in which the speaker alluded heavily to the real estate potential in South Africa. Just curious if anyone has turned their attention towards this particular country or other countries in Africa. As an investor I would be extrememly hesitant to assume the risks involved - perhaps my bias overweighs this presumption. However I'm just prodding the cow to see if anyone out there at least shares an interest.

[William Robison]

If you dont have a trustworthy partner with "boots on the ground" I would be cautious...although I find it interesting that this made it onto a TED stage.

[Lawrence Sarpong]

Hi Zacharius,

My wife is from Capetown and after visiting her family there last year, I absolutley fell in love with Capetown! We have discussed the idea of purchasing rental property in some of the nicer area's in Capetown in the near future. Luckily for us however, being from Cape Town, she has family there to watch over the property once we purchased. So yes, definitely have thought about it and certainly planning on it in the future. Please let me know if you'd like to discuss further.

Cheers,

Lawrence

[Engelo Rumora]

Originally posted by @Zacharias Salva:

On my long drive from Kansas City to Texas, I happened to listen to a TED talk on the subject of investment in Africa, in which the speaker alluded heavily to the real estate potential in South Africa. Just curious if anyone has turned their attention towards this particular country or other countries in Africa. As an investor I would be extrememly hesitant to assume the risks involved - perhaps my bias overweighs this presumption. However I'm just prodding the cow to see if anyone out there at least shares an interest.

 I agree with Will,

The most important thing when investing from afar is to have the right people on the ground looking after your best interests.

I did hear that there is quite a bit of corruption in South Africa. If so this is no good as my family is from Croatia and there is high corruption there unfortunately making it almost impossible to invest.

Thanks for reading and have a great day.

[Laura Williams]

Hi Zacharias!

I own 3 rooms in a hotel in Cape Town and am a little familiar with the real estate there. The hotel chain that manages my hotel was just bought out by the Marriott. Marriott just made a huge investment to get a share of the African market there believing there will be a big increase in tourism and the economy. Some of the nicer areas of Cape Town have alot of foreign investors and some of the house in the best areas are selling for millions...about a 10 fold increase since 10 years ago. From what I've been able to tell it's hard to find good cash flow numbers there as of the last few years in the better areas. One of my friends has done ok with buying really run down places and flipping there. As far as being a foreign owner it's pretty easy, you will just need to get a SARS number (which is the equivalent of IRS) and you will need to file a South African tax return on your rental money once a year. Also be very careful to keep records of all money that you wire to buy the property as you will need those to transfer the money back to America. The banks there require it otherwise they won't release your money when you sell. Some anti money laundering law.

I'm not familiar with other cities in Africa other than Cape Town which is beautiful and first world. I have heard that some cities like Durban are in decline so best to really check out where you are investing. Also keep in mind if you are looking for loans the interest rates there are high probably between 8-11%. You can actually put money in a savings account there and get a 4-5 % return unlike here. So the high interest mortgage rate might effect your return as well. Also the laws there are in favor of tenants if you ever had an eviction, not a landlord friendly court system from what I hear.

Let me know if anymore questions.

[Mohammed W.]

Hi Zacharias, I'm originally from South Africa and can attest to the dramatic appreciation in real estate over the last 10 yrs. However, it has slowed down the last 2 or 3 yrs though. Most people are now looking at home in gated or secured complexes if not luxury apartments due to the high crime rate. I have some relatives there that say rent in comparison to purchase price is not as great as some of the opportunities that exist here in the states. Do a lot of homework before you invest any money. I would also never buy anything sight unseen.

[Quin Hendrickse]

hi @lawrencesarpong I am from Cape Town and currently living and breathing the air of the mother city :) My wife and I bought our first rental property in 2008 and that's when our real estate journey started. I only came to learn of BiggerPockets last year and have been consuming all of Brendan Turner's and David Green's books! I know your reply to this comment was in 2014, but if you're still interested in exploring investing in Cape Town, I'd be happy to connect.