Invesment opportunity straight out of South Africa

[David Mostert]

Investment Info:

Large multi-family (5+ units) buy & hold investment in Johannesburg South.

Purchase price: $420,000
Cash invested: $40,000

This Multi family unit block consist of 19 units with 3 bedrooms 2 bathrooms each, in a prime location just outside of Johannesburg, South Africa.
It is located near a gas station, school, shopping mall and a park all within 5 mintues drive of the actual property.

The annual property growth in this area is approximately 10%.
So my idea is to hold this property for roughly 10 years and then sell the unit block, which after 10 years will bring a 100% return on investment due to the property growth. This is ontop of the annual cash flow on this property which is coming from rental income of 16% p.a ($7,000/$42,000*100 = 16%)
At the end of the day calculating all net profits after 10 years of rental + sales income it will come to just above 230% ROI. This is without taking into account the rental increase p.a.

What made you interested in investing in this type of deal?

So actually originally I was looking at a different deal and my agent gave me a call and said he might have something that's perfect for me with good rental income, and the owner is very open to negotiation.
I went to take a look at it, ran the numbers and realized that this is an incredible deal that will be earning me 16% p.a.

How did you find this deal and how did you negotiate it?

As I mentioned above my agent contacted me to let me know about this deal.

And I negotiated the deal down about $90,000 as I told the owner I will be paying cash and not financing which automatically got him excited. And which is now the reason I am raising capital.

How did you finance this deal?

The original $40,000 was the deposit amount which I didn't finance but rather payed it out of my own pockets.

How did you add value to the deal?

The previous owner was getting to old to manage it properly. I'm young and have built up good management skills both in finance and in real estate. So I will have the energy and the experience that is needed to manage the building.

What was the outcome?

On going deal. waiting for the full finances

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Myself and my partner