3 bedroom Apartment in Tulisa Mews, South Africa

[Mo Chopdat]

Investment Info:

Single-family residence buy & hold investment in Johannesburg South.

Purchase price: $250,000
Cash invested: $50,000

3 Bed and 1 Bath Apartment.

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

This was my first investment deal. The location and price provided the right opportunity to gain the necessary experience to begin my property investment journey.

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

Seller needed to pay off debt she had accumulated due to dealings with some bad business partners. Early conversation lead me understand that the seller, a retired businesswoman, purchased the property as an investment, yet there was clear evidence that she had not been managing the property as well as could be. I offered to buy the property for 430,000, with the option to repurchase property once she got back on her feet. She agreed to the offer that very day and we signed the OTP a day later.

How did you finance this deal?

The seller and I partnered to form a company where I would purchase the property for 250K using bank finance, she agreed to leave 180K in equity in the property and maintain a 28% shareholding. I maintain full control as sole director of the company,
with only 50K of my own money used to purchase the property. With a market value of 600K, I would be left with 170K in equity if I would had to buy the sellers shares.

How did you add value to the deal?

Turned the bathtub into a shower and some minor touch ups. Raising the rent to market level.

Lessons learned? Challenges?

The challenge was that the banks were weary of the purchase as I had no track record.Utilising the knowledge base of my team was crucial in keeping the deal on track and helped the deal pass bank approval. The lessons learnt was to do the due diligence on the tenants I was inheriting. The tenants at the time had no lease agreement in place, the rent was negotiated verbally. Fortunately I was able to convince the seller to assist with a new legal agreement.

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

Bruno from Bruno Simão Attorneys
Christiaan from Finvice