How An Administrator Became A Multi Let Property Investor

 

Listen to the interview:

Faith works a full time job as an Administrator and ventured into property investing using the Multi-let property strategy.

In this interview she shares her story on how she took the plunge and became a property investor and the challenges and benefits that come along with it.

 

Aslam: Okay, here we go.

 

Aslam: Okay, welcome, ladies and gentlemen. So this is Aslam Du Toit, and welcome to ThePropertyDealMaker series. This is called the Property Chronicles.

And we speak to property investors, developers, people that have basically taken the plunge into getting involved in property.

And we listen in on their experience. Hopefully, it inspires you to also get involved in property investing.

We believe that it’s one of the best ways to build a legacy for one’s family to both passive income and to ultimately build your wealth over the long term. So today we have faith.

 

 

Aslam: We are going to keep her surname anonymous.

 

 

Aslam: for you know, for her personal reasons, we are not going to divulge exactly who she is, but she will give us a little bit of background and tell us a little bit about herself. Faith, how you doing today?

 

Faith: I’m good thanks. And how are you?

 

Aslam: I’m well, thanks thanks you for agreeing to come on this interview. You’re actually the first person that we are interviewing. I came up with this idea because.

 

Aslam: you know a lot of people. Sometimes they’ll come to me and they’ll ask questions. And you know, property. Such a vast industry! There are so many different things one could do.

There’s things like student accommodation. There is multi-let property, there is fix and flips.

There is a developments, and within developments they are even more, you know, sectors of the property field, and, to be honest I have not met one person that has done every single one of those things, even myself included.

I don’t have experience in every single one of the property strategies that are out there. So I thought that it would be best to give people some insight from people who have done certain deals before.

 

Aslam: And Faith, yeah, as you know, she’s someone that I met in one of the consultations that I regularly do. She was one of the our consultation clients.

And while we were speaking, I realized, okay, faith has basically done multi-lit properties.

But before we get into that detail, okay, Faith, maybe tell us a little bit about yourself and some of your background before we get into the actual deal that you did.

 

Faith: Oh, okay, thank you so much awesome. I’m faith, I’m from Johannesburg. I’m a mother of 2 and a full time employee employee. So ya. I’m doing the the rental property part-time. I’m a full-time employee.

 

Aslam: Okay, that’s that’s awesome. So you do it. You you basically employed full time. And do you have a job that’s very busy, is it? Something that’s very demanding?

 

Faith: Yeah, my job is very demanding. However, I’m able to balance between the family and the job and the rentals as well. It’s it’s it’s not easy. However, I’m trying my best.

 

Aslam: Okay, I got it. I got it. Okay. So tell me why you decide. I mean, there’s so many different things you could have invested in. What made you decide to get into property investing specifically.

 

Faith: Oh, okay, you know, as I’m when I decided to rent out the house that I have, actually, at my work place, we were supposed to relocate to another province.

At first I started by advertising my house to the market for for sale. Then along the way I noticed that where my house is. I was around lots of malls. It’s also around industrial areas where there are a lot of companies.

Then I thought, maybe let me try and rent it out and see if it’s gonna work.

 

Faith: That’s when I started to to rent the house out. And then, yeah.

 

Aslam: okay, If I am understanding you. You’re saying this was a house you were living in, and you were meant to relocate because of your job.

Aslam: And you decided, you know what. Maybe I can turn this property into an investment property. That was it basically. Okay. And tell me what was the house before, like? How many bedrooms did it have?

 

Faith: Okay, the house that I did it was a 3 bedroom.

 

Faith: the sitting room and the dining room, and the 2 bathroom. It’s a corner house, and it’s those old houses with, you know those old houses, those strong houses with a big yard, big dining room, big bedroom.

Faith: Yeah.  And then outside there was a single garage next to it. There’s a there was this room.  It was not being used for anything. But there was a room with the garage, the single garage and the house separated.

 

Aslam: Okay, okay, I got you. Okay. So we’ve got a house that didn’t really have much buildings on the outside. So tell me, maybe explain to me cause I remember when we were doing our consultation, you had converted this into a multi lit property.

So maybe take us through that process. You know. How did you decide, or or what did you do? Exactly to change this? This 3 bedroom, usually that 2 bathrooms? Right?

 

Faith: Yes, yes. Okay.

Because I realized that the area that I was around I knew that people will be expecting something like bachelors, you know, when some most of the people prefers, whereby there is a toilet inside a small angular kitchen, and the bedroom, and a built in wardrobe, so I converted my house into bachelor units.

Let me call bachelors, so each room inside it has a toilet and the shower, a small kitchen with cupboard and a sink. It has the them. It has the built-in Wardrobe. and then I converted that house into 5 bachelors in inside the house.

And then when I went out to the garage, I took the single garage I carried in between. Then I got 2 outside rooms, and then I built outside toilets.

And then, when I was charging now with some to charging the prices, varies because the size, because of the sizes of the bachelors. They are not the same size.

So it depends what is inside the room and how big.

 

Aslam: Okay? So basically you cut up the house and you came up with the idea that you convert them into a a few bachelor units on the inside.

Then each one of those units has its own toilet and its own entrance. They don’t share anything.

 

Aslam: Okay. I’m with you. I got that. Okay. And then tell me, in terms of coming up with the finance to do this, this amendment on on the house.

How did you go about raising the finance?

Because if you’re putting you know so many bathrooms that can be quite expensive, you know, because you you have to do a a new bathroom for each one of those rooms. So how did you go about financing it?

 

Faith: Yes, fortunately, as we were relocating, the company was assisting us with some financial support, plus. I had some savings in my account. Then I took that financial support from my company,  the savings that I have, and a little bit of loan because of my budget.

I budgeted this much, however, when I was busy with the project. It went up. So I had to get this additional money from the bank. Yeah. that’s how I finance it, because my house is a bonded house.

 

Aslam: I think you just brought up a very important point. I sometimes mention to people, especially when you’re going in, and you’re going to be doing some sort of development, even if you’re planning a small alteration on a property when you think it’s going to cost 10,000, it could end up costing 50,000.

 

Faith: I think that’s the experience that you are basically relating. Yeah, that always budget a little bit extra, because it never comes up to that amount.

 

Faith: That’s correct. Yeah, okay, 100%.

Aslam: Okay. So you’ve got how many units in total. Then if I’m counting, I think you’ve got about 6 in total on this property?

 

Faith: I’ve got 5 inside the house, and I’ve got 2 rooms outside the other room that was there. Yes, it’s it’s 7. And then the other room that I’m that is, that was initially there. I’m not renting it out. My caretaker is using it.

 

Aslam: Okay, so you’ve got a caretaker, which means you’re renting out 6 rooms?

 

Faith: I’m renting out 7 rooms, and there is another one. Remember, I divided the garage.

 

Aslam: Oh, yes, you divided the garage, and there was an unutilized portion.

 

Faith: Yes, I renovated that one because I was not around in Joburg, so I had to leave someone to look after the property, so I had to get a caretaker who was going to be there full time since I was not staying in Joburg by that time.

 

Aslam: Okay, 100% I understand now.

Okay, so on average. You know, what are you collecting for? These bachelors cause? You did say that each one has a different rental. So more or less, what do you collect on these bachelors?

 

Faith: I think, plus minus R17,000 per month?

 

Aslam: Okay, so that’s in total, 17,000 for all the bachelors. Okay, that’s for all the bachelors, including the rooms.

 

Aslam: Okay, I’ve got it. I’ve got it. Okay. And tell me what has been the positives about, you know, getting involved in property investing.

 

 

Faith: Yeah. The positive side of it is when the it’s time for the rental income. Yes, because: it assist me at least to pay the bond and do some other like rates and taxes, and other expenses to take care of the property. That’s the positive side of it.

 

Aslam: Okay? Okay? And I think what you know, what I’m gonna ask you next, what has been the negatives? And you know, what have you learned in the process.

 

Faith: Yeah, the the negative ones, you know when I started this business I didn’t study. I didn’t get knowledge.

I thought it was just about renting out, and you know I’m gone. The money will just come every month. Right?

So yes, not planning for the maintenance, the unknown. So there is a lot that has happened a lot, even not mentioning that involved the municipality.

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Learning Point: Faith realized afterwards that the municipality requires you to get the necessary permissions to convert the property to Multi-let accommodation. Which can be expensive.

However the architect did not advise her about this when the renovation was done. This has caused expensive complications for her.

So if you plan on doing a multi-let property deal, make sure you get the necessary zoning and permission from the Municipality.

___________________________________________________________________________

Faith: So most of the things I’ve I’ll learn them along the way. So I think, yeah, the negative side of it was not to get knowledge first, because now, when I was busy now with the business.

I’ve realized that I’ve messed up lot of things, so I think I was supposed to do my studies first to get knowledge. Because, as I said, you know, before, I even involved myself in this business.

 

Faith: However, I’ve learnt from my mistakes. I didn’t mention the maintenance of the property. The negative side of it! You must have them. man, is that you?

Have you saved for the unexpected you know, tenants can just call any time. Whatever is leaking. The electricity. So you must have the funds as well for emergency.

Aslam: 100%. So what you’re basically saying is when you’re doing the assessment of this type of deal, it’s the in this case.

This is a multi-let you want to take into account all the expenses as well, not just the income, because it’s not just about selecting income. There are expenses that you need to budget for you know, that also need to be factored in when working out the profitability of the investment.

 

Faith: That’s correct. That’s correct. I didn’t know anything about those until I get into the deal.

 

Aslam: Sometimes you only end up learning the hard way. To get knowledge.

You know I remember when when we got started in property. The amount of information and knowledge that is available these days was not available back then, you know, we didn’t have it.  I mean, right now. You could go on the Internet for info.

I mean, I met you on a consultation where you came, you know, when I had a look at your deal. But we didn’t have that, you know. So a lot of us learned the hard way we actually paid a lot of school fees.

 

Aslam: But I think this is an important point for anyone that’s listening, that you know before you make the mistakes. There are people that have made these mistakes already types of deals.

And you know, if you’re listening to audios like this, yeah, or you reading a blog, or you know you you consulting with people that have done these things before or have experience. I think you can end up saving a lot of money.

That’s small investment might end up saving you a lot of money.

 

Faith: True!

 

Aslam: Okay, I’ve got that. Okay, let’s see. Okay, so you’ve got this property.

Have you invested in any others? Or has this been the only one that you’ve invested in so far.

 

Faith: No, no, I have another one. When I relocated back I didn’t have a a a house to stay in, because I’ve already made to let my house into rental, so I had to get another property where I’m going to stay with my family. So I bought aboard another house in how chain?

Yeah, that’s where I’m currently staying. And…..

 

Faith: I’m trying now to. I’m in a process of putting the one bachelor because it’s a small yard. So I’m putting one bachelor just to rent it out as well, so that I can get that rental income again.

Aslam: Okay. Fantastic.

 

Aslam: And tell me, what would I know? Maybe you. You partially answered this question. But what would you have done differently if you could start this process and do it all over again?

 

Faith: I think I would just get knowledge first. Do my assessments properly.

 

Faith: Ask. You know there’s knowledge out there. Some. It’s free, some, unfortunately, you have to pay for it.

Yeah. And then some of the things you will learn along the way. But, however, before you even start, at least have some knowledge, know what you are doing.

What are you putting yourself into? What can you expect in this type of of business. What is good? What is bad about it? Yeah.

 

Aslam: Okay. And then tell me, just before we end the call, I think this is an important question to ask, because of all the you know, when I do social media content.

 

Aslam: I see a lot of landlords obviously complaining sometimes about tenants that are not paying. That might not be your situation. But what would you say has been

 

Aslam: the worst experience you’ve had with this investment as a landlord. What would you count as one of your worst experiences.

 

Faith: Okay, I think, I can call myself Lucky. I was blessed when it comes to tenants, because I never had much challenges with my tenants. The people that are still staying are the very same people who moved in.

When I started this business, however, I once experienced. One tenant who who rented out one of my tenants, moved out.

Then I had to get another one who rented out the room, and he was not staying there since I was not around in Joburg, I wasn’t aware that the room is empty. However, he was paying the rent on time. So there was a burglary that happened in the yard.

Someone came and tried to take cell phones from all of them. But when went through the investigation process. Yeah, he was identified as one of the person who arranged this whole thing.

 

Faith: And then when we opened the room, that’s when we find out that the tenant, was not staying there.

 

Faith: but he was paying the rent, so meaning he will come maybe once and see what’s happening in the yard. Yeah, but with the payments and everything, all my tenants I’m blessed to have them. We are a family.

 

Aslam: Okay, that’s wonderful. And you know, I think that’s very, very good, because sometimes when you go on social media, you see a lot of negatives.

Yes, and you know, I’ve done videos speaking about tenants before, but I think you know I’ve had some bad experiences personally with tenants, but over the whole I would say, I’ve had more good experiences also with tenants than bad experiences. So I think what you’re saying

 

Aslam: just highlights that you know what, it’s not all bad all the time. Just you know you get the right tenants. And I mean, you’ve got about what? 7 tenants there. And yet most of them are paying. Okay, that’s fantastic.

 

Aslam: And then just to end off. Faith, what advice can you give others that are looking to get into? Say, multi-let property?

 

Faith: Oh, okay, I can say don’t, don’t! Don’t. Don’t be scared. Don’t fail to try. Other people are scared to try something because they they will say, no, the tenants are giving problems, but

 

Faith: the information is there? People are sharing their experience when it comes to the challenges just to help you to be aware what you can come across to during the business, but it doesn’t mean that you must stop trying.

Try the business and see if it will work or not, you see. So just go for it. Be a go getter, just try and do something you will see along the way, because if you don’t try, how are you gonna know if it will be successful or not?

 

Faith: So what my advice is, try if you try try with something small. I also wanna be a multi-let, I wanna also be one of the property investors. However, the position I’m in now, I mean at the beginning phase.

However, I know that one day I’ll be far. So you start small, you grow, you grow, you grow. The more you get knowledge, the more you will grow. You will grow until you become what you want to be.

 

Aslam: Oh, that’s fantastic. That’s very good advice. It’s almost like the Nike slogan that says, just do it.

 

Aslam: So I think that’s ultimately what you’re telling people, and you know, obviously seek, seek the knowledge, you know. Read up, speak to people.

 

Aslam: You know, where you need to make that investment in your education. I think that’s sort of the the the message that you’re sending out.

 

Faith: That’s correct.

 

Aslam: Thanks so much, you know. I wish you all the best in your your future property investments. Thank you for coming on, and thank you for sharing your story with us.

 

Faith: Thank you so much. Aslam. Thanks for the invite.

 

Aslam: Okay? Awesome.

 

Faith: Okay. Thank you.

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