Thanks so much! Really appreciate this! It's something I really appreciate myself in youtube videos. We all learn better and are better prepared with the real life information 😊! Thanks
My chat please try sharing more on low cost investments etc. I'm a 1st year student and I've been using change from my travel pocket money to invest so just R100 and less investment information would be so great!!!!
WOW! a 2 bedroom 2 bathroom for R460k, will never find something like that in Cape Town, well at least in a decent area. Thanks for the video was really informative.
Brilliant, I wish all kids are watching this, inside info on how to get rich. Most kids today waste their parents money buying expensive cars, etc while property is the way to go.
Thanks Chris, In a world where discussing finances or how to afford a bond is seen as a taboo subject even amongst good friends and family, this is very insightful and gives me hope again.
He purchased on a new development I believe where after purchasing, the developer builds his 2 bed apartment, he chooses some finishes and simply moves in after that.
I've been meaning to ask, flipping requires money right - and if that's the case then where did you get funding, how much was it & its IR (if there was one)?
Dude you awesome appreciate the adivise flipping complexes quiet nervous at late 20's pulling the trigger age swallowing your pride an executing the deal with a fury desire all that counts god bless
It is such a great investment class. You are able to leverage money based on the value of the property, provides (ideally) a steady income and hopefully asset growth as well. Great idea to hold onto it for rental 👌! Our eviction laws are a bit difficult compared to the rest of the world, but hopefully you have a good tenant 👍🏻 Haha I think we all wish we'd done more when we were younger 😂 me too. I guess we can only do our best now 🤷🏻♂️😄 Thanks so much!
Hi I'm 19 years old and I'm really interested in flipping, I found an abandoned dilapidated property situated in a 1.9m market area. I want to get details on who owns it and if they are willing to sell and I heard that the owner has not been paying rates for 10+ years. How do I go about receiving owner information as well as proposing purchasing it?
The best way in that scenario is probably to get in touch with a real estate agent in the area. They will be able to look up the owners details on their systems and get you their contact details. Perhaps they can even help with the sale if the seller wants to give them a commission. But either way, that's a good process. But if it has been abandoned the owners can't be found of contacted, then you will have to contact the council and they might arrange the repossession and sale 😊 hope this helps.
Nice video. Encouraging for those who prefer buying. An alternative strategy would be to rent and invest the levies and miscellaneous amounts into a unit trust for 7 years. That yields around R250 000 cash in your pocket at the end of the 7 year term. There are many ways to skin a cat.
Thanks so much! Usually the levies will be included in your rent as a total cost, because the landlord will have to pay the levies. So normally the landlord will charge more than their expenses. So typically you are still paying the levies, just through your rent 😊 and of course you won't get the gains on the property. Renting definitely has its perks though 😊
@CasualCash if you compare like for like, in the suburbs, in the same complex and same unit size, the rental amount is less than the bond repayment. Especially now. The only way the owner can cover his levies with your rent is if he put down a big deposit for the property. Otherwise he will remain cash flow negative for years before the annual rental increases make him break even
@CasualCash a typical example is: a R800 000 flat nowadays costs roughly R10 000 in bond repayments, levies excluded. The same flat will be rented out for about R8500. That's a 1.5k saving off the bat for the renter. Plus the levies saving, plus maintenance and insurance and municipal rates savings. All that disposable money can be pumped into a unit trust.
Did you include your monthly bond, levies and rates etc when calculating the profits? Did you also include the the agent rate after sales? I am not a mathematician but somehow the monies you said you made and the ones you spent don’t add up.
How did you do the finance for the bond finance repayment? Then the finance for the finance repayment of the bond monthly fee? Also how did you get the small bond approved? I don’t have a salary. I have never had an entry level salary for longer than 6 months.
So when I applied I used a company called Ooba. They take all of your details and search for the best bond amounts from all of the different banks. But they did take all my salary details, credit score etc. I think it will be harder without a salary. However, if you find a property, and find a partner to finance. Then you can do it that way as a partnership 😊
So, does that add up to around 4.7% value increase per annum (I did not use a compound interest sum, just your 33%/7y)? What would be the right way to look at this from a yearly perspective?
Interest of 4.35 percent effectively. Calculated as (1+r) ^(1/n). Where r is total return = 0.35 n = number of periods So it’s 1 plus total return to the power of 1/time. You can test it by doing a manual compound interest calc if earning 4.35 % per annum for 7 years. Using compound annual interest for real estate has little value as the change in value is not really linear or straight but this could be used to look at what other investments would have earned vs putting money in real estate
Thank you for the video. I have been tracking what I call irrecoverable costs with regards to property ownership and interested in how property performs as an investment as compared to other assets like equity. - What is the total interest that you paid over the 7 years of owning the property? - What is the total amount you paid in levies over the 7 year period? - What is the total municipal fees paid over this period? - Taking into consideration the buying and selling costs, as well as the bond interest, levies and municipal fees over the 7 years period, how do the numbers stack up? Did you make a profit, loss or breakeven?
lmao, you will never get an honest answer to this because the people that actually make profit are ones that are already rich and are not financing through banks. Your instincts are correct, after all the costs you mentioned, there simply is no noteworthy profit.
Awesome question. It will depend how you look at those costs, but I will give you my view. Many property investors/developers and flippers will live in their property investment. This serves a couple of reasons, the first is to reduce capital gains tax (as it gets classified as a residence) and the other is to offset general living costs, such as paying rent on another property during the process. As I lived in the property some of those costs are general living costs. For me I classify levies, utilities, municipal fees as living expenses. If you were renting the same property or paying the same amount in rent, they would be factored in the rental. The numbers which affect the investment return would be the bond interest and buying and selling costs. That is the asset return that you would not see if you were renting or did not buy the property. The final amount I show, the R172K, includes in it all of the bond interest, as well as certain buying costs and includes the selling costs and the bond repayments to the capital amount. These costs will vary over the years. Interest varies with interest rate changes. Levies change every year from the complex budget. Municipal fees change based on property valuations from the city. So it will be hard to get exact amounts. But I can say that the investment return based on the above considerations, is very much the R172K shown. If you didn't live in the asset, the return would be different. That is the choice of the individual investor. 😊 But many i know choose to live in the asset to reduce living costs.
Bought my own place @ 25 for 1.2M but I sometimes regret it, due to the interest rate going up so much...don't feel like a big investment at the moment seeing that it's getting so expensive
Yes it does take into account interest. The final payment that is received accounts for interest added every month, and capital payment deducted every month. So the remaining payment is inclusive of total interest charges 😊
No it does not. He paid interested to the amount of R366 943.08 over 7 years. That left him with a loss of R246 943.08 which he is not even aware of🤣🤣🤣
I'm so happy to have found your channel - such great content💯! My friend and I are graduating (chemical and electrical engineering) this year and will be earning an income soon. However, as you mention in this video, some of the wealthiest people started out or have their hands in the real estate pie🤑 - and this is our plan. We would like to get into real estate investing or a start-up at some point. It would be great if you made a video on how to do something like that (especially when doing it with someone else)!!!
Amazing to hear! Great to listen to your story, and I think I saw you in the Casual Cash Club too 😊👊! Really looking forward to chatting more and following your story too!
The property was purchased for R469k, if you add the claimed profit of R172k to this you get R642k. I think the profit is a misconception, and is not the same as receiving proceeds from a sale. Profit is all costs including interests, agents fees etc subtracted from the total sales proceeds.
That is correct 😊. Remember that while you hold the property you also pay down the bond. That profit is indeed the accumulation of interest, bond payments, capital appreciation and the agents fees. That R172K is inclusive of everything that you mentioned 😊
You are correct. This dude does not understand the basics of property investment. He sctually made a loss on the property but he does not even know it🤣🤣🤣
So when it comes to interest rate it is completely determined by the banks. And the biggest factors will be your credit score and repayment history. For me I started working on my credit score at 18, first with store cards (Edgar's etc) and later by maintaining a well run credit card. It's good to maintain a well run credit card, but not to get carried away of course. What is also factored is payment history. For example paying your cellphone contracts, or streaming platforms, even your rental payments. If you always pay in full and on time it goes towards this. So those are quite important 😊 you can always retrieve your current credit profile and see where you can improve. That will better your interest rate.
Hi there, That is an absolutely great question that relates to capital gains tax. And it is a complex topic. But luckily quite simple as it relates to this specific deal. Simply put, capital gains on a primary residence are excluded up to a rate of R2 million. So in this case, there would be no capital gains tax. However, if you do house flipping as a business, ie flipping say 20 properties in a year it would be classified as income tax and your personal income tax rate would apply. Like I said its a complex topic (as tax often is). But in this deal and all deals under R2M there is no tax on the sale itself 😊
Great question! 😊 So the tax you would usually pay is capital gains tax (in this situation). However there are a number of exclusions to this. For example, there is an exclusion on the first R2M of gain or loss on your 'primary residence' which means where you live. That's why many property investors and those who flip individual properties will live in the properties in order to reduce or remove the tax (depending on the property). So this property is far below the exclusion amount. So there is no capital gains tax paid. The only major tax was Vat on the agents fee. But not on the sale of the asset itself. 😊
I'm sorry to inform you, but based on the calculations, it appears that you have incurred a significant loss on the property. Here's how it breaks down: Loan repayment after seven years: R529,200 Sale proceeds after deducting agent commission: R595,200 Loss on the property: Loan repayment - Sale proceeds = R529,200 - R595,200 = -R66,000 The negative value indicates a loss of R66,000 on the sale of the property.
You forgot to account that loan repayments bring down the owing capital amount 😊 👍. It doesn't just dissappear. Also technically you minused the amounts the wrong way around. 😊
@@CasualCash Thank you for sharing this video, but I have to express my concern regarding the insufficient information provided. It's important to present a complete breakdown of the pricing and profits to help viewers make an educated decision. By offering more clarity and value, you can assist others in understanding the actual amount of profit made. I suggest considering a part 2 or elaborating further to address the confusion caused by the video. Let's strive to provide comprehensive information and empower viewers to make informed choices. Thank you.
I agree with casual cash, you have missed the point of real estate investing using debt. This method is basically an interest rate swap or return pick up strategy with real estate as the underlying asset. You borrow for lower than your yield and the difference is in fact the profit. Perhaps you have defined profit differently.
Yes he did suffer a loss when he sold the property. It is all about how much money goes out of your pocket vs how much money come into your pocket. He is ignoring 7 years of money that went out of his pocket paying off his bond. He also does not seem to understand the concept of the time value of money. Property Investment 101
Great question! 😊 So the tax you would usually pay is capital gains tax (in this situation). However there are a number of exclusions to this. For example, there is an exclusion on the first R2M of gain or loss on your 'primary residence' which means where you live. That's why many property investors and those who flip individual properties will live in the properties in order to reduce or remove the tax (depending on the property). So this property is far below the exclusion amount. So there is no capital gains tax paid. The only major tax was Vat on the agents fee. But not on the sale of the asset itself. 😊
But now the interest you paid to the bank over the 7yrs of onwership and residence, how much did that accumulate to? This difference dilutes the true value of the profit claimed. Did you factor that in?
Because I was living in the property it forms part of your living expenses. That way you save money on renting somewhere else for example. So levies, utilities, even bond cost (to an extent) become living costs. Many property investors or while renovating might do this. Whereas the value created in the property (the asset value) becomes the investment return. 😊
I own a construction company how can I get ina contact with Complex develop to have my company help them in building house,where and when they need them
So firstly you need to be able to qualify for a bond. How did you qualify for one @ 22? What was your income looking like? Im 30, working in the bank for 5 years and still cant get a bond of 750k today. Let alone how many years ago
Absolutely right! 👍🏻 It is not a requirement. Although from what I understand the bank can make it an individual requirement of a bond and it is at their discretion. I'm not fully aware what criteria they use or if they still implement it? Do you perhaps know
@@CasualCash I can absolutely find out if that is the case. Let me ask the relevant person and get back to you. I do know, however, that you are allowed to cancel the life insurance policy after bond has been secured and transfer has taken place.
I flipped my first house for a profit of R850k, my second house created a profit of R800k. I used that money each time to buy a larger home and I can already sell the one I have now for R1m profit. I bought in Cape Town and started with a loan from family which I am paying back on the original amount and I'm ten years in already with 10 left. My rate is well below market interest so I got lucky in that sense. I wish I started earlier in my life, but at least I exited the rental lifestyle. I am looking at buying a rental flat now to add to my portfolio.
That is absolutely incredible man! Congratulations, those are some amazing numbers and total figures! Really inspiring, you should actually make a video breaking down all the details of them 🙌 I would love to see it! Thanks for sharing, hopefully other people can also read this and be inspired!
Great question! 😊 So the tax you would usually pay is capital gains tax (in this situation). However there are a number of exclusions to this. For example, there is an exclusion on the first R2M of gain or loss on your 'primary residence' which means where you live. That's why many property investors and those who flip individual properties will live in the properties in order to reduce or remove the tax (depending on the property). So this property is far below the exclusion amount. So there is no capital gains tax paid. The only major tax was Vat on the agents fee. But not on the sale of the asset itself. 😊
Its not as easy today as 7 years ago Also made that much profit which is good but again the inflation and everything else is much more expensive R469 000 is worth R720k after 7 years
help me out here. you're saying in 6 years you made 172,000 through capital appreciation and as a renter you wouldn't have seen that. your total monthly installment came to about 6500. as a renter you could have expected a rental cost of 2300 less (based on the occupational rent plus padding), which (napkin math and without compounding interest) would have been 165000 (2300x12x6). with a lot less risk. that's more and less the same.
The assumption here is that rental would he R2,300 less. Those units of the same size in the complex were being rented for R7.2k pm 😊 So it's a saving on a normal rental, and the capital appreciation. Landlords don't rent out just based on bond repayments. It is all costs included (incl levies, rates etc) plus their profit. So I know from seeing in the complex those units were renting for R7. 2k 😊
You bought the property for R469 000. You then paid R4 368.37 per month for 7 years. That is R366 943.08 of YOUR MONEY that you put into the property over 84 months. At the time you sold the property you still owed the bank R388 330.19. You sold the property for R620 000. The selling price minus the outstanding bond is R231 669.81. But now you also have to deduct the money you paid out of your own pocket over 84 months. That leaves you with a loss of R135 273.27. Sorry dude but you did not make any profit. You also did not flip a property cause what you did is not property flipping. And your primary residential property is never an investment😂😂
Those monthly costs are personal costs basically as 'rent' for me to stay there. Otherwise I could have rented it out for roughly R7K a month which would still make a good profit. So those are personal costs for me for somewhere to live, not part of the investment 😊.
I see you've left quite a lot of negative comments on the video. Thank you 😊 helps with the videos reach. Maybe watch some more of the videos on the channel and see what you think overall 😊 Hope you have an incredible day 👍 wishing you all the best.
I've actually studied property investment and development at 3 different universities (Wits, UJ and UP) and worked on some of the biggest developments in the country 😊. There are a lot of comments here where people think they know what they're talking about, but they're actually just missing things they don't understand because they haven't worked with it. Including why monthly costs don't contribute towards capital gains and the valid reasons why they're offset. And that's fine. 😊 Anyways I won't comment anymore to you. You're welcome to reply with something you think is clever or funny if you want 😊 thanks for the engagement.
Definitely not bad I think. I've seen some 1 bedrooms that go for over R10K a month. And at least you control how much you pay a month with a bond, rather than what the landlord decides to increase 👌. Thanks so much 😊
Thanks for adding this. I had always thought that it would have related to credit score, as to what interest rate you receive. But I guess these are the kinds of things we have to consider here. I hope that's not the case.
I’m not sure where you got the info that there are differential interest rates based on race. It’s definitely to do with credit score and financial worthiness.
You paid about R555k (including buying and selling costs) over the 7 years and gained R172k. Income minus expenses = -332k (negative profit) So you basically rented the property from the bank for an average of 4.2k per month over the 7 years. The bank paid 470k (expense) but gained your bond repayment (4.2k x12 x 7) over the 7 years which is R352k and the received 448k from the 620k. Their profit R352+ R448 -470 = R330k profit
Thanks so much, really appreciate it 😊🙌. So it can get a bit hectic between the comments and social media inboxes these days. Very hard to keep track of everything. These days I usually keep to our Patreon inboxes. It's just $1 but it helps me to see the people who really want to chat and ask questions and talk through strategies etc. As you can see I saw this after 4 weeks 😂 But yes, that would be the best way 🙌
So, does that add up to around 4.7% value increase per annum (I did not use a compound interest sum, just your 33%/7y)? What would be the right way to look at this from a yearly perspective?
That is a way that you could look it at. Which looks at the asset value growth. So for example if you bought it cash, that may be your return. Another way to look at it, which many investors do, is to look at the return which your money earned that you put in. For example that R5000 deposit (Plus purchase fees) which you could have put somewhere else. If you look at the monthly costs as living costs (you would have paid for the same amount if you didn't buy) then the return would be only on the cash you invested. Which on for example R5k would be a much larger return per year. That is the power of leveraging and debt in property as well. In that case the return is 491K %. But it depends which version you use, both are right in their own way 😊
Keep up the transparency, many youtubers dont have it at all
Thanks so much! Really appreciate this! It's something I really appreciate myself in youtube videos. We all learn better and are better prepared with the real life information 😊! Thanks
My chat please try sharing more on low cost investments etc. I'm a 1st year student and I've been using change from my travel pocket money to invest so just R100 and less investment information would be so great!!!!
WOW! a 2 bedroom 2 bathroom for R460k, will never find something like that in Cape Town, well at least in a decent area. Thanks for the video was really informative.
Yeah. I think it's more difficult to enter the real estate game in Cape Town than the rest of South Africa.
Brilliant, I wish all kids are watching this, inside info on how to get rich. Most kids today waste their parents money buying expensive cars, etc while property is the way to go.
Completely agree. If you want generational wealth, for not only your kids, but their kids too. Property is definitely the way to go 🙌
Thank you Chris. Regards South Africa 🇿🇦
Thanks Chris, In a world where discussing finances or how to afford a bond is seen as a taboo subject even amongst good friends and family, this is very insightful and gives me hope again.
Thanks for the real life practical story and lesson. It is invaluable information. Keep posting such content.
Thanks for the kind words, I really appreciate it! Will do so :)
Amazing love the transparency im 100% subscribing
You’re the best , we appreciate your transparency 🙏🏾
Well done mate, truly inspiring
Really appreciate this! Thanks so much 👍🏻!
Had to subscribe after this. Brilliant insight!
Note sure if I had missed a point. But who paid the cost of construction aswell as finished etc?
He purchased on a new development I believe where after purchasing, the developer builds his 2 bed apartment, he chooses some finishes and simply moves in after that.
The bond taken out gets paid to the developer who then undertakes the construction of the property. 😊
I've been meaning to ask, flipping requires money right - and if that's the case then where did you get funding, how much was it & its IR (if there was one)?
Dude you awesome appreciate the adivise flipping complexes quiet nervous at late 20's pulling the trigger age swallowing your pride an executing the deal with a fury desire all that counts god bless
Your videos are so informative. Thanks so much for this.
this is the way to help our fellow south africans! thanks for the positivity!
Thank You For This Valuable Info
😊👍
Wow Chris! This Video did so well!
Well done! 👏👏👏
Thank you for sharing your journey and being so transparent.
Adding a lot of value to viewers!👊
Thanks, great show and tell.
I'm still holding on to my first flat for rental income :)
Wish I kept on with this trend while I was young :(
It is such a great investment class. You are able to leverage money based on the value of the property, provides (ideally) a steady income and hopefully asset growth as well.
Great idea to hold onto it for rental 👌! Our eviction laws are a bit difficult compared to the rest of the world, but hopefully you have a good tenant 👍🏻
Haha I think we all wish we'd done more when we were younger 😂 me too. I guess we can only do our best now 🤷🏻♂️😄 Thanks so much!
@@CasualCash still waiting for a video on how to submit your sars tax return online using eFilling for beginners
What a great video…thank you for sharing
Thanks boet. Very well spoken.
Appreciate it! Thanks man
Please make a video on different entities to use in which you can register your properties
very transparent, great video
Much appreciated 😊🙌
Hi
I'm 19 years old and I'm really interested in flipping, I found an abandoned dilapidated property situated in a 1.9m market area. I want to get details on who owns it and if they are willing to sell and I heard that the owner has not been paying rates for 10+ years. How do I go about receiving owner information as well as proposing purchasing it?
The best way in that scenario is probably to get in touch with a real estate agent in the area. They will be able to look up the owners details on their systems and get you their contact details. Perhaps they can even help with the sale if the seller wants to give them a commission. But either way, that's a good process. But if it has been abandoned the owners can't be found of contacted, then you will have to contact the council and they might arrange the repossession and sale 😊 hope this helps.
Very good thanks for sharing
😊👊
Nice video. Encouraging for those who prefer buying. An alternative strategy would be to rent and invest the levies and miscellaneous amounts into a unit trust for 7 years. That yields around R250 000 cash in your pocket at the end of the 7 year term. There are many ways to skin a cat.
Thanks so much! Usually the levies will be included in your rent as a total cost, because the landlord will have to pay the levies. So normally the landlord will charge more than their expenses. So typically you are still paying the levies, just through your rent 😊 and of course you won't get the gains on the property. Renting definitely has its perks though 😊
@CasualCash if you compare like for like, in the suburbs, in the same complex and same unit size, the rental amount is less than the bond repayment. Especially now. The only way the owner can cover his levies with your rent is if he put down a big deposit for the property. Otherwise he will remain cash flow negative for years before the annual rental increases make him break even
@CasualCash a typical example is: a R800 000 flat nowadays costs roughly R10 000 in bond repayments, levies excluded. The same flat will be rented out for about R8500. That's a 1.5k saving off the bat for the renter. Plus the levies saving, plus maintenance and insurance and municipal rates savings. All that disposable money can be pumped into a unit trust.
Thanks for the info just got myself land in EC that I want to build on. Going for retirement soon
Best of luck 😊👍
Thankyou...may god bless you
Thank you!
This is fantastic Consumer Info and I appreciate it. I can now see why the Real Estate Market is such a lucrative one. Up You
Thanks so much! Really appreciate it
Thank u for this vid, basically explaining real estate
👍
Did you include your monthly bond, levies and rates etc when calculating the profits? Did you also include the the agent rate after sales? I am not a mathematician but somehow the monies you said you made and the ones you spent don’t add up.
I agree. His calculations are wrong
How did you do the finance for the bond finance repayment? Then the finance for the finance repayment of the bond monthly fee? Also how did you get the small bond approved? I don’t have a salary. I have never had an entry level salary for longer than 6 months.
So when I applied I used a company called Ooba. They take all of your details and search for the best bond amounts from all of the different banks. But they did take all my salary details, credit score etc. I think it will be harder without a salary. However, if you find a property, and find a partner to finance. Then you can do it that way as a partnership 😊
So, does that add up to around 4.7% value increase per annum (I did not use a compound interest sum, just your 33%/7y)?
What would be the right way to look at this from a yearly perspective?
spit that, thats a good question. Imma copy paste your comment to it can have some light
Interest of 4.35 percent effectively. Calculated as (1+r) ^(1/n).
Where r is total return = 0.35
n = number of periods
So it’s 1 plus total return to the power of 1/time.
You can test it by doing a manual compound interest calc if earning 4.35 % per annum for 7 years.
Using compound annual interest for real estate has little value as the change in value is not really linear or straight but this could be used to look at what other investments would have earned vs putting money in real estate
Thank you for sharing 🙌
😊🙌🙌 Thank you!
Thank you for this video
So glad you enjoyed 🙏
Fantastic video. Thanks a million
Any time! Glad you enjoyed :)
This is amazing content.
Thank you!
Thank you for the video.
I have been tracking what I call irrecoverable costs with regards to property ownership and interested in how property performs as an investment as compared to other assets like equity.
- What is the total interest that you paid over the 7 years of owning the property?
- What is the total amount you paid in levies over the 7 year period?
- What is the total municipal fees paid over this period?
- Taking into consideration the buying and selling costs, as well as the bond interest, levies and municipal fees over the 7 years period, how do the numbers stack up? Did you make a profit, loss or breakeven?
lmao, you will never get an honest answer to this because the people that actually make profit are ones that are already rich and are not financing through banks.
Your instincts are correct, after all the costs you mentioned, there simply is no noteworthy profit.
Awesome question.
It will depend how you look at those costs, but I will give you my view.
Many property investors/developers and flippers will live in their property investment. This serves a couple of reasons, the first is to reduce capital gains tax (as it gets classified as a residence) and the other is to offset general living costs, such as paying rent on another property during the process. As I lived in the property some of those costs are general living costs. For me I classify levies, utilities, municipal fees as living expenses. If you were renting the same property or paying the same amount in rent, they would be factored in the rental. The numbers which affect the investment return would be the bond interest and buying and selling costs. That is the asset return that you would not see if you were renting or did not buy the property. The final amount I show, the R172K, includes in it all of the bond interest, as well as certain buying costs and includes the selling costs and the bond repayments to the capital amount. These costs will vary over the years. Interest varies with interest rate changes. Levies change every year from the complex budget. Municipal fees change based on property valuations from the city. So it will be hard to get exact amounts. But I can say that the investment return based on the above considerations, is very much the R172K shown. If you didn't live in the asset, the return would be different. That is the choice of the individual investor. 😊 But many i know choose to live in the asset to reduce living costs.
Bought my own place @ 25 for 1.2M but I sometimes regret it, due to the interest rate going up so much...don't feel like a big investment at the moment seeing that it's getting so expensive
Hang on tight, never sell. Move money elsewhere instead.
Is it not getting more expensive rising in value?
I wish I had fixed my interest rate 2 yrs ago. The pain is real and not being covered by my rental income. Sigh...
Your residential property is never an investment. Only properties that you rent out are investments
If the value increases it is an investment 😊.
Wow this is awesome
Thank you 😊🙌
thank you for this amazing video👏🎬
😊👊
Fire pool😂. Great video
😂🙌 Thanks!
Does the final profit of R171k take into account interest paid over the 7 years?
i have the same question in mind.
Yes it does take into account interest. The final payment that is received accounts for interest added every month, and capital payment deducted every month. So the remaining payment is inclusive of total interest charges 😊
No it does not. He paid interested to the amount of R366 943.08 over 7 years. That left him with a loss of R246 943.08 which he is not even aware of🤣🤣🤣
I'm so happy to have found your channel - such great content💯! My friend and I are graduating (chemical and electrical engineering) this year and will be earning an income soon. However, as you mention in this video, some of the wealthiest people started out or have their hands in the real estate pie🤑 - and this is our plan. We would like to get into real estate investing or a start-up at some point. It would be great if you made a video on how to do something like that (especially when doing it with someone else)!!!
best of luck G, dont forget to also tell us your experiences when u make the dough
7:09
Amazing to hear! Great to listen to your story, and I think I saw you in the Casual Cash Club too 😊👊! Really looking forward to chatting more and following your story too!
Hi Luzuko. Congratulations on your graduation 🎉. I'm a financial advisor and would love to talk to you and your friend about your finances.
Thank you for this!
Glad it was helpful!
The property was purchased for R469k, if you add the claimed profit of R172k to this you get R642k. I think the profit is a misconception, and is not the same as receiving proceeds from a sale. Profit is all costs including interests, agents fees etc subtracted from the total sales proceeds.
That is correct 😊. Remember that while you hold the property you also pay down the bond. That profit is indeed the accumulation of interest, bond payments, capital appreciation and the agents fees. That R172K is inclusive of everything that you mentioned 😊
You are correct. This dude does not understand the basics of property investment. He sctually made a loss on the property but he does not even know it🤣🤣🤣
My only question is how you got interest rate of minus prime at age 22? Do you negotiate that at all and how do you do it.
So when it comes to interest rate it is completely determined by the banks. And the biggest factors will be your credit score and repayment history. For me I started working on my credit score at 18, first with store cards (Edgar's etc) and later by maintaining a well run credit card. It's good to maintain a well run credit card, but not to get carried away of course. What is also factored is payment history. For example paying your cellphone contracts, or streaming platforms, even your rental payments. If you always pay in full and on time it goes towards this. So those are quite important 😊 you can always retrieve your current credit profile and see where you can improve. That will better your interest rate.
this was good, thanks.
Glad you enjoyed!
Did you have to pay tax on the "profit" you made from the sale?
Very impressive.keeo going
Thank you 😊
Awesome Video, thank you 😎
Glad you liked it!
Thank u very much keep up the good work can I ask do u have to pay tax after flipping a property?
Hi there,
That is an absolutely great question that relates to capital gains tax. And it is a complex topic. But luckily quite simple as it relates to this specific deal.
Simply put, capital gains on a primary residence are excluded up to a rate of R2 million. So in this case, there would be no capital gains tax.
However, if you do house flipping as a business, ie flipping say 20 properties in a year it would be classified as income tax and your personal income tax rate would apply.
Like I said its a complex topic (as tax often is). But in this deal and all deals under R2M there is no tax on the sale itself 😊
@@CasualCash thank u very much
👊
STOP WHAT, I stopped this vid @ 3:52, R5000 deposit? I will carry on watching now and comment again.
Ah yes the bond, i have low credit and low income. lets carry on watching.
172000 sale 7 years devide by is around 2k a month you received for that property
Amazing thanks
Most welcome! Thank you 👍🏻
hello, when you talk about 469.000 rand you mean its around 24.000 euro for a 2 bedroom appartment ??
Yes
That is about right yes 😊
@@CasualCash okay nice, is there a way to invest with you ? like we pay, you manage the flipping, and we split profit at the end ?
What was your CGT on the sale?
Great question! 😊 So the tax you would usually pay is capital gains tax (in this situation). However there are a number of exclusions to this. For example, there is an exclusion on the first R2M of gain or loss on your 'primary residence' which means where you live. That's why many property investors and those who flip individual properties will live in the properties in order to reduce or remove the tax (depending on the property). So this property is far below the exclusion amount. So there is no capital gains tax paid.
The only major tax was Vat on the agents fee. But not on the sale of the asset itself. 😊
@casual cash did you via company or personal capacity? How much in tax did you pay?
I'm sorry to inform you, but based on the calculations, it appears that you have incurred a significant loss on the property. Here's how it breaks down:
Loan repayment after seven years: R529,200
Sale proceeds after deducting agent commission: R595,200
Loss on the property:
Loan repayment - Sale proceeds = R529,200 - R595,200 = -R66,000
The negative value indicates a loss of R66,000 on the sale of the property.
You forgot to account that loan repayments bring down the owing capital amount 😊 👍. It doesn't just dissappear.
Also technically you minused the amounts the wrong way around. 😊
@@CasualCash Thank you for sharing this video, but I have to express my concern regarding the insufficient information provided. It's important to present a complete breakdown of the pricing and profits to help viewers make an educated decision. By offering more clarity and value, you can assist others in understanding the actual amount of profit made. I suggest considering a part 2 or elaborating further to address the confusion caused by the video. Let's strive to provide comprehensive information and empower viewers to make informed choices. Thank you.
I agree with casual cash, you have missed the point of real estate investing using debt. This method is basically an interest rate swap or return pick up strategy with real estate as the underlying asset. You borrow for lower than your yield and the difference is in fact the profit. Perhaps you have defined profit differently.
@@MohamedGardee uh…wrong
Yes he did suffer a loss when he sold the property. It is all about how much money goes out of your pocket vs how much money come into your pocket. He is ignoring 7 years of money that went out of his pocket paying off his bond. He also does not seem to understand the concept of the time value of money. Property Investment 101
172k in how many years ?
Did you have to pay tax for the sale of the property?
Great question! 😊 So the tax you would usually pay is capital gains tax (in this situation). However there are a number of exclusions to this. For example, there is an exclusion on the first R2M of gain or loss on your 'primary residence' which means where you live. That's why many property investors and those who flip individual properties will live in the properties in order to reduce or remove the tax (depending on the property). So this property is far below the exclusion amount. So there is no capital gains tax paid.
The only major tax was Vat on the agents fee. But not on the sale of the asset itself. 😊
But now the interest you paid to the bank over the 7yrs of onwership and residence, how much did that accumulate to? This difference dilutes the true value of the profit claimed. Did you factor that in?
Interest over 7 years were about R366 943.08. The guy made a loss of R246 943.08 and he is not even aware of it🤣🤣
Hey there do you do any mentoring ? Like help a brand new beginner
Sorry but what about the 7years of paying levy?
Because I was living in the property it forms part of your living expenses. That way you save money on renting somewhere else for example. So levies, utilities, even bond cost (to an extent) become living costs. Many property investors or while renovating might do this. Whereas the value created in the property (the asset value) becomes the investment return. 😊
@@CasualCash No property investor worth his salt would follow your model. Your model guarantees you to stay poor
I own a construction company how can I get ina contact with Complex develop to have my company help them in building house,where and when they need them
One question how much did you paid TAX from your property income per year ?
Income 17300R what is TAX to SARS?
Thank you in advance
i have one property (my primary residence) but i want to buy another to rent out - can you help me
this answers the rent vs buying question thank you so much
I think if you have the means to, it's really beneficial over the long, and sometimes short term as well 😊👍🏻! Thank you
So firstly you need to be able to qualify for a bond. How did you qualify for one @ 22? What was your income looking like?
Im 30, working in the bank for 5 years and still cant get a bond of 750k today. Let alone how many years ago
What is bond ? When you have rich parents?😂
Haha, I think we all wish that were the case 😂
Im not attacking. Just interested to know , if its too personal i understand completely
thank you for this, I was well informative and inspirational!
Thank you! So glad you enjoyed it! Hope to see you on the next ones 😊🙌!
Thankfully, life insurance is no longer required.
Absolutely right! 👍🏻 It is not a requirement. Although from what I understand the bank can make it an individual requirement of a bond and it is at their discretion. I'm not fully aware what criteria they use or if they still implement it? Do you perhaps know
@@CasualCash I can absolutely find out if that is the case. Let me ask the relevant person and get back to you. I do know, however, that you are allowed to cancel the life insurance policy after bond has been secured and transfer has taken place.
How videos should be made.. DETAILED.
if you don't mind answering, what was your entry level salary at a time?
South Africans don't understand flipping in property.. keep it South Africa
wow, now imagine if u owned 10 of those properties,R1 million of the bat
Isn't it because it was a new development there were no transfer fees to be paid
I flipped my first house for a profit of R850k, my second house created a profit of R800k. I used that money each time to buy a larger home and I can already sell the one I have now for R1m profit. I bought in Cape Town and started with a loan from family which I am paying back on the original amount and I'm ten years in already with 10 left. My rate is well below market interest so I got lucky in that sense. I wish I started earlier in my life, but at least I exited the rental lifestyle. I am looking at buying a rental flat now to add to my portfolio.
That is absolutely incredible man! Congratulations, those are some amazing numbers and total figures! Really inspiring, you should actually make a video breaking down all the details of them 🙌 I would love to see it! Thanks for sharing, hopefully other people can also read this and be inspired!
All for this
:) Thank you!
I still dont understand how you got past the bond? dont they penalize you ?
Capital gains tax thereafter?
Great question! 😊 So the tax you would usually pay is capital gains tax (in this situation). However there are a number of exclusions to this. For example, there is an exclusion on the first R2M of gain or loss on your 'primary residence' which means where you live. That's why many property investors and those who flip individual properties will live in the properties in order to reduce or remove the tax (depending on the property). So this property is far below the exclusion amount. So there is no capital gains tax paid.
The only major tax was Vat on the agents fee. But not on the sale of the asset itself. 😊
@@CasualCash Ah alright sweet! Thank you for the response 😌🙌🏼
Its not as easy today as 7 years ago
Also made that much profit which is good but again the inflation and everything else is much more expensive
R469 000 is worth R720k after 7 years
help me out here. you're saying in 6 years you made 172,000 through capital appreciation and as a renter you wouldn't have seen that. your total monthly installment came to about 6500. as a renter you could have expected a rental cost of 2300 less (based on the occupational rent plus padding), which (napkin math and without compounding interest) would have been 165000 (2300x12x6). with a lot less risk. that's more and less the same.
The assumption here is that rental would he R2,300 less. Those units of the same size in the complex were being rented for R7.2k pm 😊 So it's a saving on a normal rental, and the capital appreciation. Landlords don't rent out just based on bond repayments. It is all costs included (incl levies, rates etc) plus their profit. So I know from seeing in the complex those units were renting for R7. 2k 😊
And then Goldilocks ate the porridge that was juuust right.
😂
Hello
Hi
@@CasualCash Hi
Where can I get the R500k to start off with? That's my dilemma... banks don't trust me.
It's very important to build a good credit rating and a stable history of income and payment history. That will assist in getting a bond 😊
Thats good man. Lots of mistakes
You bought the property for R469 000. You then paid R4 368.37 per month for 7 years. That is R366 943.08 of YOUR MONEY that you put into the property over 84 months. At the time you sold the property you still owed the bank R388 330.19. You sold the property for R620 000. The selling price minus the outstanding bond is R231 669.81. But now you also have to deduct the money you paid out of your own pocket over 84 months. That leaves you with a loss of R135 273.27. Sorry dude but you did not make any profit. You also did not flip a property cause what you did is not property flipping. And your primary residential property is never an investment😂😂
Those monthly costs are personal costs basically as 'rent' for me to stay there. Otherwise I could have rented it out for roughly R7K a month which would still make a good profit. So those are personal costs for me for somewhere to live, not part of the investment 😊.
@@CasualCash Dude all you did was to rent the property from the bank for 7 years. You did not make any investment or profit🤣🤣🤣
I see you've left quite a lot of negative comments on the video. Thank you 😊 helps with the videos reach. Maybe watch some more of the videos on the channel and see what you think overall 😊 Hope you have an incredible day 👍 wishing you all the best.
@@CasualCash Perhaps you should enroll in a property investment course to learn the basics😂😂😂😂😂
I've actually studied property investment and development at 3 different universities (Wits, UJ and UP) and worked on some of the biggest developments in the country 😊. There are a lot of comments here where people think they know what they're talking about, but they're actually just missing things they don't understand because they haven't worked with it. Including why monthly costs don't contribute towards capital gains and the valid reasons why they're offset. And that's fine. 😊
Anyways I won't comment anymore to you. You're welcome to reply with something you think is clever or funny if you want 😊 thanks for the engagement.
Basically lived in a 2bed in Northriding for 7 years and it cost you 4k a month, that's alright innit🤔
Definitely not bad I think. I've seen some 1 bedrooms that go for over R10K a month. And at least you control how much you pay a month with a bond, rather than what the landlord decides to increase 👌. Thanks so much 😊
You’ll never even get an rdp house for that amount in cpt 😭💔
I know, prices there are crazy 🤣🤣
I am not being discouraged but this does not favour Africans because african clients are charged 11% to 11.5% interests ratenot below that.
Thanks for adding this. I had always thought that it would have related to credit score, as to what interest rate you receive. But I guess these are the kinds of things we have to consider here. I hope that's not the case.
Also, 7y ago, prime lending rates went up, haven't they?
I’m not sure where you got the info that there are differential interest rates based on race. It’s definitely to do with credit score and financial worthiness.
1:48 "robot" is a traffic light . translation for non-msanzis
Haha its something so normal to us I don't even think of clarifying, but you're completely right 😂. Sounds strange to non-msanzis 😄
Inflation?
he just conviently forgot about the time value of money (inflation)🤣🤣
i guess owning a house is expensive
It can be 😄
You the fish tank guy?
Depends what you mean but yes I have an aquarium channel 😄
dude you're 22 and you've been in property for 10 years? so when you were 12/13 yo that's when you started?😧
I'm 32 now, I did this property transaction at 22 years old 😊
@@CasualCash oooh lol I get it now. I'm 28 started a year ago similar to what you did with your first apartment. I know I will learn a lot from you.
You paid about R555k (including buying and selling costs) over the 7 years and gained R172k. Income minus expenses = -332k (negative profit)
So you basically rented the property from the bank for an average of 4.2k per month over the 7 years.
The bank paid 470k (expense) but gained your bond repayment (4.2k x12 x 7) over the 7 years which is R352k and the received 448k from the 620k. Their profit R352+ R448 -470 = R330k profit
correct. Thus guy does not know anything about property investments🤣🤣
So basically u got ur money back and stayed for free for 7 years
Haha you could definitely look at it like that yes 😄!
You made a significant loss in real terms, because you did not calculate for inflation.
Yes absolutely correct. He totally ignored inflation and the time value of money
So ba
👊
Great content Chris 🙌. Chris am new to this and very interested in growing, what's your best email I can chat with you on?
Thanks again Chris
Thanks so much, really appreciate it 😊🙌. So it can get a bit hectic between the comments and social media inboxes these days. Very hard to keep track of everything. These days I usually keep to our Patreon inboxes. It's just $1 but it helps me to see the people who really want to chat and ask questions and talk through strategies etc. As you can see I saw this after 4 weeks 😂 But yes, that would be the best way 🙌
So, does that add up to around 4.7% value increase per annum (I did not use a compound interest sum, just your 33%/7y)?
What would be the right way to look at this from a yearly perspective?
That is a way that you could look it at. Which looks at the asset value growth. So for example if you bought it cash, that may be your return. Another way to look at it, which many investors do, is to look at the return which your money earned that you put in. For example that R5000 deposit (Plus purchase fees) which you could have put somewhere else.
If you look at the monthly costs as living costs (you would have paid for the same amount if you didn't buy) then the return would be only on the cash you invested. Which on for example R5k would be a much larger return per year. That is the power of leveraging and debt in property as well. In that case the return is 491K %. But it depends which version you use, both are right in their own way 😊