Earned: an encore in the property theatre
ENTREPRENEUR Skhulile Ndlovu left his comfortable corporate jobs working for the world’s largest banks to start a real estate business and help first time buyers while also transforming the multibillion-rand sector.
Ndlovu, 27, who hails from Pietermaritzburg, is the founder of Encore Real Estate, which he established last year.
The company manages, markets and sells properties in the major South African cities of Johannesburg and Durban.
“We are mostly into residential and commercial properties.
“We do sales, rentals, property management and property consulting,” says Ndlovu, who holds a Bcom degree from the University of Kwazulu-natal (UKZN).
“I wanted to service mostly firsttime buyers and young professionals looking for office space, as well as people with limited knowledge about property.”
Ndlovu says his decision to venture into the property business sector was well-calculated.
From 2011 to 2015 he joined one of the globe’s largest banks, HSBC Bank, starting in global transaction with a focus on trade finance. He later progressed to global market operations at the same financial institution.
Ndlovu says during his time at university he was part of an international student organisation, sponsored by HSBC Bank, focussing on sustainable community projects.
“We had an opportunity to go overseas to Malaysia and Singapore. On my return, I joined HSBC Bank.
“They put me on an accelerated development programme to equip people with leadership skills,” he says.
“I had to do a management development programme with Milpark Business School as part of the accelerated development programme. Those guys invested in me, it’s so unfortunate that I had to leave.”
Ndlovu, who also holds a postgraduate degree in maritime law and economics from UKZN, subsequently joined UBS, Switzerland’s largest investment bank, where he worked on the supporting desk for traders.
“I was there for one year and six months before leaving my corporate job for the property sector,” he says.
He had an arrangement with a global real estate agency to service its clients in the affluent suburb of Sandton, helping with property sales transactions.
However, after five months into his new job Ndlovu realised he needed to start his own real estate company.
“I wanted to focus a lot on young professionals looking to buy their first properties and entrepreneurs looking for rent space.
“I felt they were neglected in Sandton because it’s expensive there.”
He equipped himself with a qualification in property investment and practice programme from Wits University in order to navigate his new terrain.
“With the Wits qualification
I’m more than equipped to service the industry and fulfil my clients’ property investment aspirations.”
Funnily enough, Ndlovu says, it was actually Top Billing, the well-known entertainment and lifestyle television programme, that motivated him to venture into the property sphere.
“I used to be so fascinated by the property features on Top Billing. They made me develop a passion for property,” says the businessman, who was named as one of the World Economic Forum’s Global Shapers last year.
Ndlovu, a member of the young professionals’ committee of the Association of Black Securities and Investment Professionals, made the “100 of Africa’s Brightest Young Minds” list.
He says his goal is to move to the niche property development and management of commercial properties. “That’s where the money is, ultimately.
“I want to have a listed property fund, and to be listed we are looking at a 10-year period.”
He says the property market in South Africa is a multibillion-rand industry, but stresses the challenge remains transformation.
“People need to be educated about the opportunities that exist in this industry and how they can get involved.”
Ndlovu says he is inspired by property mogul and Billion Group founder Sisa Ngebulana, a self-made multibillionaire.
“He’s my role model and source of inspiration. When you see guys like him, you get the feeling that it’s possible and that you too can actually do it.” PROPERTY investment is often the step emerging businesses take once they have stabilised. Here are tips for starting and growing an investment property portfolio:
This is the most important of the macro factors that determine the quality of a property investment. If the area is bad, it is bound to be a bad investment. Rather buy a neglected building in a good or rapidly improving area.
It is crucial for a property investor to try to see the property from the point of view of a prospective tenant. High visibility makes marketing much easier.
A property may be sold with seemingly high-paying tenants, but how many months are left on the leases before you have to start looking for new tenants, or how reliable are the tenants in paying their rent? This kind of information is not going to be volunteered by the property broker who is trying to make a sale. You will have to ask for the relevant documents and records.
Parking, proximity to public transport or road facilities are all accessibility issues that need to be considered.
Buying a quiet shopping centre if a major new residential development is planned right next to it is a bonus. Similarly, buying a successful petrol station, for example, if a competing station is going to open up across the road is a problem. A simple change in municipal road layout can redirect traffic and dramatically affect the desirability of any retail space.
The local municipal town planning department is a crucial source of information.
The growth in property value is limited to the rate at which you can raise the rent. If your annual rental increase is limited to, say, 6%, the value of your property can only grow at that rate.
Find out if you are allowed to build on top of the building or can get approval for more rental units. An experienced investor will buy a property based on the possibility that an application for its rezoning – and therefore a bulk increase in future – will succeed.
Think like the kind of tenant you want to attract. Does the building have enough power, or loading facilities, or even enough space for a certain size truck to turn around? If the facilities are not up to scratch, it might be worth improving the building so that you will be able to charge higher rentals.
Shrewd property owners create all sorts of income streams – renting out advertising space on buildings, selling the naming rights, renting out unused space for parking or storage.
Location: Visibility: Leases: Accessibility: Developments: Escalation: Extension: Facilities: Space: Structure:
A hidden defect can cost a lot. Ask for the approved building plans to ensure the structure falls within the municipal rules. If you have any doubts about soundness, get professional advice.
The most common mistake beginner property owners make is to get excited about existing rentals and forget to deduct costs such as security, water and maintenance, for which the landlord might be liable.
Ben Bierman is managing director at Business Partners Ltd.
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