Types of Property Investments

Contrary to belief, there are various options in which to hold property. The extent and type of property investment, one wishes to have is largely determined by the level of personal involvement during the life span of the investment, as well as the reason for the investment. Owning property for the purposes of renting to third parties may require substantial personal involvement as apposed to investing in a holiday home. For the average person in South Africa, property investment means obtaining a physical shelter for their families. Some investors may be interested in property due to its capital growth component as well as its ability to generate attractive yields and returns over time. For others it may be to pursue non financial objectives, such as being able to control a tangible asset. Thus before one decides to invest in property one needs to clearly define the reasons behind the investment. Furthermore, from an investment perspective considerations of ownership tax and management issues are of vital importance. This decision needs to be considered carefully as shifting from one type of ownership to the next may be very costly. The property conveyancing process is a lengthy process which one would not like to encounter more frequent than necessary. In this newsletter we discuss the most prominent ways in which investors can hold property in South AfricaFreehold Ownership:
This is by far the most common form of ownership in South Africa. It implies the owner holds direct title over the property. Ownership would be registered in the deeds office in the name of the owner. Freehold property may be owned by both companies and individuals alike. The advantage of this type of ownership is that the owner has maximum control over his/her investment and may dispose of the property as they wish. Ownership in this form also means the property may be used as security to obtain loans and finances.Leasehold:
Leasehold, also referred to as renting property does not give ownership to the tenant, however throughout the duration of the lease or rental agreement, the lessee (person who pays rent for the property) will enjoy virtually the same benefit as in the case of freehold above. It allows them to use and occupy the property for the duration of the agreement. The tenant pays over a monthly agreed rental to the landlord (Lessor) which entitles them to stay in the property. There are various types of lease agreements which include short term rentals, long term rentals or even rentals structured with the option to buy the property. Often the Landlord will have a very important right called a “tacit hypothec” included in the rental agreement, which entitles him to take possession of movable goods in the rented premises should the tenant or lessee not be able to pay their rent timelessly. Rental agreements are good options to consider for individuals who may not qualify for mortgage bonds as well as those who do not wish to settle permanently at a particular residence. Money paid out is money lost, thus this may not be a long term profitable investment vehicle.Sectional Title
Under Sectional Title, there are several owners owning different sections of property. An example would be owners of townhouses and clusters all built on the same portion of land, albeit in various sections. Each owner has exclusive ownership of his own section as well as shared ownership in the communal property such as the swimming pool, clubhouse and staircases. Sectional Title in South Africa is regulated through the Sectional Titles Acts No 95 of 1986. The Act requires that a Body Corporate be created to govern the interest of the various owners. The Body Corporate collect levies, pays rates and taxes, insurance and maintenance expenses.Syndication
This refers to the grouping together of individuals to pool finances in order to invest in property. Syndication provides the small investor with an opportunity to invest in a specific property which would otherwise not have been possible considering the size of the total capital outlay.Property Companies:
Property companies are similar to the above however more formalized in the form of a company specifically established for the purpose of owning property. Under this type of ownership, a company is established in terms of the Company Act 61 of 1973. These are largely institutions and individuals who form these companies and use them as intermediary vehicles to invest in property. For the investor, a property company offers the advantage of it being a separate legal entity which has distinct liability from its shareholders. Property companies tend to be large entities that are mostly listed on the Stock Exchange.Share block Companies
A share block company is similar to the above, however it is governed by the Share block Control Act 59 of 1980. These are specifically formed companies with shareholders each owning a share in the company. Income is taxed in the hands of each individual shareholder, thus making it a convenient vehicle for investors who wish to invest in property, allowing each to have their own tax profile. Owning a share in the property entitles to use and occupy the share of property they own. The rights are stipulated in the memorandum and articles of the share block company. A variant of this form of ownership would be Fractional Title, normally associated with owning a fraction of a holiday home. This form of ownership is also governed by the Share block Act alongside the Sectional Title Act. The difference is that Fractional Title has a management company setting up a defined roster for the scheduled periods of usage throughout the year, whilst usage is informally discussed with shareholders of a share block company.Timesharing
Unlike the above discussed forms of ownership, owning timeshare is much like Fractional ownership, however it only entitles the owner to usage for a week or more of a particular unit. This is applied primarily to holiday accommodation. Timeshare in South Africa is governed by the Timesharing Contract Act, Act 75 of 1983. Beware of falling for the “Timeshare trap”. Owning timeshare does not equate to holding property, it merely entitles the holder to usage rights for a specific week/s during the year. Furthermore Timeshare in South Africa does not have a good reputation and thus sales agents will often use aggressive selling tactics to lock people into buying timeshares. This is particularly evident along the Durban coastal beaches and holiday resorts such as Sun City. Timeshare is often associated with accommodation establishments which are of lower quality. Exchanging weeks across resorts is also often difficult since it is subject to availability at the particular resort. It will also be very difficult to get rid of the purchased timeshare depending on the weeks during the year purchased, in the meantime levies will still have to be serviced.Listed Property Investments
There are various ways in which one can invest in property indirectly without having to physically hold the property. This includes Property Unit Trusts, Property Loan Trusts, Investment Trusts and Collective Investment Schemes. Listed property investments are listed on the Johannesburg Stock Exchange and traded similar to equity stocks. As this topic is voluminous, it will be discussed further in future newsletters. It is however important to note that one can invest in property stocks listed on the stock exchange thus capitalizing on trading movements.From the above it is thus essential that the property investor pays careful attention to the type of property ownership that they wish to use before investing in property. This need to be considered thoroughly since shifting from one property investment vehicle to another may be costly. It is vital to do all the necessary investment research, with focus on the macro economy, property sector performance as well as specific property funds, trusts or companies one wishes to invest in. Holding exclusive freehold title to property is not the only form of investment. As listed below there are various property investment types that can be considered which may also produce generous yields. The secret to building a healthy property portfolio however exists in firstly ensuring ownership to your primary residence is secured and you have the necessary Title deeds to show. Thereafter the playing field is diverse and hungry for new investors to participate.

Travel – The New Incentive To Get More Business

How do you get prospects to become clients? What extra can you add to your presentation to make the sale? Why not try an incentive? The three top incentives to get people to do anything is cash, products and travel. Cash incentives cost the most and believe it or not are the least effective. The reason being is that you pay dollar for dollar and what little cash you offer is used to pay bills and is quickly forgotten. Products work quite well, and it is true you can by them at a discount off retail but the problem is, most of your clients already have everything. It is almost impossible to guess what they want. Printed mugs, shirts, pens are very old fashioned. What is left to offer, a CD player?Vacation and travel incentives are one of the most powerful methods of attracting business, retaining profitable clients, increasing profits, enhancing product awareness, and improving employee productivity. Businesses who have used vacation incentives in their marketing and promotions have seen at least 30% increase in their sales!Why not recreation travel? First of all it is the cheapest. The most successful travel promotion in the country today (I will be mentioning it later in this article) cost 1.5% of its market value! More important recreation travel appeals to everyone. And travel is a long lasting gift. For example, think of all the preparation that goes into effect for a long vacation. Then think of all the pictures that you take during your vacation and remember for a lifetime. That’s right. Memories of a vacation can last forever! How is that for a great incentive! To show you how powerful recreational travel is just look at the most popular screen savers on everyone’s computer. You won’t find pictures of money. You won’t find pictures of products. What you will find is everyone’s dream vacation resort with palm trees in the background. Get the picture! The first words from most lottery winners are – “The first thing I am going to do is go on a long vacation”. I assume you get the point that recreation travel is one hell of an incentive.According to the results of an email survey conducted by the Incentive Travel Fact Book, 58% say travel is more effective than cash or merchandise. Survey respondents consider travel to be the most effective reward. “Cash bonuses are necessary but travel is a higher reward”, says Verizon’s Porterfield. Porterfield added, “When people spend their money, its gone. But the recognition that comes from travel incentives lives on”. Additionally, in a recent survey of American workers, 85% said they were motivated by vacation travel incentives.Incentive magazine in their September2003 issue said travel is remembered two to one over cash or merchandise and a USA Today survey said “93% preferred travel over other incentives”. Incentive Magazine said business respondents to a recent survey said travel incentives meet 99% of their objectives.Travel incentives make great sales incentives. In a special report in Promo Magazine, it was noted that LifeUSA attracted new agents and sent sales soaring by abandoning its annual cash incentive program for an inclusive campaign that gave out merchandise and travel. By the program’s conclusion enrollments exceeded LifeUSA’s initial goal by 700%!Travel incentives make great employee incentives. Target Appliances President Daryl Gamerman in Maryland said, “We introduced our first travel incentive for sales employees five years ago and since then we’ve only lost staff due to retirement. I don’t ever have a problem with our sales people not working hard or volunteering for extra work, because they know it will help them qualify for a great trip”.Travel incentives builds customer loyalty. The Frequent Builders Program at Garco Building systems offered travel awards to individuals. Since launching the program, Garco has experienced a 15% to 25% growth rate, compared to the industry standard of 2% to 3%.COST OF TRAVEL INCENTIVESNow lets get to the best part. You can buy recreation travel wholesale, and I mean really wholesale. Look at these figures.VACATION INCENTIVE COST MARKET VALUETwo night stay for two
at major resort $16 $400.00Three day cruise for two
to Mexico or Bahamas $50 $1,500.00Round-trip airline tickets for two
To major resorts throughout
North America $30 $2,000.00Seven night eight day vacation
At major resort including round trip
airfare $1,000 $3,500.00O.K. take your pick. All these vacation incentives are marketed through
my company, We are the premier travel incentive company in North America and provide companies with an inexpensive way of leveraging the most exciting and effective promotional premium available today. Travel! For the past 16 years, we have been helping business owners attract new customers, generate leads, referrals and appointments and helping retain good employees using an extraordinary inexpensive travel promotion. We are a certified full-service travel agency and a member of the leading travel agency associations.Let me describe our signature travel incentive, called Fly Free America.Here is what our travel incentive includes:1. Two Complimentary Roundtrip Airline Tickets to four & five star domestic and international destinations worth over $2,000![ at a recent charity auction, these two tickets sold for $1,000.]2. Travel on all major airlines to over 47 four & five star hotels, all-inclusive resorts, and condos in Hawaii, Mexico, the Caribbean, Lake Tahoe, etc.3. Great hotel rates 365 days of the year, Prices start at $130 per night [Stay in Hawaii or the Bahamas for only $179 per night]4. Tickets good for three years5. No restrictions, airfare good from Jan 1 through Dec 31.6. Kids under 12 stay FREE at our resorts.7. Frequent Flier mileage accepted on all our flights8. Tickets are good from any airport in the U.S. or Canada.9. Absolutely no Timeshares are associated with our incentives.Unlike other travel incentive companies, we are a high-touch company. We are known by the company we keep. Our partial client list includes the FBI, Federal Express, American Express, Auto Nation, MBNA Bank, Time-Life, Citibank, Marriott, and Sprint, to name a few. Fly Free America is trusted by these and hundreds of other companies to facilitate client and employee acquisition/retention programs.If you think offering a travel incentive program is expensive, think again. Our travel incentive of two complimentary roundtrip tickets on major airlines costs you only $30.00 or less in volume while your customers/employees get a luxurious dream vacation with a savings value in airfare of $2,000. Over 90% of the businesses who use Fly Free America as an incentive in their business reorder the program. OVER 8 MILLION HAVE BEEN SOLD!Our customers have been using our travel premiums successfully for over 16 years to:Increase Revenue – New Customer AcquisitionGrow Sales of their Existing Base and increase Customer RetentionGenerate More Lead Referrals from CustomersReward and Motivate Sales PersonnelImprove Morale through Employee Reward & Benefit ProgramsIncrease Contract/Warranty and/or Service Package RenewalsSuccess Stories:Citibank – new credit card activation (25% increase)MBNA Bank – to activate new credit card accounts (60% increase)American Express – catalogue promotions (customer retention / rewards)Sprint – to activate new cell phone accounts (30% new business)Nextel – to activate new cell phone accounts (35% increase in activation)Blue Beard’s Castle – lead generation (purchase 1000 units/month for nine-year period – zero consumer complaints)MCG Marketing – purchase 600 units/month for 6 years. (35% increase in their warranty business)Fraternal Order of Police – increased the # of donations by an average of over 700%… and hundreds more.Because we travel hundreds of FBI agents a year, our travel professionals treat everyone who calls to redeem the vouchers as if they were an FBI agent–with the highest level of courtesy, respect, and impeccable customer service. Hundreds of Thousands of people have gone on vacation through Fly Free America’s travel incentive program and we have not had a documented consumer complaint in our history, since 1989!

How to Rent My Property

One of the most common questions landlords often ask of us is “I can’t find tenants – please can you help me rent my property?” or “what do we need to do to rent my property quickly?”.Often we are shown the property of landlords who are struggling to find tenants, yet on many occasions we can tell within minutes of walking through the door, why they have had little interest. Usually with just a little bit of work, these properties can be made more rentable, without having to commit a large budget.Some tenant find principlesMost tenants will view five or six properties before choosing one to rent; and will often make up their mind based on a single viewing. After considering the type of tenant you want to attract, you need to help them choose your property over the others.To successfully rent my property it is essential you know your market. The location and type of property you have to rent will in most cases dictate the type of tenant you should try and attract. Which ever category of tenant you are after, it makes commercial sense to attract the best tenants you can. If you want professionals in your property then you need make your property appeal to the expectations of that type of tenant. If you are after students, LHA or house share; then your property needs to attract tenants who look for something different.So if “how do I rent my property” is a question on your mind, here are some key pointers to help you rent your property quickly.Rent My Property – Our Top Tips1) First impressions: The tenants’ first view of your property is made as they walk up road or up the drive. How does your property compare with others on the street? How does it look through the windows (often the first things prospective tenants see are the backs of curtains and blinds)? Outside; a tidy garden, clear path, freshly cut lawn, clean walls and paint work, have greater tenant appeal.2) Clear the clutter: If your current tenants are messy, consider waiting until they have left until you show prospective tenants round. New tenants often cannot see past the clutter and therefore struggle to see themselves living there. If previous tenants have gone and left clutter inside or out – get rid of it.3) Re-fresh and fix: The decoration and presentation of your property will affect the speed of letting and the rent you will achieve. Pay special attention to the paint on the walls (plain paint is often best); the carpets and the floors. Clean and repaint where necessary; fixing any broken door or drawer handles and taps. You are setting a standard so you should refresh according to how you would like your property to be looked after (and grubby properties attract grubby tenants).4) Focus on the kitchen: Many tenants look at the kitchen more than any other room in the property. If you are to spend money on any room in the house, make this the one you look at first. If your kitchen looks “tired” then a repaint and new cupboard handles can make a major difference for a minimal cost. Any loose doors need to be fixed or replaced. Appliances do not have to be new but they should be clean – especially ovens and hobs.5) Do not worry about “white goods”: Your property should supply a cooker as a minimum; other appliances are beneficial but not essential. If there are not any “white goods” in your property then you may be best waiting until tenants view the property before deciding whether to supply them (you have to maintain them if you do). Some tenants already have their own. You can always state to viewers that you will supply if required.6) The bathroom: The second most important room in the house is the bathroom. A “tired” bathroom will put many tenants off. It does not need to be new but it should be clean and clear of clutter. All units and bath sides should be firmly fixed; taps and showers should work smoothly. Showers are now a modern day necessity so if your property does not have one, consider installing an electric shower over the bath as your property will rent quicker if you have one.7) Carpets and floors: If your property has old or worn carpets, with heavy patterns or dark colours; consider replacing them with more modern, plain carpets. A good choice of colour can brighten up a room and make it feel more spacious. An important room to look at is the living room. If your budget is restricted, this is the room to look at first. With the right choice you will recover the cost with the extra rent you will likely achieve.8) Windows and views: You can never let too much light shine into your property. Make sure all windows are clean and any curtains are open when tenants are shown round; and remove any old net curtains. You should supply curtain rails but curtains are not essential as tenants often prefer to provide their own to personalise the property. If your property has good natural light then use it and if at all possible conduct viewings during daylight hours.9) Lamps and shades: It is possible to improve the appearance of a room with new lights and/or shades. In many properties for rent these are old or have never been cleaned, contributing to a grubby feel. New shades can add that finishing touch. Subtle is best as anything unusual runs the risk of not appealing to the tenants taste.10) Furniture: There is little difference in rent values for furnished and unfurnished properties. Smaller furnished properties can appeal to younger tenants; the recently separated; or students. Larger properties generally attract families who tend to bring more furniture with them. If you are willing to supply some furniture, don’t rush out and buy it in advance. Prospective tenants may not have the same taste as you and involving the tenant in the buying decision can be a plus point for your property over others.11) The final clean: The last yet most important action to rent my property is the thorough clean. This means doing more than just going round your property with a vacuum cleaner. A full professional clean can transform your property from average to desirable. For less than a week’s rent, it will make your property stand out and attract a better quality tenant.Rent My Property – Final ThoughtsAll landlords hate to have an empty property but rushing to rent my property without investing time to refresh and prepare it, can mean your property is empty for longer. It is better to adopt the principle that you are competing with other landlords and you want to attract the best tenants you can in your target market.When competing to rent my property, you are usually better to refresh your property as above – even if it takes a week or two to complete and comes with a small cost. It will help you rent your property to a better tenant, who is prepared to pay more rent. Your property may ultimately rent faster.