7 Ways to Finance a Property Deal
In this short e-book you will learn about 7 different ways to buy property with other people’s money.
About The Book
Don’t be fooled, there is a lot of money in South Africa, you just need to be patient, positive and persistent in trying to find it. This book is an introduction to just some of the finance strategies available.
To be honest, you’re most likely going to have to start here. It is possible to lend money from an investor, but the investor will want you to have some experience before lending you money. If you can do a successful deal with the bank’s money, it’s much easier to lend money from a private investor, because you’ve got credibility.
I’ve had the privilege to be involved with some of the discussions at ABSA bank regarding investor specific packages, and it’s amazing to see how interested the banks are in funding investors.
ABSA for instance, have a few products specifically catering to investors. They have one product where they will consider future rentals of a deal and add it to your affordability. Before, banks would look at your salary to determine whether you can pay off the loan or not. That would be a limiting factor because once you’ve bought 3/4 properties, your affordability would run out and you wouldn’t get more lending from the banks.
In South Africa, the banks look at two main criteria when giving you a loan. They look at your credit score and your affordability. Historically, they would look at your salary and assume 30% of your salary can be used for repaying a loan. Therefore, if you earned R10 000, the bank would allocate R3 000 to bond repayments and you would qualify for a loan of roughly R300 000. But now, most banks are looking at your rental income and adding it to your salary. Therefore, if your salary is R10 000 and your rental income is R8 000. They will take a portion of the R8 000 and add it to your affordability. Each bank is different, but they will take around 60% – 80% of the rental income and add it to your affordability.
To get a better understanding as to the banks offerings and what products might suit your needs, go to your banker or research online. The banks are looking to fund our deals, but we must understand their limitations and requirements to do business.
Property requires seed capital, but it doesn’t have to be your own capital. One of the biggest shifts you will need to make is getting comfortable asking and using other people’s money to invest. Download the book to understand what I mean.
About the author.
After successfully completing an Honours in Computer Science, Laurens started working for a large IT company in South Africa. After 4 years he was retrenched, and left without savings, without an income, and without hope. He stumbled across a property course that changed his life. Over the past 8 years he has built a successful multi-let portfolio, been involved in over 50 successful property deals and coached thousands of South African's into property investing.