The Only Property Business I Will Start Right Now

Currently learning a high value skill is still the best option.  But I always want to look at property and if it is possible to unlock cheap land of which there are lots of in SA. Why? because property remains a easy dumb way to make money as opposed to the strenuous mental task of say learning to code proficiently. As stated last time to get traction in a traditional small business in the current environment is really hard.

TL;DR 

Buy land, build house, sell house.

1. Go to Property24.com or PrivateProperty.co.za
2. Choose target area. preferably coastal, away from major city. Or anywhere not run by the ANC.
3. Filter Property Type by land only. Price low to high. See what cheapest plot(s) cost.
4. Filter Property Type by House/Houses only. Price low to high.  See what cheapest house(s) cost

Example

Jeffreys Bay

Plots
Cheapest Plot is R163 000 in Aston Bay (628m2)
2nd Cheapst Plot is R165 000 in Ashton Bay (675m2)

Houses
1st Cheapest house in Ashton Bay is R855 000 (Offer pending) [2 beds, 1 bathroom on 303m3 land]
2nd Cheapest house in Ashton Bay is R865 000 (Offer pending) [90m2 on 432m2 land]
3rd Cheapest house in Ashton Bay R940 000 (OFFER PENDING)
4th Cheapest house in Ashton Bay R965 000 (OFFER ALSO PENDING)

I now know this area has demand for < R1m houses.

Cheapest house price Cheapest plot price = Opportunity

Viability test: How much can I build a relatively same sized property for [90m2 in this case] ? In this case I have R692 000 to work with (R855 000 – R163 000) looking at the lowest and assuming I put in an offer for the full price of the land (something I never do). 

Goal: R150 000 – R200 000 gross profit per property. Depending on building time and the amount of houses being built. Rapidly building three at a time I would settle for R100k  gross per property for a quick sale.

That is the simplified version (there are a some variables to account for). There are two parts of strategy that I will focus on (1) one is the right area and the other (2) is the building technique. I will not look at Nutec or other modular prefab type housing today as that may affect the perceived value.

My focus is rapidly building using interlocking blocks or steel and glass structures.
My neighbour who is a builder and who owns a lot of interlocking moulds (Stumbelblocs) reckons we can build for R3500/m2 if we cast the blocks on site (using Malawian personnel) and as low as R2500m2 depending on building type such as bigger or double storey based on the costing behaviour principle. That is complete with basic finishes not just the “wet works”. That is R350 000 for 100m2. I have also been talking to my engineer friend who specialise in laser cutting around the viability of affordable steel and glass homes by mimicking the frame of a shipping container. The logic is if a shipping container side can be cut out and replaced with glass then surely we can build that frame ourselves (Google “shipping container glass house” to get an idea). He is currently recovering from sickness and I didn’t want to bother him with something I am not even going to carry through with considering #ImLeaving.


Today I want to look at something for those with some money saved up or the gainfully employed that are earning OK but remain poor and struggling. This is a curious group in SA. There are people that are paying off a Golf 7 over five years a car that costs as much as a property that is paid off over 20 years or the cost of multiple plots of land, some of which are walking distance to the beach. Yet they will die poor and in debt leaving no generational wealth and then their descendants will blame Jan van Riebeeck – dead for 345 years – for their problems.

If you have a car that cost ~R500k but don’t own a property then you are a moron. Buy a cheap easy to maintain car cash and then use the would-be car payments on your overpriced piece of sheet metal to buy a property. My first car was a Corsa Lite I paid R28 000 for. That’s why today I’m not running around fighting with statues despite having grown up poor and having no political connections. Instead of fighting with statues you can use the economy and infrastructure built by the previous dispensations to make more money than your ancestors cold ever imagine in fact that is exactly what the foreigners are doing here while you fight with statues. And instead of fighting with statues of people who have been dead for centuries what if I told you that you can confront your enemies right now – the people responsible for your predicament, take this address down: 54 Pixley Ka Isaka Seme Street, Johannesburg. The name on the building is “Chief Albert Luthuli House”.

Sometimes you need to shave the inside of your skull to get rid of any preconceived notions holding you back from being successful. It can be a bitter pill to swallow if you are used to blaming others for your problems.

TRIGGER WARNING

I have spoken about the fallacy of land before and how there are lots of cheap land in SA and how the land issue is a Bell Pottinger agitate. I will say it again: most land is worthless if you cannot do anything with it. Don’t want to believe me? Yesterday was independence day in Zimbabwe 42 years now that they have taken the land from the evil white man but half of their country is in SA working for R120 a day. The British can hardly conceal their smirks as they proclaim “I told you so!”. By SA Twitter logic the Zimbabweans are all millionaires, well technically they are but their currency is worthless which is what will happen to the rand if the same thing were to happen here.  Why am I bringing this up? Mindset. Fair enough if you are stupid no one can help you. But if you can think a little bit you can succeed.

What does “land” cost in SA?
Here are some commercially advertised land from the major portals. I say commercially advertised as I have seen cheaper land. But someone selling a R20 000 plot is not going to pay R1200 to advertise on PrivateProperty.co.za or R1530 to advertise on Property24. Now granted most of these places are ghost towns in the middle of nowhere but SA Twitter wants their land back. And I have it on good authority their ancestors didn’t own wine farms with cellars now did they? I for one should know when the Dutch arrived to find my ancestors here there was nothing not even the northerners claiming to “own the land” in the Cape.

So instead of sitting on Twitter the whole day for the price of one night at Konka you too can own “land” just like Johann Rupert.

Let’s look at the commercial portals. I will only look at land in the Sovereign State of Good Hope (South of the Fish River).

Western Cape
R65 000 for 373m2 in Touws River
R75 000 for 690m2 in Touws River
R77 000 for 634m2 in Touws River
R80 000 for 644m2 in Touws River
R80 000 for 177m2 in Kwanonqaba (Don’t know why there are places with such uncolonial names in the Cape Colony)
R85 000 for 2361m2 in Nuwerus (Vanrhynsdorp)
R90 000 for 952m2 in Graafwater

Northern Cape
R45 000 for 821m2 in Calvinia
R45 000 for 1007m2 in Williston
R50 000 for 892m2 in Nieuwoudville
 R50 000 for 386m2 in Phillipstown
R55 000 for 634m2 in Loxton
R55750 for 1501m2 in Delportshoop
etc.

OK, now we get to the first part of our strategy: right area selection most all places mentioned above do not meet the parameters I have set. So just going to a province and sorting by cheapest is not the best strategy. If you look at my last post on small houses, I have been looking at the Cape coast, the West (Yzerfontein, Langebaan, Paternoster, St Helena Bay, Veldrif etc.) and we looked at the East (Pearly Beach Arniston etc.). I then started looking further up the coast (George, Knysna, Plettenberg Bay) and that is how I ended up in the surfing spot of Jeffreys Bay ( before there are cheaper plots in St Francis Bay as well and nice places in Kenton-on-Sea after). The only problem is that they are both in ANC country. Kenton-on-Sea has seen a price collapse:

I would probably go as far as Plett on the East coast, the amount of people that flee the beautiful fertile Eastern Cape to live in shacks in the Western Cape tells you all you need to know about the mindset in that neck of the woods.

What can be built on this land?
I am only looking at residential dwellings, there is opportunity to build storage space, workshops even some small scale farming. I’m not interested in any of that. I want to buy the land, build the house, sell it and move to the next piece of land (or do multiple simultaneously ).

How to build / What to build
I have spoke of the need for cheaper modular style housing. Some places do have building guidelines (your plans won’t be approved) as we have seen in some coastal villages where all houses look the same (fisherman cottages). Admittedly I have not spent too much time looking into houses that will work. But I did speak to my neighbour the other day who is a builder he reckons using interlocking blocks (aka Stumbelblocs) will bring the cost down quite a bit if we keep things simple.

Here is my thing, I don’t like how most houses are built, I’m a minimalist type of guy, I don’t like houses with alleyways (the correct term escapes me now). I just want to build a rectangle and then divvy that into open plan areas (large rooms with few or no internal dividing walls). Even if you want to build a larger place, three rectangles in the shape of a U all open plan has endless possibilities (only difference would be the finishes).

Rectangle

This design

Three rectangles

Can be basic

turned into this:

Two rectangles running parallel

or this:

The point I am making is finishes can add significant cost. Adding a pool R100k then you go from R3500 to R4500m2 on a 100m2 property for just with that one thing and then Patricia de Lille will still come knocking on your door telling you not to waste water so she can give her sister the “smart” water meter contract. It’s a no from me.

I have spoken to an engineer about building steel and glass houses. If you have seen the type that are built from shipping containers, they cut the whole sidewall out leaving only a steel frame and replace it with glass. But I don’t want to mess around with grinding shipping containers. Now glass is not cheap, but if you buy the material and pay for labour by the day it will be cheaper than paying to have it built and the builder makes R50k a week shouting at Malawians who are doing the actual work. Plus with steel there is less chance for chance-taking of people standing around and taking hours to mix concrete and bricklayers checking every 30 seconds if a wall is straight all the while running down the clock to make the job take longer and make more money.