#Solomon Lethole | Thabe Phalane | Tsholofelo Lethole - Aprix Construction

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Solomon Lethole gives 5 reasons to invest in buy
to let property in South Africa
Solomon Lethole
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• Have you ever thought of the reasons to invest in
  property? Is it worthwhile, risky, too much
  hassle?
• Amidst the confusing smorgasbord of options when
  it comes to investing, how can one choose?
• I am going to share my top 5 reasons to invest
  in buy to let property, and there are many more!
• I have been astounded at the returns I have
  personally achieved over the last 16 years!
• Here are my 5 top reasons to do so yourself.

Solomon Lethole
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1. Low Barrier to Entry

• No other investment class can compete with
  investing in residential property, particularly
  if one invests in townhouses in very good areas
• Investment in residential buy to let properties
  requires that you only have to come up with a
  minimal deposit. At present, most of our Premium
  Club members obtain 100 bonds.  The transfer
  costs for a small townhouse normally amounts to
  around 4 or 5 percent of the purchase price. Try
  borrowing R700 000 to invest in R700 000 worth of
  shares!

Solomon Lethole
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2. Retire early

• The average Johannesburg household spends a
  quarter of their gross monthly income on rent or
  their bond repayment. It stands to reason that
  buying four or five townhouses in Four ways, plus
  some patience while your tenants to pay off your
  property portfolio, will  able to earn  the
  average Four ways townhouse dwellers income.
• We call this point, Financial Freedom, the point
  at which your job becomes optional.
• In Four ways, rentals generally rise by 8 to 10
  each year. If you are disciplined and pay the
  excess rentals into your bond every year, it is
  not unreasonable to expect your bond to be paid
  off in 10 to 12 years  Roll on financial
  freedom!
• If your current retirement plan involves saving,
  or the supreme effort of investing sufficient
  capital in a retirement annuity, then please
  watch this video below where I compare a
  retirement annuity (RA)  to buy to let property
  investment. We are not registered financial
  advisers and hence not able to offer financial
  advice or quote on any RA, so I used the RA
  figures as quoted by a large South African
  Insurance companys website and compared them
  with the figures we do know a simple townhouse
  investment!

Solomon Lethole
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3. Educate your children

• I bought a tiny townhouse in Sandton for each of
  my daughters when they were finishing junior
  school. By the time they finished high school,
  their townhouses had appreciated in value
  sufficiently for me to take out a second bond of
  R 300 000 on each property.
• This easily provided them with an
  all-expenses-paid university scholarship, without
  costing daddy a cent. Click here to read the full
  story.

Solomon Lethole
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4. Your tenant pays for your investment!

• Simply put the buy to let property formula works
  like this
• You purchase a buy to let property with 5 10
  percent of the purchase price in cash
• You take out property finance for the remainder
  of the purchase price
• Your tenants pay rental which covers your monthly
  bond and levy costs. Youll probably have to
  subsidise the rental payment for a few years
  until the rental income increases sufficiently to
  cover all your costs. Once it goes cashflow
  positive, your income climbs exponentially.
• You watch your investment grow in value while
  your tenants pay off your bond

Solomon Lethole
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5. Inflation works for you

• We live in Africa, inflation is here to stay.
  Its about as certain as death and taxes.
• As inflation prices rise, so do salaries, rentals
  and property values.(but your bond debt freezes
  at the original rand amount)  So, how does this
  affect your property investment? Apart from the
  obvious increase in property values and rentals,
  another dynamic is at play here.
• An example is best used to demonstrate this
  dynamic. When I bought my first buy to let
  townhouse in 2001, it cost R140 000. I took out a
  100 bond, so back in 2001 I owed R140 000, and
  my property was worth R140 000. My loan to value
  was 1 to 1 (or 100).
• Say, I took out an access bond at the time and I
  still use the facility, and 16 years later I
  still owe R140 00. But the property is now worth
  R700 000, so my loan to value ratio is 140 000 to
  700 000 or 20.
• Can you see why I dont really bother paying off
  my own bonds?  Inflation paid off 80 of my
  property in 16 years!
• If I had pumped all the increased rental income
  into the bond over the years, it would have been
  paid off 3 or 4 years ago. Property investors are
  of the rare breed who can say inflation works
  for me!.
• Are these enough reasons to invest in buy to let
  property?
• If you need help to get you started, click here.

Solomon Lethole
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Solomon Lethole