Author: Jason Lee. This Edition’s Publication Date: 2019
Are you a property investor aiming to generate wealth through real estate? Do you enjoy kicking back with a good book to read? We have the answer for you! One of our recommended reads is Jason Lee’s Making Money Out Of Property In South Africa (Penguin Random House, 2019), available on Takealot and at Exclusive Books stores, among others. It’s a must-read if you need insider guidance on the South African property landscape! This book offers insights into property market movements, strategies and ideas to help you get the best Return on Investment (ROI).
We’ll let you in on a secret… IGrow even has a copy of this book in our in-house team Library, and many of our staff are waiting for its current reader so they can read it too!
It’s definitely a good read and a lot of it aligns closely with our philosophy for property investment in South Africa – though there are some slight differences in approach in some aspects that we will cover later in this post.
What’s the book all about?
Making Money Out Of Property In South Africa has already reached the milestone of over 60, 000 readers! This bestseller has been updated over the years with the latest edition, which we’d recommend getting stuck into, published in 2019. We consider this edition of Lee’s book as ”recommended reading” as it’s updated with current property market golden secrets! It’s a mark of how stable property markets are that this doesn’t date quickly, unlike stock market advice!
Lee outlines the property investment journey, from pinpointing the best buys to negotiating financing for your next property investment.
Jason Lee has made his fortune buying properties via his own personal Investment Club, and then the Club renovates them and “flips” them to sell at a profit in a short space of time.
According to Jason Lee, “In property circles ‘flipping’ describes the quick purchase and resale of a property for a profit” (p. 56).
Property investment “golden nuggets” from Jason Lee on buying and “flipping”
Be prepared before you start investing
Do thorough property market research. We couldn’t agree more, which is why our team do meticulous due diligence before taking on properties to sell to our investor clients.
Get to know the property market landscape
This will help you handle economic or property market fluctuations. Then you can strategise accordingly, and this will bring you the rewards you are after.
The leniency of banks
Banks are lenient and will usually offer you 100% bonds for your property investments. This is because property is such a great asset class, and banks know it. This is different from buying primary residences, which is why IGrow advocates buy-to-let properties as investments.
Investment Clubs are a good bet!
They offer cost splitting and sharing of the financial load and risks associated with the investment. Create your investment club under a Company or CC where each club member is a “shareholder”. This can mean applying for joint home loans and setting up legal structures that require expert advice from experienced attorneys and Chartered accountants such as those we have at IGrow.
Be objective when viewing properties
Don’t worry if you “fall in love” with a potential investment property; just don’t ignore property defects, and trust your gut!
Property location is key
“Location, location, location”- choose your investment property wisely in the South African property market in areas offering high rental demand, rather than in the fanciest neighbourhood possible. All IGrow properties are selected for you with this key metric in mind: Is this property in an area with high and growing rental demand?
Drive around areas you are pinpointing as potential investment hotspots
Seek out up-and-coming suburbs and growing markets. Look for suburbs where a few residents are upgrading their homes, as fellow neighbours usually follow suit to keep up. Suddenly, a whole neighbourhood has been spruced up and it becomes an excellent area to invest in. You can purchase properties more cheaply, then they appreciate as the neighbourhood is improved, as by residents, in this example.
Review the Agreement of Sale with a fine-toothed comb
This document covers important terms and details regarding your potential property purchase.
Loan terms are always negotiable
Negotiate better terms, or even better, get the experienced IGrow Home Loans team to do it for you – with one set of paperwork on your side, they will submit applications simultaneously to multiple banks to get them competing for your business and offering you the best terms available!
Use professional builders and one General Contractor to avoid unnecessary pitfalls
Unreliable contractors that are notorious for not finishing the entire job and walking away before the completion of the renovations. IGrow Rentals works with carefully vetted contractors and regular maintenance schedules to keep your property in great condition.
Tax incentives & Capital Gains Tax sometimes apply
Understand what applies to your specific property investment. IGrow Chartered Accountants have decades of experience in property investments and the tax implications.
Buy your property in slow markets and sell your property in fast markets
Although IGrow would recommend the strategy of retaining, refinancing and reinvesting over selling any day!
Fixer-upper properties and off-plan properties are winners for both the investor and the developer!
They offer excellent ROI. Off-plan properties, in particular, offer Section 13 sex tax benefits, which are highly lucrative to those who have portfolios of 5 or more qualifying properties.
According to Jason Lee, “ although this book [Making Money out of Property in South Africa] is a good starting point to acquire knowledge of the property game, you will pick up 90% of your knowledge once you start doing deals yourself… once you are out there, physically doing deals and thinking about doing deals, you will be surprised by the results.” (Making Money out of Property in South Africa. P. 42).
What does IGrow think of Jason Lee’s philosophies in his book?
At IGrow, we fully support Jason Lee’s notion- breaking into the property market is the first step on the road to successful investments! There is so much to learn from experts out there, but once you actually start doing property deals, you’re learning techniques and tricks as you go. There may sometimes be bumps along the way. Don’t let these “bumps” make you feel disheartened or set you back!
This book is one of our recommended reading books as he shares expert property knowledge and insider ideas about the property landscape and how to grow wealth from property investment, specifically in South Africa.
What are the key pointers in Lee’s Book?
Lee’s ideas on “flipping properties” vs. IGrow’s ideas of long-term wealth accumulation
One of the major points that Lee drives home is the strategy of “flipping properties”. Lee believes in buying a property that needs work, renovating it, and then “flipping it” or selling it on quickly for a great profit. This plan has great short-term capital benefits, but it also comes with risks. The property market experiences fluctuation, and selling property for profit comes with tax liabilities in the form of Capital Gains Tax.
At IGrow Wealth Investments, we look more at a long-term strategy, hinging on wealth accumulation by holding onto your property, which involves valuable advantages, as we explore below.
IGrow takes you through a property investment journey geared for long-term wealth accumulation!
With our umbrella company, IGrow Wealth, comprising several key sub-companies, each has a specific purpose, and each has a team of qualified experts at hand. IGrow aims to guide you to property investment success through our various companies’ experts with key investment strategies. IGrow’s specialised and qualified experts will take you through the entire property investment process so your property runs smoothly!
These strategies are devised by our wealth generation strategists (within IGrow Wealth Investments ). Our bond originators (within our IGrow Home Loans department) will help negotiate favourable terms for your Home Loan, should you need one, holding highly favourable relationships with major banks and financial lenders. Our tax consultants (within IGrow Chartered Accountants) and trust and estate planning Attorneys at IGrow Trusts and our partners at LK Attorneys will handle your tax situation. They will help you create the correct company and trust structures to reduce tax liabilities, and avoid such liabilities that would tie to Lee’s strategy of “flipping a property” for quick financial gain.
We even have a property management team (within IGrow Rentals) on hand with our rental managers able to handle your tenant management and property maintenance so you can enjoy fewer hassles and more free time. IGrow makes property investment possible for the everyday South African!
IGrow’s core property investment philosophy compared to Lee’s philosophy
Our team centres our guidance provided to our property investor clients on “buy-and-hold strategies”. Or, as we would put it, the 3 Rs of RETAIN, REFINANCE and REINVEST. We encourage our investors to buy a property and keep it in their portfolio, so it can offer a tax-efficient solution to passive income for years to come as well as allowing you to access the equity in the property to fund further portfolio growth, which Jason Lee also touches on in his book.
The appeal of “flipping properties” ties in to the short-term financial gains you get from that. We aim to give you a short-term gain through a rental income generated after you purchase your property. We encourage you to “buy and hold” your property so you can watch its value appreciate and your rental income increase every year.
Why is Lee’s book on IGrow’s recommended reading list?
If you are serious about making a good ROI in property in South Africa, Making Money Out Of Property In South Africa is one of our top-rated reads. Its practical and real-world examples make things easy to compartmentalise and digest for investors, and much of the advice in it is sound and aligned with what we do at IGrow Wealth.
Why is “Making Money Out Of Property In South Africa” a worthwhile read?
Why is a recommended reading list-topper such as this ideal for those who want to invest in property?
“If you need good reading material, with tools and techniques to navigate the general South African property market and to understand its mechanisms, this book is a good choice. Also, if you want to try buying and renovating a run-down property, then ‘flipping’ it for a profit, this book will be up your alley” – IGrow team member & reading enthusiast
At IGrow, we agree with Lee that knowing market fluctuations and strategising correctly will bring you the rewards you are after! However, we are in it with you for the long haul, and we recommend you hold onto your valuable investment properties rather than “flip” your properties and sell as soon as you can! You can set up a consultation with an IGrow Wealth strategist if you’d like to plan for your property investment future!
If you’re looking for some property investment-centred recommended books to read, we’ll be posting reviews whenever something exciting comes our way! We’ll share our top-read picks with you, offering you handy property market trade tricks. Keep your eyes peeled for our handy IGrow Book Reviews, and follow our blog post updates on Instagram and Facebook for more up-to-date advice and information.
