Starting a property business: Need advice

[julies]

HI Reuphk

I don't understand your first point, I paid cash for the Town House last year, and this year bought my primary residence with my wife after got married?

I don't think ill start a "Rental Agency" for other land lords, I'l just concentrate on growing my own property portfolio for now.

[reuphk]

HI Reuphk

I don't understand your first point, I paid cash for the Town House last year, and this year bought my primary residence with my wife after got married?

I don't think ill start a "Rental Agency" for other land lords, I'l just concentrate on growing my own property portfolio for now.

I'll explain briefly, but you should consider speaking to your accountant (or just get some advise from a CA for an hour).
SARS allows you to deduct all expenses related to a rental property from your Income Tax. Expenses includes repairs and the like, even rental losses if you have it, as well as interest as charged by the bank for a homeloan.
This is not allowed for your own house where you live.
In essence, this makes the property you live in just an expense whilst the one you rent out is an asset. (dont believe them when they tell you your own house is an asset, in accounting terms and from a tax perspective it is an expense until the day you sell it)
So, if you do not have a bond on your rental property, but you have one on your own house, it means that you cannot deduct the bond interest from your tax liability. Use the bond money (which you paid cash) from the rental and pay it off on your house you live in. This will have 2 effects. (1) reduce your interest on your own house (if not totally paid) i.e. reduce the amount of money you CANNOT claim as an expense and (2) increase the interest on your rental i.e. increase your expenses on your rental, with an amount you CAN claim from tax.
Further to this, since you are renting out your cottage, you can claim from tax any expenditures you may have including improvements if it is small amounts, from your tax as you declare the income from the cottage as rental income as well.

Hope that makes sense. It is one of the many benefits of property investments. If you are keen to build your own portfolio and invest in properties, may I suggest that you find a good course that teaches these and other financial and legal information.
May I suggest TREOC as an option. I think Coert Coetzee has quite a lot of info and value to add to especially new investors. He operates in Jhb and Cape Town if I am not mistaken. There are a few of his type of "seminars", but I would suggest that you tie into a club, and keep to South Africans (sorry, no issues with all the Canadians and US and Europeans and whoever else that come here, but they are all about selling their own "offerings" and mostly not as clued up about our specific South African tax and other considerations)

[Houses4Rent]

I would not ever touch Treoc and rather recommend P3 for a relative beginner. Or even Hannes Dreyer.

[Basment Dweller]

I would not ever touch Treoc.

Curious to know why, what's up with Treoc?

[Houses4Rent]

Long story and just my opinion. Call me if interested.

Just one snippet: A man who punts property and then suddenly punts gold has no credibility in my mind.
He is too full of himself too (Treoc is Coert spelt backwards). Everything is declared rubbish, except his stuff. He does some good to the masses, but I would never follow him.

[Basment Dweller]

I know a little bit about Coert Cotzee and the 'Treoc Way'...I worked for a busines selling and facilitating 'guru' seminars some years ago and can tell you that most of these guys are snake oil salesmen that are BROKE as hell. The one guy that I worked for, is a well known seminar guy (I won't mention his name) consulted with companies but was in a constant state of bankruptcy himself. He didn't even own a car as it was repossessed so had to rent or borrow cars to show up at meetings...lol

But that's a topic for another thread altogether...

[reuphk]

Oui guys, you are way to serious about "following" people.
The advise I gave was to get information. You do not have to part with your money or even do anything that you have not thought about and decide on for yourself. However, if you are new to the property business, you can make very expensive mistakes if all you do is learn from your own experiences. Whether you like Coert, or Hannes, or Dolf de Roos, or even Robert Kyosaki, the point is that these guys share information. Lots of time for free, or at a very small cost, not counting your time. So I approach to this is to get the info, use what is solid and discard what you dont want. Learning about Trusts, Financing, types of properties and even at the odd time meeting others like you who share their experiences when like minded get together not only saves you time, it can save you from mistakes.
So like you are on this forum, sharing your views and opinions, and sometimes getting some good advise and sometimes just smiling and thinking, yeah, that wont work... I still say - meet up with those who do provide information either by seminars or books, and equip yourself well with knowledge. Keep the good, discard the bad, and build a property portfolio as soon as you can.
Personally, I dont like rental agencies, probably because the experience I've had with (many) of them has been bad and I dont see the value in paying someone to do nothing. Are there good agencies out there? Of course. Could they save you from costly mistakes? Maybe. Can my Trust Attorney do the same? The first one I used set up the Trust incorrectly. I had to get it all changed. Since then, I used one who understand property trusts and investments. Maybe if I had been in a property club when I first started, I would have known what to look out for.
On a different note - I would love to know why you are so against Treoc? I am not part of Treoc - I am just curious, so if you could share your experience and why you say "stay away", that would help the discussion.

[Basment Dweller]

Definately agree with reuphk to go out an educate yourself, go to as many seminars as possible and hear all points of view, I was just making a point about some of the self styled 'guru' types. Some of these guys put out some excellent information and content, but can't apply it to their own lives, doesn't mean you can't learn something.

It was just an observation and doesn't necissarily discredit the content of their teachings.

[Houses4Rent]

Spot on, I agree with reuphk. I do not follow anyone, I learn from all. I take bits and pieces from all of them and make my own brew. I meet most personally and recently I even had a rather private session with Dr Dolf de Roos. What a great insight. He is super down to Earth and does not hover above all like Coert who feels is is the one and only.

E.g. I am not quiet sure why, but I never found capital growth a major motivator. Its speculation in the end and many calculate their NET gain wrongly anyway. So I always focus on cash flow and being (too) conservative about it. However, that resulted in me never ending up in a financial tight spot and I intend to keep it that way. A lot of capital growths investors went bust.

I even agree on the notion that most letting agents (and estate agents for that matter too) are useless, and I am one myself. I became one and changed my career, because of bad experiences. I saw a huge gap in the specialised investor market and took it - so far uncopied. It was not exactly my brain child, but I joined a group. Later I pulled out of the group which is dead now while I am successful, because I made it one. It makes a major difference whether tour agent is a clerk staying with one's parents or a global property investor who can speak and act from experience. Enough of me.

Treoc? Well, where do I start. He is good on some things which is stopping the sheep buying retirement policies and relying on others to just end up poor at retirement age. So I give him huge credit for that. I even went to his rather expensive seminar to see whether I miss something. There was little if any news to me, but the content was good for the novices for sure. I did no agree with all, but generally the content was good. Just don't ever believe everything one person is teaching/selling.

Treoc were my trust accountants at times when Jose Delgado was still involved. Jose's DVK did my trusts. Treoc trust accountants messed up and I changed to Iprotect which is under Jose's stable. They misbehaved badly too and I found an independent trust account, who happened to be the same person who did my accounts at Treoc and had gone solo since. I asked him why Treoc did not work for him and he said that he was tired being told to do the wrong thing and just chase money regardless of clients needs. So I have a bit of closed loop knowledge and experience. This person's company is still doing my trust accounts and they are growing fast. Maybe a bit too fast, but lets see what happens.

That aside my trusts are still with DVK as they are good in that and leading in that field in my view. I also consider Jose the founder of the double trust structure and not Coert.

Treoc shrank drastically and almost imploded a few years back when too many sheep blindly followed him and/or got sucked up in the hype and went over the top. See Coert's newsletter from yesterday giving us the long story that it was never his fault.

At some stage he suddenly and heavily punted Gold, God knows why. And that from a man who preached property is the one and only. I agree on property hence I think he shot himself into his both feet when suddenly changing his tune only to revert back to property later.

He single handedly declares anything hat does not fit into his concept (i.e. he does not make money out if it) as rubbish and says it won't work. E.g. he says only townhouses in estates work and nothing else. I do not have a single townhouse in an estate, but all my properties do earn me money and secure my pension. When I challenged him on that he just insulted me.

Anyway, feel free to make your own experiences and do not take my word for it.

[Houses4Rent]

I know a little bit about Coert Cotzee and the 'Treoc Way'...I worked for a busines selling and facilitating 'guru' seminars some years ago and can tell you that most of these guys are snake oil salesmen that are BROKE as hell. The one guy that I worked for, is a well known seminar guy (I won't mention his name) consulted with companies but was in a constant state of bankruptcy himself. He didn't even own a car as it was repossessed so had to rent or borrow cars to show up at meetings...lol

But that's a topic for another thread altogether...

Give us a hint. Would like to know who that was. Maybe PM me.

Anyway, a good test is always to check the net worth of the person who is making him/herself out to be guru. Not quite sure how to do that, but I tent to believe the people who consistently seem to be well off rather the ones who pretend do be or are only there for short while.

[john morley]

Sell the "paid for" property - buy a low price repo in a half decent area - fix it up and flip it. Do it all in your wife's name - do two per year - as primary residence sales - no cgt - NEVER CLAIM vat!