R7.5k CASHFLOW - Student House in Cape Town

[@Wendilo2]

Those sleeping conditions are deplorable! I have student accommodation too but would never let my students sleep 4 in a room with bunk beds like a jail cell. Do better!

[@LaurensBoel]

We bought this property from a landlord who had overcrowded it. Since acquiring it, we've converted the house into an 8-sleeper, which is much more comfortable for the kids and hasn't lowered our revenue, as we can charge more per student. I recorded this case study just as we had bought it, so we had to honor the current lease agreements.

[@Littlepaw01]

Show us your student accommodation.

[@Wendilo2]

@@Littlepaw01 Where would you like me to show you? I'd be happy to but can't attach images to my comment. Then you can see what student accommodation should look like

[@robbybalona7856]

I'm ur neighbors.. your a opportunist.. The living conditions are terrible like ur tenants

[@LaurensBoel]

@robbybalona7856 yes, I'm an opportunitist. Also known as entrepreneurship. Also, go have a look now. It's been renovated and caters for 8 students and living conditions are good.

[@robbybalona7856]

@@LaurensBoel ok if you say so... Been there ... Seen it. Well done.. what a clever business man you are. !!!! Shining pillar of the community..

[@LaurensBoel]

@@robbybalona7856 👍

[@CapeTownNick]

15 students in 1 house! no man thats not right

[@LaurensBoel]

As mentioned on other comments, we bought this property from a landlord who had overcrowded it. We had to honor the lease agreements for the first year, which is the year of recording the video. The following year, we converted the house into an 8-sleeper, which is much more comfortable for the kids and hasn't lowered our revenue, as we can charge more per student.

[@tibbydudeza]

I rented a one bedroom flat in Rondebosch of main road near UCT for my kid and her bf last year @ 10K per month. I had to furnish it and they wanted 3 months upfront and I had to commit to a 12 month lease. It was 30K upfront - you can see why a student on NSFAS would opt for this. It might look cramped (personally I would only put 2 per room) but it is supply and demand and I have seen worse student accommodation in Obs when I looked.

[@LaurensBoel]

As I've said in many replies, we inherited the property as is and kept the leases intact for the first year. We have reconfigured the property for 8 students and have NSFAS accreditation. Unfortunately there isn't alot of supply and alot of demand, giving landlords more freewill to provide less than optimal accommodation.

[@hoosaindalvie9515]

Good video. The numbers don't make sense to me if your bond repayment is quite low with the total rent being R47k per month. Unless you not alone in the deal and you splitting the profit R7.5k each.

[@LaurensBoel]

With an 100% LTV, the debt portion is substantial, and the opex costs of running student housing is much higher than normal residential. Maintenance and vacancy provisions are much higher and therefore impact the bottom line.

[@njabulomasina4180]

Lots of assumptions in this comment. 1. Loan is 100% LTV, probably taken over a shorter period e.g. 10 - 15 years 2. He probably pays for water and electricity as this is a multi-let and you can't realistically separate water and electricity usage and therefore charge it on to the tenant 3. He prolly puts money aside for vacancy 4. He also prolly puts money aside for repairs That's some of the things I'm thinking about at the top of my head...

[@LaurensBoel]

@@njabulomasina4180, correct. I put at least 16% aside for vacancy provision as students rent for 10 months. Repairs and maintenance is much higher on student housing than normal residential. Water and electricity is for the landlords account.

[@mzimhlemosiwe5047]

Just finished selling my apartment in town, after 3 to 4 months, I'm looking to buy a new property in observatory, these videos are a very good help! Especially the cape town ones.. Besides the lawyer fees, how much would you suggest one should have for renovations on a 2 bedroom apartment? Lets say those old houses in the southern suburbs as they are quit old?

[@LaurensBoel]

Glad you like them :) It's impossible to estimate renovations because it depends on many factors. It depends on current condition and future state, and also the market you are targeting. For instance, a property in bad condition that you want to use for luxury airbnb will be a lot more expensive than an average condition house requiring minimal renovations in the affordable housing space. There isn't a one size fits all. You need a good inspector and contractor to assess each deal on it's merit.

[@turnleft8645]

So you're the donny breaking my wallet every month!😭😭

[@LaurensBoel]

Yes, I'm the co landlord. We provide a good quality accommodation at rates set by NSFAS. Hope you enjoy your stay 👍

[@michaelnuttall5896]

People pay R5000pm to live like that? To be fair, in Australia they had 4 of us in a 4 x 6 shed and charge double. Sucks ass to be a renter, people are fkn nuts to sit with that situation. I can only imagine being the landlord of something like this is going to be hell.

[@LaurensBoel]

Hi Mike, you're completely right. We bought this property from a landlord who had overcrowded it. Since acquiring it, we've converted the house into an 8-sleeper, which is much more comfortable for the kids and hasn't lowered our revenue, as we can charge more per student. I recorded this case study just as we had bought it, so we had to honor the current lease agreements. Now that I think about it, I should do an update video on this. Being the landlord for this property has been tough, but all student housing requires a lot of time and maintenance. However, now that we are down to 8 students, it's much easier to manage, and we have the right operational team in place. This has given us a lot of time back.

[@Shane-wn1mk]

I am a student staying in private accommodation here in Belhar studying at UWC. And I must say this is over over crowded... the old landlord definitely was not concerned about the wellbeing of the students and I don't think they were accredited by the university because at least with my uni there are requirements and the size of the rooms has to be appropriate. So far I have stayed in 3 different private accommodations. My first was with an elderly woman who rented her daughters old room to me...the room was massive, big enough for 2 students according to the rules...she could have even had 3 if the beds where small and 2 bunk beds but i guess on the safer side it was big enough for 2 but I stayed there alone because she wanted me to be comfortable and did not want extra stress from having 2 students living with her so gave me the choice whether to share or not. This year and last year I stayed in a multi let accommodation. In both cases I had a single room as well which i always try my best have. The prices mostly charged nowadays is R5000, my room is R5000 here where i am staying now. I am comfortable in this space its big enough for me. Here are a lot of people staying but the house is really big as well.

[@LaurensBoel]

@Shane-wn1mk did you see my previous replies... we inherited the property as is and then converted to 8 students, which is NSFAS accredited. I care very much about the wellbeing of my students

[@johnybilly3634]

Hi Laurense, did you manage to get NSFAS accreditation on the building, or are you depended on cash paying students, how did you manage to get these guys to share 4 per room, where im from they dont even want to use bunk beds?

[@LaurensBoel]

Yes, we got NSFAS accreditation for certain rooms that meet NSFAS criteria. For the 4 per room share, we rent out to private students.

[@musawenkosimakhoba9028]

Nice video. How do you get municipality to approve such living? it seems a little too packed to be within the limits the property can or is designed to accommodate.

[@LaurensBoel]

Due to the lack of space and high demand for affordable housing in Cape Town, the muncipality is a bit more lenient.

[@MakesDogg]

Nice vid Lone! Keep these coming

[@LaurensBoel]

Thanks! Will do Makes!!

[@sudique]

How did you get municipality approval? Do you have to rezone the property? And any neighbour's consent needed?

[@LaurensBoel]

We bought this property already certified as student housing, so I'm not sure what the process is... but yes, I would assume council approval and neighbour consent.

[@robbybalona7856]

@@sudique nope .. he just put paint on the walls and called it revamped.... It's a far cry from anything I would allow my kids to stay in.

[@simpleandminimalmaybe]

not to be funny but this is why i do not support Real Estate for profit, housing is a basic human right and yet we want to profit from it. what a sad sight.

[@LaurensBoel]

We live in a capitalist world. Food is also a basic right, does that mean farmers, wholesalers and restaurants shouldn't profit? I provide good quality housing at a fair price. I provide a good service and make a profit doing it.

[@LaurensBoel]

And BTW... making profit from real estate gives me financial resources to empower those less fortunate. Have a look here: thundafund.africa/campaign/AFA12A10DECA7D2BC8D0 It's easy to judge others.

[@simpleandminimalmaybe]

@@LaurensBoel noted.

[@mazibukomail]

I hear what you're saying, the solution is perhaps more public housing.

[@simpleandminimalmaybe]

@@mazibukomail exactly, at subsidized costs not quality. i would much rather we pay more taxes to support those type of projects.

[@michaelbrink2585]

Great investment! How did you manage to get a access facility of R350k? Do all banks allow that?

[@LaurensBoel]

We bought below market value. Banks will offer it if there is sufficient equity in the property

[@mazibukomail]

Aah uct...so many happy (and not so happy) memories.

[@LaurensBoel]

Yeah... trying to enjoy your student life while having to meet deadlines and pass exams... it was a tough balance.

[@thandolwakhechiliza8507]

Great content right here.

[@LaurensBoel]

Thanks 🙏

[@timothymalatji]

Is your student accommodation accredited by Nsfas.?

[@LaurensBoel]

Yes, for 7 students. The rest of the house is private / cash students.

[@evannlowe790]

Cool vid Laurens!

[@LaurensBoel]

Thanks bro!

[@AGirlNamedVan]

Obz is a good location

[@LaurensBoel]

It is indeed.

[@kwezindyoko9241]

What’s your take on Grahamstown (Rhodes)

[@LaurensBoel]

I don't have any investments in Grahamstown, so you will need to do your own research. You'll need to determine if the effective yield is above 20% and if demand is high. Then it's a good investment area.

[@autumnvalentine2612]

thanks

[@LaurensBoel]

You are welcome 😊

[@Epistemic_Explorations]

Thanks

[@LaurensBoel]

Enjoy the video!