Should you buy a property cash or use a home loan? Leverage in South African real estate explained

Whether you are building your rental property portfolio or buying your own house in South Africa, think carefully whether you want to buy it cash or use a home loan. In this video Retha explains the power of buying properties using bank money (bonds) vs. cash.
In the first section she covers rental properties for a property investor and in the last part of the video Retha explains how you can use this same principle to live in your property for free and getting other people to pay your bond for you!
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[@noziphop9728]

Short and sweet. Now I understand how leverage works using other people’s money to buy more properties

[@MyPropertyBusiness]

Thats the spirit, we like to keep it straight to the point so that you can get out there and start making some money, hope you have started?

[@maheyamoyce8989]

Keep up the good work and stay blessed.

[@MyPropertyBusiness]

Thank you! You too!

[@darrenpetrus7922]

That last example was brilliant👏👏👏

[@MyPropertyBusiness]

thank you! :-)

[@jaymielandkimm9827]

Thanks for sharing

[@MyPropertyBusiness]

Thanks for watching!

[@NtambueMarie]

I take note.thanks

[@MyPropertyBusiness]

awesome.

[@hotsebamangthanwane277]

Thoroughly explained and sounds very easy👍. Thanks Retha, the power of multiplication/duplication

[@MyPropertyBusiness]

My pleasure 😊, have you started your property journey?

[@lulekamgaga4556]

Thank you 👏👏👏

[@MyPropertyBusiness]

You're welcome 😊

[@npmalwane8179]

Thank you very much

[@MyPropertyBusiness]

You are welcome 😊

[@willykalala625]

This is very good and powerful knowledge about Property. Thank you for sharing Rita🙏🙏🙏👌👌👌

[@MyPropertyBusiness]

My pleasure 😊

[@kidgamer9399]

Excellent

[@MyPropertyBusiness]

Thank you! Cheers!

[@uba4740]

i love the white board lesson, u reminded me of my primary school teacher, so warm and welcoming, easy to comprehend and a fun class.. thank you. you convinced me.

[@MyPropertyBusiness]

Wow, thank you!

[@malcolmjosephs2667]

Thank you Retha for this formula & strategy session. It made something click mentally and makes it seem so simple the way you explain it. Leverage makes absolute sense, thanks to this video.

[@MyPropertyBusiness]

An absolute pleasure!

[@sahillarya06]

Hi Retha, Thank you for the very informative video, please can you demonstrate the considering factors on buying an apartment under construction (pros and cons)

[@MyPropertyBusiness]

Will do thanks for the suggestion

[@pedroandre938]

What is the advantage of buying property with business credit?

[@losmag33]

Okay 👍 👌 🙆‍♂️

[@MyPropertyBusiness]

you are welcome

[@chemanejerrymhlanga]

Remember on board side when 2 or more don't pay. You must make a plan to pay the bank R4500x units to pay the loan.

[@aaronboltman344]

Hi Retha...We would like to book a strategy session with you please... You already helped us in the past by putting us into contact with People who helped us form our business now we are ready to buy our third property but need guidance... Kind Regards Aaron

[@lizapieters9273]

Thank you for insightful video. Which is the best entity to build a buy to let portfolio - personal, trust or cc? How many bonds will a bank give in your personal name?

[@MyPropertyBusiness]

Hi Liza, It Depends on how well you are managing your finance affairs and how much you qualify. We suggest you see a bond originator, if you do not have one, check out our bond originator we use in the varsity under Power Team.

[@pasekalehlekiso488]

Thanks for the insightful video, can you please just explain or suggest a site where I can check the utility price I will pay should I buy a property? Do the prices differ due to location? Do they increase or decrease yearly? 🙌

[@MyPropertyBusiness]

As far as we know, there is no one place where you can find this, however recently we started seeing lightstone.co.za having a utility on their reports. The best thing is to ask seller as and when you are making an offer, we always include this as a condition when making an offer. Also properties in the same area turn to have the same prices so if you are buying in the same areas you would, - this is for rates and taxes.

[@NtambueMarie]

Please make a video on how to pay tax on rental property income please

[@MyPropertyBusiness]

Hi Ntambue, tax is very is one of those things that personalised and we urge you to consult a tax consult to cover your personal circumstance. If you are a member in the Varsity, please check on the professional panel and look for a tax consultant and they will support you. Thanks and to your success!

[@ruanp3760]

Such a nice video , i just dont understand how to aquire more than 1 property bond with a single salary , how do you go about it

[@MyPropertyBusiness]

Hi Ruan maybe join us on the education journey it will help you understand more www.m5propertyvarsity.com, see you in class.

[@ezramurenjekwa5742]

You did not include interest on bond payments.

[@GSibs74]

For aspiring Investors out there You make money when you buy! Currently the Prime lending rate is 9% & the rate of of return on a fixed deposit (standard bank) is 9%. So after analyzing a deal consider whether the cap rate is above the return on a fixed deposit. If it's equal to or less , why buy the property when you can invest in a fixed deposit account which is less risky and the interest income is exempt from tax but only up to certain limits depending on your age.

[@MyPropertyBusiness]

Hi G. What about the lost opportunity of property appreciation that you may also achieve and when you buy right, the equity you maybe achieve 🤷‍♂️

[@eugenematthews1981]

The math on the first example is wrong the debt is 4,5 mil (450K X 10 units) which means that the premise of 10 units is incorrect. It only applies to the first 2 units thereafter the gist of the video is correct but ultimately wrong.

[@JustifyJustin]

No roasting, perhaps just a light saute ;-) - the whole premise of this concept hinges on being able to purchase 10x (per the example) properties (excluding your primary dwelling). Would you mind suppling the video link/name where you explain how that is achieved? I would say THAT concept needs clarity first before one watches this video - cause to my mind, for a individual salaried individual to qualify for 10x property purchases from a bank, if possible, would swing the investment class closer to gambling than investment. Many thanks.

[@MyPropertyBusiness]

The video was done with the idea to explain leverage. There are multiple strategies and banks that will do finance for you based on property performance. But yes you are right in saying that this is not easy and not everyone can do it to the extreme. But everyone can do it within their limits of affordability and the right structure.

[@ryderb4l328]

How about building a base of 4/5 properties by buying with cash then buying another 5 using the second method?

[@MyPropertyBusiness]

Sounds like a good option.... there are many options to get to the same destination

[@michaelducasse4458]

Love the simple explanation but I’m slightly confused. On the left side the value increased 50k and thus the person was left with 550k after selling giving them a profit of 50k. On the right side the same increase of 50k per property leaves the person with 500k profit. Which means the person is now sitting with 1mil instead of the original 500k they had. Is that correct?

[@MyPropertyBusiness]

I get you, something it's about context that one can get with indepth learn tauraijack.com/join-the-academy/

[@palesakhanye8219]

Wow this is eye opening. I almost became Peter ....been saving up in order to reduce my bond and interest, little did I know. Please tell me if I can be Retha as I have been preapproved for a maximum of 700k by three different banks (very similar interest rates). Can I simultaneously take 500k bonds from all three banks Or would I get 3x 500k bonds with the same bank?

[@MyPropertyBusiness]

hi Palesa, you need to work closely with a bond originator on this action. Do you have one?

[@willykalala625]

Most using the Bank money. Not using your own money

[@MyPropertyBusiness]

good strategy

[@jeffm.k4152]

Hey Retha,can I ask please,I'm a bit lost in your calculations, in your example you say Retha has 500k cash right and she gets 90% loan for her properties,I understand she will split her R500k cash into 10 properties giving her R50k for each,now I have a challange in understanding that will she get R450K for each one of the 10 properties (making it a loan of about 4.5 million rands)or will she get R450k and loan and split it into 10( resulting in 95K for each of her Lil babies) like she did with her cash?great content ,powerfuly informative..i hope this finds you well...thanks in advance

[@MyPropertyBusiness]

Glad you could find it helpful! In the example if means R450k on each property.

[@glenmash2363]

@@MyPropertyBusiness And that’s a bit unrealistic for an average person to qualify for a loan of R4.5million at once. For the average person, the 10 properties can be achieved by repeating the process over a couple of years, not all at once.

[@revelationpowerhour9149]

But what if I have the full amount to buy the property?

[@MyPropertyBusiness]

Then you can buy it however it's always cheaper to use opm than your own...

[@shaunhlatshwayo2577]

Please help

[@bazamilemseleku2189]

What if you don't have a cent but you qualify for R500000 property bond?

[@MyPropertyBusiness]

you can still invest

[@garagepie]

I know its an example but you will never increase by 10%

[@MyPropertyBusiness]

True that figure depends on so many factors that can't even be explained in one video :-) but the principles are still valid.

[@lungisanizondi7040]

Guys I'm completely lost when she explains the right hand side,,I see two R50 000 being multiplied by 10 whereas on the other side it's R500 000 so I'm trying to make sense on what she wants to explain and I just can't,,please someone help

[@mightylove]

I think she just run out of space to write down all ten properties on the right hand side. She says when you have a vacancy, on the right hand you still have other income but she forgets that you still have yo service the bond. Atleast on the left you don't have to worry about the bond. And you save up on the interests that the bank could have charged you.

[@MyPropertyBusiness]

we need a part two to decode the confusion.

[@rebonemoloi8284]

But ma'am I already built this cross for you... come undergo your crusification

[@TheSimpleLifeTNT]

If you qualified to only buy for R500k as a salaried person ,,you can NEVER buy 10 properties worth 5 million .... where do you find collateral as all South african banks use your salary assuming you a first time buyer with no millioner bank balance , and it takes time to build equity in a new property , or am I missing some not so public facts concerning bonds..... Very curious , comparison should be 1 to 1 , not 1 to 10 , .. that said can I use my freehold R1 million house to buy 10 R1 million houses , with no salary .

[@MyPropertyBusiness]

You are on the right track, not everything is public knowledge thats why we advocate for you to go to school and start learning the tricks of the game to win. you can start here www.m5propertyvarsity.com

[@TheSimpleLifeTNT]

@@MyPropertyBusiness much appreciated , a "lesson" long overdue .

[@aimableshingiro4059]

Hi, come to kigali-Rwanda we will own real estates😊

[@teedee1170]

Good grief… she lost me at x10 properties😳

[@MyPropertyBusiness]

We are sorry but you are welcome to connect with here on www.m5propertyvarsity.com/Retha

[@chemanejerrymhlanga]

Both had 500k right. Retha opted for bonds instead of cash sale with a deposit of 50k each. Meaning 500k divide by 50k it's 10 properties.