On this page, we will seek to answer all your Investment Property Questions.

We welcome you to comment below and also ask more questions we will try our best to add tools and answers here that will help you on your investment journey.

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Q I currently have about R XXX  in cash that I would like to invest in a safe investment. I want to invest in a longer term safer investment. I have thought about property investments for a long time – but I cannot decide if I must go commercial or residential.

OG Answer  Commercial property has its advantages since the numbers are bigger than residential investment (not the growth), but it requires a high degree of property knowledge and the same basics apply, that is, you need to purchase in a high growth area with high tenant demand. And then manage your investment effectively.

Q I want to retire early and enjoy my family, I value my time much more than money. I would need about R50k per month to replace my current monthly income. I have done some calculations and it seems like I would need to purchase about 10 townhouses of R500 000 – R 600 000 each to cover this amount – not sure if my calculations are correct.


A Yes that sounds about right, and you can go for slightly higher priced units, but the cashflow returns are a bit lower and when times get tough the higher end of the rental market suffers. What the  Organic Growth Investors Club offers is hand selected investment properties and then offer a full management solution. You will get monthly reports on each property and we could give you a monthly combined report as your portfolio grows.


Q Debt: I do not like to make debt at all – I prefer to invest cash. After reading your articles I am thinking of using the banks money. I will need to set an ambitious goal if I need 10 units paid off to replace my salary – and that would not easily be done when doing cash only deals.


A  Yes It is ambitious, but very possible. By using the banks money you will get to your target a lot quicker. The basic premise here is that the power of property lies in capital growth, so buy as many small units as you can in great areas.

Eg: If you bought 1 unit for R 1 million and paid cash, you would get a cash return of R 8 000 is per month and you would gain value of about 10% per year ( i.e. R 100 000 wealth growth plus your rental income of R 96 000 for 12 months = R 196 000 in year 1 )

If you bought 10 units of R 600 000 each (like the Telford units in our hot deals list), put in R 100 000 on each property, your cashflow in would be approximately  neutral per month in the first year and your wealth will grow by 10% per unit per year i.e. 10  times R 60 000 per year (R 600 000 growth in year 1).

Your rental income then increases in year two and bond repayments stay approximately the same. As time progresses the tenants pay off your bonds, you get increased cashflow and the benefit of a whole portfolio of properties growing in value.

Q If I decide to fund my investment using the banks money – what kind of cash flow do I need to budget for?

A Go to the investor toolkit page, which is found in the Organic Growth Investors Club members area on our website and download the Cashflow calculator.

You can then input numbers from our hot deals into the spreadsheet to see the effect of bonds on cashflow. R 100 000 deposit on a Northriding R 600 000 unit gives neutral cashflow. R 100 000 on a Northriding R 500 000 unit will provide  positive monthly cashflow.

Q Risks. Regarding the risks of tenant repairs, wear and tear maintenance.  I do not want to run into cash flow problems. What kind of risks are we dealing with?

A Organic Growth are associate owners of Targer Realty who manage a large portfolio  of properties in the R 600 000 to R 800 000 price bracket. Our owners tend to spend about R2000-R 3000 per unit per year on maintenance. But having said that, the tenants pay at least half of this. Much of the required maintenance is tenant damage and the tenant contributes, so it is hard to say how much it cost – budget on R 2000 per unit per year for maintenance and you are safe.

Q Vacancy risks. What vacancies must I budget for?

If you want to be really safe, budget on one month vacancy per year per unit, but this is overkill. I have owned particular units for nearly ten years with only about 1 or two months vacancy in them in the whole ten years. The secret to successful investment is finding good properties in high tenant demand areas. Location is a primary selection criterion for our Organic Growth Investors club  hand selected hot deals

 Q Tenant arrears!. What are the real risks of tenants not paying their rent?

A Tenants are humans who sometimes have problems, so we cannot give you precise statistics. What is very effective in mitigating this risk is  careful tenant screening and tenants education (of the danger of non-payment). Late payment costs them a late payment fee, and they only do that once! Agencies registered with the credit bureaus have a lot of power by being able to “blacklist”  tenants as defaulters if they don’t pay. Targer Realty has  never had to go the whole legal process to evict a tenan; that is in 14 years of managing a portfolio of approximately 90 townhouses in the Northern suburbs of Johannesburg and Sandton.

Landlord TIP : Late payments are easily dealt with as a landlord. Don’t let late rental payments cause you undue stress. You simply instruct the bank to deduct you debit order bond repayment for the 10th of the month, which gives your property manager  time to chase late payments and ensure the money is timeously in your account.

Q Insurance : How are townhouses insured? Do I need to take out an insurance policy and if so what are my costs?

A  Building insurance is covered by the body corporate and is catered for in the levy. Items covered in the building insurance include the exterior of the building, geysers and resultant damage of failed geysers. Normally if your geyser should spring a leak (burst sounds so melodramatic, they are designed to leak, not explode), the body corporate will arrange geyser replacement and repair of ceilings and carpets and other resultant damages. You would be required to pay the insurance excess. The excess payable is dependent on the insurance policy. R 1500 excess is fairly normal

 Q Who pays the municipal rates, can I recover this from my tenants?

A On a small unit (less than 100m²), you can expect the rates to be about R200 per month. Who pays the rates is a part of the negotiation process when sourcing a new tenant, there is no set standard.

Q In your cashflow projections on the HOT DEALS, how realistic is your rental income that you propose?

A They are actuals. Targer Realty is very active in the leasing market and base our proposals on actual rentals that Targer are achieving.  In a complex like Telford Court, Targer manage about 8 or ten units in that complex and do freelance rentals for many other owners who manage their own. The market rentals are relatively easily to establish as I have a team of agents who specialise in rentals. Many agents don’t have a clue about rentals! So be careful. Do you really easily get people renting for those amounts? Yes, very easily. The tenants household income we are looking at here is R 20 –R 30K per month What are your average % of rentals standing open per month? 1% or less

 Q Payments of rent : What is the current status on this? Do you have issues with people not paying? What is the plan of action when they are not paying?

A Yes I covered most of this above, but if I ask my managers ( 90 units) in the middle of the month, they are generally struggling with one or two tenants, and we generally get the money.  We have our ways and means to legally persuade tenants to pay their rental on time.


Q What does the 13% that we pay each month include if we ask Targer to manage our poperties?

A Leasing commissions (finders fees) plus full management, we collect rentals, pay all the bills and effect necessary maintenance in consultation with the landlord.

Q  Do you arrange that any maintenance gets done and just bill us for it?

A  Yes, Targer does this in consultation with the landlord.

Q Do you have arrangements with repair people to offer us better rates?

A We tend to work with maintenance people who give us reasonable rates but GOOD service. We have a few preferred suppliers who know that we know how much things cost. If they slacken or price themselves too high, the work stops.


Q Do I have to see the investment unit before I buy?

A Generally at Organic Growth we structure your offer to purchase subject to you viewing the unit within 3 or 4 days  of acceptance, so you have an option for 3 or 4 days. In that time you can either come up to view and approve or not or I can do a detailed video of the inside of the unit showing all the blemishes etc so you have no surprises. We do this to save your time.  You don’t waste time looking at units that you have not secured!


Q  My number one question is, how do I keep qualifying for bonds?


QThe income out of renting must be declared as a taxable income?

A Yes, your net rental income is seen as taxable income.

Net rental income =  gross annual rental income less interest on your bond, all levies, rates , service costs, repairs and maintenance costs.


Q Are 100 % bonds are available,

A Yes they are, but only under certain circumstances. The  information we would need to beable to answer this question are.

1)    What are your monthly earnings?

2)    Are you self-employed or do you get a salary?

3)    What are your current debt repayments ( clothing accounts, credit cards etc.)?

4)    Do you own any property and if so what and how large are your bonds?


Once we have this info I can point you in the right direction and be of more assistance.


Q How do I avoid ending in a cash trap with the value of property not increasing fast enough to do refinancing?

A Patience is required as property is long term. But you can accelerate the process by applying our proven property/area selection criteria to ensure you have very good capital growth.


We are about to launch our property mentorship program in which we deal with items like this,  look out for our emails about the mentorship program coming soon.


Q Do u always get suitable tenants?

A Targer Realty has a good team of agents who know how to source good tenants, do credit checks, and effectively collect rental for you.

Q How to find a good property deal?

A Finding a good deal is relatively easy, we can do that for you on our hot deals offering. Organic growth  continually search the market and deal with other agents to find very good investment deals. We then make them available to our investor club members who apply and qualify


QThe industry has gone through  a slump in the past few years and returns are not a high as they were 5 yrs ago and I’m not sure whether it is the best investment portfolio

A. Even in  “bad times” residential property is excellent. You are investing the bank’s money and getting tenants to pay off the bank. You only pay  a portion yourself. So if you invest R40 000 in cash to purchase a R 500 000 property ( R 460 000 bond) ; say you only get a return of 8% per annum on the R 500 000 ( assuming you paid in cash for the whole property) i.e. a return of R 40 000.

BUT since you only invested R 40 000 of your own money, your returns on your own cash invested in year 1 are 100% and it gets better when the market improves!


Q  I work for myself and I don’t think the bank will give me mortgage.

A Firstly don’t disqualify yourself. The banks do look at sole proprietors, but they are fairly strict and require additional financial information and over a longer period. If you are running a profitable operation and have done so for a few years, there is no reason why you can’t obtain a bond. If they really get sticky,call us, we have ways and means to get around this.

Q Where do I start and how do I start investing ?

Step one would be to subscribe to our Organic Growth mailing list. You will receive an email approximately every week with investment insights and tips. (Green subscription forms are found on the top right hand side of almost every page on this website)

Step two would be to read our Property Investment 101 [click here]

Step 3 Do the Residential Property Investment 101course which will set you up to begin investing yourself [click here]

Step 4 Join the Club. [click here]

The Organic Growth Investors Club provides coaching and hand selected property deals sourced from our associated estate agencies

Q. How do I get into property investment? Is it easy? Possible?

It isn’t easy if you go it alone, you stand make many unnecessary  mistakes and even lose money.

Step one would be to subscribe to our Organic Growth mailing list. You will receive an email approximately every week with investment insights and tips. (Green subscription forms are found on the top right hand side of almost every page on this website)

Step two would be to read our Property Investment 101 [click here]

Step 3 Do the Residential Property Investment 101course which will set you up to begin investing yourself [click here]

Step 4 Join the Club. [click here]

The Organic Growth Investors Club provides coaching and hand selected property deals sourced from our associated estate agencies


Q. My biggest challenge is funds..How to go about that one?

This is the difficulty faced by many investors at present while the banks sort out their liquidity. Fortunately we are already seeing the money supply ease up and there is hope on the horizon.

Saving up a sizable deposit and investing only in very good areas goes a long way to assisting the process of bond applications.

Look around, a simple rule of thumb – watch the media to see which bank is advertising homeloans, they will be the hungry-est for your business


Q Very well done on your latest article. I wanted to ask you something as I was a bit confused on the transfer costs for a new developments…I was under the impression that if you buy a property from a developer (most probably a VAT vendor) then you don’t pay transfer costs, but rather VAT, is that correct?

A No, the developer pays VAT and it is included in the price  ( so you pay it eventually) . Nowadays though, the bulk of transfer costs are attorneys costs, not a transfer duty…the first R600 000 has no transfer duty at all. The law says that you either pay VAT or transfer duty. Since developers normally have to be VAT vendors, they pay VAT and pretend that they are doing the buyer a huge favour by paying transfer duty for them.

But not all developers are equal. Some will include the bond registration costs too. For a breakdown of costs click here  https://fninc.co.za/calculators.asp  scroll down on their webpage and you can see where the costs are incurred.

 Q cont : And if so, does that mean that you will actually be technically paying more ‘transfer costs’ at a rate of 14% (VAT) rather than 3% to 6% rate for transfer costs on a second hand townhouse?

A Yes and amen, but it is hidden in the purchase price and is bondable.

Q I own a unit in a sectional title complex. The BC recently called in plumbers to install a water pressure valve in a service duct that apparently only impacts my unit. The bill was subsequently passed onto me. I disagreed given this was on common property and not near my unit even though it controls pressure eventually fed to my unit. The BC has quoted rule 68 (vii) which states that I’m responsible for the heating installation and their stance is that it stands to reason this includes piping etc. I’m not convicted about this interpretation though. The geyser and related piping in my unit I would understand, but surely not a pressure valve controlling the supply to me from common property? Your thoughts?

A Answer provided by Gerhard Faurie of Faurie Nell Inc 

Hot whole water supply in sectional title is the exception to the rule that the BC covers the costs of common property repairs

Essentially there are three classes of property in Sectional Title

1.                   Common property

2.                   Sections that belongs to the respective owners

3.                   Common property to which certain owners have exclusive use

Insofar is number 1 above is concerned the body corporate is responsible for the maintenance of common property. The body corporate will attend to and/or pay for maintenance of the common property. Hot water systems situated in or on the common property however is the exception to the rule. The whole hot water system is the responsibility of the owner it serves and therefore the person/s served by the hot water system will be responsible for the maintenance

The relevant section of the Regulation 68(1) (vii) provides as follows –


68(1) In addition to his obligations….an owner –

(vii) shall maintain the hot water installation which serves his section, or where such installation serves more than one section, the owners concerned shall maintain such installation pro-rata, notwithstanding that such appliance is situated in part of the common property and is insured in terms of the policy taken out by the body corporate