My daughter and I would like set up a partnership and build...

My daughter and I would like set up a partnership and build low cost rental housing. What advice can you give in terms of funding in order to get us started up?

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Vinolia Mashiane, investment officer at the Gauteng Partnership Fund (GPF) advises that in order to get started with your low cost rental housing project, the GPF will be a right place to start!

At GPF there is a programme called the Entrepreneur Empowerment Property Fund, this programme is an incubator programme designed to promote participation of previously disadvantaged owned companies in the affordable rental property market, especially companies with funding constrains.

The programme is limited to prospective participants invited on public tender annually. You can refer to the advert which is currently running in the Newspapers i.e, The Star, Sowetan, Sunday Times , you can also refer to the GPF’s website. The closing date for prospective participants who will be part of the programme for 2012 is 31 October 2011.

Perhaps the first step is to focus on a business plan that looks at mainly the merits of the projects (feasibility, technical issues etc.).This will enable you to approach potential debt funders. Financial institutions typically provide 70% of the project capital and would expect the balance to be funded by yourself.

There are institutions such as GPF that can assist with 20% towards rental projects capital. Considering you are a start-up I would suggest you ensure you have:

  • An experienced professional team to assist the project planning,
  • Consider procuring a competent contractor to build,
  • Consider appointing a reputable property manager to manage the rental stock. This is key because your project cash flows rely on your ability to collect rent from your tenants.

GPF has a business plan guideline and project checklist that can assist you on developing a project proposal please visit our website www.gpf.org.za.