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Types of Businesses to Start

Forget Stock Markets – Think House Flipping

If the idea of stock markets and asset management firms to make your money grow aren’t for you, take a look at how house flipping could generate the wealth you want.

Lisa Witspeski

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House-flipping

The flippers’ perspective

Alison Steven and her husband, Stewart, purchase one house every year to renovate; using the proceeds from their sales to pay for their children’s school fees. They have been successfully following this formula for four years.

What’s the best way to finance your flipping project?

We use the access bond on our personal home, which is almost fully paid off, to finance the houses we buy to flip, so we don’t need to take out another bond.

The advantage of this approach is that we don’t have to wait for a bond to be approved; plus, as cash buyers we’re in a stronger position.

A bank might be reluctant to grant you more than one bond, as you become a greater risk for them. On the other hand, we’re now bearing the risk. If the project goes pear-shaped, we stand to lose our home.

Related:  Top Tips on How to Flip a House

What are the costs involved?

The bank will lend you the amount that the property costs, but it won’t give you money to cover the holding fees or renovation costs, so you need to factor these in. You also need to budget for transfer fees, which come to around 8% on any amount over R600 000.

So, if you buy a house for R1 million, you’ll pay transfer fees. Then, there’s interest on your bond, building costs, and it will take around two months to do the renovations.

Then say it takes three months to sell the house and the further costs if you sell through an estate agent (5% commission plus VAT).

All of this eats into your final profit, and makes margins quite tight. We choose one estate agent to work with but we don’t issue a sole mandate; that way, we can advertise on Private Property. Of course, we don’t mind paying an estate agent if they can get a higher price that covers their commission.

How much should you look to spend on renovations?

Alison-and-Stewart

We usually spend around R200 000 to R350 000, which covers refurbishing the kitchens and bathrooms, re-tiling the unit and repainting the property. A bathroom will cost between R30 000 to R60 000, depending on finishes. Painting the exterior and interior costs about R60 000.

Kitchen renovations cost between R60 000 to R80 000, depending on whether you instal cupboards or re-use the existing cabinets and replace the doors. You also need about R20 000 for new light fittings. Labour and building costs come to around R40 000.

This may include jobs like replastering and moving doors. We also redo the gardens, putting in new grass, and we spend a further R20 000 on staging the property for sale.

This isn’t always necessary but we’ve found that people need help visualising and conceptualising rooms – often, they don’t know how a space should be used. Rooms also look bigger when they have furniture. This helps the property to sell more quickly, so you pay less on holding fees.

How do you avoid investing too much in the renovation?

When I purchase a property, I ask to see a Lightstone report, or similar. This is obtainable, free of charge, from any estate agent.

This tells you the amount that was paid for all the properties in the area, when they were sold and the size of the land and the houses. This is important information, because the asking price seldom matches the selling price.

How much profit can you make?

We usually purchase houses for around R1 million to R1,5 million and sell for about R2 million to R2,5 million. It really depends on what we have to spend and what, realistically, the market will pay.

We only buy in our neighbourhood (Douglasdale/Olivedale) because we know the area extremely well. I have visited almost every house on show over the past eight years, so I know what properties sell for.

What are the potential pitfalls?

It all comes down to the quality of your contractors. My husband has experience in construction and we have a building team that we have worked with for many years. We actively project manage every renovation, so this mitigates risks.

The good thing about spending so much time on site is that you can see if something needs to change and accommodations must be made, which is important because building is not an exact science.

All the same, it’s difficult to find electricians, plumbers and carpenters who are reliable and available. Before you hire anyone, ask to see their work – even the most expensive tile looks nasty if it’s badly laid, so it’s worth getting things right. The quality of workmanship is imperative.

The Stevens’ top tips for renovating

  • Most important: Never skimp on finishes. Use the best quality, as buyers are savvy and can see through cheap fittings and fixtures. Using the best will help to sell the house quickly.
  • Keep your palette of colours neutral so that you appeal to as many buyers as possible.
  • Buy big tiles (600mm x 600mm) for the best price possible (shop around – you can get them for R100 to R150 per square metre if you’re lucky!). If your tiler is great, they will look like they cost R400 per square metre!

Related: Buying To Renovate? Consider This First

Lisa Witepski is a Johannesburg-based freelance journalist and editor whose work has appeared in most of South Africa’s major magazines, including Cosmo, Women’s Health, Shape, Destiny, the Oprah Magazine, Women & Home, Financial Mail and Longevity. - See more at: http://www.mybalancingact.co.za/looking-back-looking-forward#sthash.4P3SErVo.dpuf

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1 Comment

1 Comment

  1. Sharlene L Rowett

    Feb 3, 2016 at 14:47

    Can this be done as a business? My son and I are considering pooling our resources, starting a business, buying houses, renovating them and selling them. We have a construction co that will renovate for us. Since we are buying and selling CGT shouldn’t apply, just normal company tax.

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Types of Businesses to Start

(Infographic) 5 Best Online Businesses To Start Before The Year Ends

The internet provides a number of opportunities for aspiring entrepreneurs.

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There’s no better time to start an online business than right now.

Today, most retailers are finding that a good deal of their sales come from online shoppers. However, it doesn’t stop there – nearly every industry is moving online. So if you’re thinking about starting a new business venture, you should think about how to put your skills to use on the web.

Not sure what type of online business you should start? Easy. Sell what you already have: your knowledge. Offer your knowledge or expertise in a package, for example in the form of an ebook or a webinar.

If your talents lie in creating things, then launch an Etsy or eBay channel and sell your crafts online. In 2016, Etsy sales reached $669.7 million – an increase of more than $100 million from 2015. For some inspiration, check out Distributel’s infographic below.

starting-a-business-online-infographic-1

 

Related: Hate Being Stuck Behind a Desk? 7 Business Ideas for You

This article was originally posted here on Entrepreneur.com.

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Company Posts

Business Opportunities In Printing And Signage

The event is taking place from 12-14 September at Gallagher Convention Centre.

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In an entrepreneurial environment, people are seeking innovative ways to make extra money. The signage and printing industry offers opportunities for small start-ups or those looking to grow their businesses.

These opportunities will be showcased at the upcoming Sign Africa and FESPA Africa expo, which is co-located with Africa Print for commercial print solutions and Africa LED for professional LED lighting. The event is taking place from 12-14 September at Gallagher Convention Centre.

T-Shirt and Bag Printing

Embellishments and glitter help transform a simple shirt into a unique garment, and depending on the specific shirt and techniques used, it could become a high priced item. Shirts and bags can be customised, a key aspect to targeting millennials, who require unique products, want to stand out and want items that are Instagram-worthy. You can target this market with personalised bags and unique T-shirts, which do not require large and expensive equipment to produce.

Mugs and Promotional Gifting

While others may see public holidays as opportunities to relax, entrepreneurs can see them as money-making opportunities. Capitalise on trendy markets and popular holidays such as Valentine’s Day, Mother’s and Father’s Day by producing themed and personalised gifts. Other profitable options include: shopping bags, decor and invites, promotional, corporate and safety wear, wood, vinyl, paper, plastics, metals, flat substrates like clipboards, binders, notebooks, mouse pads, coasters, business cards, stickers and corrugated signs or posters, smart phones and tablet cases.

Related: Move Your Brand Forward With Eye-Catching Vehicle Wraps

Vehicle Wrapping

Business owners are constantly seeking ways to get their brands noticed. And with all the gigantic billboards, street pole advertisements and other media vying for consumers’ attention, it’s difficult to stand out. Enter vehicle wrapping, which is an effective promotional tool as it’s cost-effective, impactful and long-lasting. Besides cost-effective general wraps for corporate fleets, custom vehicle wrapping offers special effects that create Instagram-worthy wraps that get brands noticed.

Of course, these business opportunities require training and some research. Luckily, industry experts will be available at the Sign Africa and FESPA Africa expo to answer visitors’ questions. There are also free educational features such as a T-Shirt and Bag printing workshop featuring demonstrations by local experts on T-shirts and bags with speciality printing techniques as well as the Textile Experience, which shows how to screen print onto T-shirts.

Opportunities for small start-ups or those looking to grow their businesses will be showcased in daily 30 minute Business Opportunity sessions. For more information about the event, and to register online, please visit: http://bit.ly/EntrepreneurSignAfrica.

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Types of Businesses to Start

10 Businesses You Can Start Part-Time

Find your perfect match for a successful part-time start-up.

Nadine Todd

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Launching a company – even if it’s operated part-time – is all about drawing on your skills, talents and interests to create a viable business.

What you know and what you’re good at form a good basis for a part-time business because these companies either become an extension of what you enjoy doing most or they are based on your strengths.

Working part-time while still maintaining a permanent job is time consuming and often exhausting, so choosing what you take pleasure in or are good at can keep you focused and motivated. The right fit is important when it comes to launching a part-time business. Selling a service rather than a product does not require large start-up costs, which means you can grow your business without financing until it becomes self-sustaining.

Corporate Communications & Promotions

Corporate communications covers a host of areas, mainly because this is the sector that takes care of how companies look to the outside world – something that is very definitely a service, but also that is not often taken care of in-house. If you can write, edit, have a knack for advertising, can take photographs or create promotional and corporate videos, you can offer your services part-time to companies both large and small that are in need of these services.

Contents

  1. Public Relations
  2. Freelance Photography
  3. Corporate Videos
  4. Small Business Advertising Agency
  5. Writing, Editing and Proofreading Services
  6. Internet Marketing Consultant
  7. Web Design
  8. Tax Accountant
  9. Business Consultant
  10. Business Plan Consultant
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