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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

A Step-By-Step Guide To Selling Consulting Services

Do people often ask for your professional advice? It’s time to start charging for your consulting sessions.

Alex Berman

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Ever since I launched my YouTube channel where I talk about different strategies regarding B2B selling and inbound marketing, I’ve gotten a lot of requests from my audience to hop on a call with them and help them out.

This is how I got started offering consulting services to different companies and entrepreneurs. Based on what I’ve learned, here’s how to structure these consulting calls so you can start selling them on your own.

1. Selling

I usually use a pretty simple email whenever I’m asked a detailed question that requires a decent amount of my time.

Email correspondence

This email includes the price for the consulting call, which can vary, but generally starts at $300. Usually, that email is enough to get viewers to buy in.

Related: 5 Secrets Of Communicating Effectively With Your Customers

You want to price your consulting services in a way that it makes you want to work for that amount (even if you’re not in the mood). By charging a certain amount for the consulting call, you make sure that you’re adding value and the other person is also taking your notes more seriously.

2. Mindset

For those who are just getting into coaching and consulting, the best way to start is to assume that the person on the other end is going to get good information out of your session.

People usually join a coaching session either because they have a burning problem or they are so close to a solution that only few words are enough to solve it for them.

In some cases, people paying for a consulting session already have an idea or solution to a specific problem, but they want to have your ideas or expertise.

It is important to remember that the person won’t reach out to you for coaching if she didn’t like something about what you’re doing.

3. Scheduling

To get this meeting on the calendar, I use a tool called Calendly. There are a bunch of alternatives out there, but Calendly is a pretty popular solution.

Related: What Really Drives Sales Growth And Repeat Business?

The tool is free, but I use a version that charges about $10-$15 a month and plugs directly into my Google calendar. There are a lot of similar tools out there that you can choose from if you don’t like Calendly.

4. Payment

I recently discovered and started using Google Wallet. It is a free tool from Google and its pretty similar to Venmo. It allows you to input your credit card info and the amount billed is directly transferred to your account on the same day.

Related: How To Seal The Deal By Understanding The 3 Phases Of The Customer Buying Cycle

I’ve previously also used Venmo and Paypal, and as a company (Experiment 27) we used Chargebee for a while. With Chargebee, we had a problem where it would mess up our revenue numbers and our churn rate.

A lot of these coaching sessions are one- or two-time purchases for a very small amount of money compared to our main service offerings, so it would mess up our purchase rates.

Setting up a Google Wallet account is pretty simple and it also provides invoices. The last coaching session I did, an invoice was paid within two hours.

5. Process

It is important to know whether the person purchasing a coaching session is getting value out of it.

Related: Why Customers Don’t Respond To Disruption

I picked up this idea from someone with whom I used to do a bunch of coaching sessions who runs his coaching session using Google docs.

He opens up a blank Google doc at the start of a coaching session and adds notes there. Using that model, my clients and I go over different goals and questions by writing them in a Google doc and I also assign homework.

Here’s an example of a document like that.

Sales Coaching

And because all of it was done in a Google doc, everyone has easy access to it. At the end of each coaching session, I think it’s necessary to have a homework assignment that would set up the attendees on something to work for the next week.

Bonus: Should your consulting landing page have short or long copy?

There’s been a long debate among the copywriting community about whether short copy or long copy is the best. Some say that you need long landing pages outlining data point after data point in order to make someone take action and buy your services.

But, there’s another group of copywriters who believe that the short copy is more effective because of its to-the-point approach and easier click and buy operation. There are always two sides to all advice, but for us, short copy didn’t work.

Our coaching funnel normally consists of our clients watching a YouTube video and then booking a consulting call directly.

Related: 3 Strategies For Closing Sales Without Picking Up The Phone

The clients would usually find the consulting page and would be welcomed by the headline, “Want me to help you double, triple or maybe even quadruple your revenue for the next quarter?”

Our landing page was converting about two clients a week who wanted consulting services on how to improve their agency business.Being a fan of testing, I thought we could do better.

My favorite coaching page of all time is one that is literally a picture of the coach’s face along with a description that says “Did you know Neville takes on four different private consulting clients?” along with one paragraph of copy and a “buy now” button – that’s it.

So, we wrote a version of our consulting page based on Neville’s, but we saw our conversions drop from where they were before down to almost zero. We had just one conversion for the entire month that we had this landing page.

Since this approach clearly wasn’t working for us, we changed back to our previous landing page. We kept a few items from the other approach.

For example, we changed the pricing section and began offering consulting packages. Having packages on the copy page increased the revenue dramatically.

Related: What Really Drives Sales Growth And Repeat Business?

The other thing that this experiment taught us is that we needed a more intense email drip to sell people on coaching. We rewrote our email sequence, which is now a five-day drip in which we basically hard sell people on coaching as they sign up for any of our lead magnets on our YouTube channel.

Even though the short copy approach wasn’t right for us, we did gain some valuable insights from the experiment.

This article was originally posted here on Entrepreneur.com.

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Types of Businesses to Start

Want To Start A School? Your Guide To The Education Sector

The education sector continues to show remarkable growth and opportunity as the private sector fulfils the increasing need for quality education in South Africa.

Nicole Crampton

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education

“The education sector is interesting as it’s one of the few sectors in South Africa showing very strong fundamental growth, almost independent of general economic growth,” says Rory Ord, head of unlisted investments at 27four Investment Managers.

“Education is highly demanded across all sectors of South African society, and this ties into a global trend of increasingly educated populations.”

Demand creates an opportunity for the private sector

There are two major themes in education that make it interesting from an investment perspective.

“First, it’s clear that government cannot meet the demand for the different levels of education required by South Africans, and neither can it meet the standards required on a very large scale,” says Rory.

He adds that beyond the top performing government schools and universities, the population using these services want better education and many are willing and able to pay for it. This has created an opportunity for the private sector, which has experienced huge growth in private schools, to the benefit of companies like Curro and ADvTECH.

“Both companies have grown strongly in recent years, with Curro achieving higher percentage growth off a lower base. Curro has been highly valued by investors who have been willing to pay for the expected growth. ADvTECH is a bit more mature as a business, but has still delivered growth of 20%+, and on a much lower earnings multiple. Private education is still a small percentage of the whole, so expect more growth, but it does take time to deliver this growth in large numbers,” advises Rory.

The investment opportunity of education technology

investment-opportunity-of-education-technology

“The second theme,” Rory says, “is how technology can increase the penetration of quality education. In essence, the way education is delivered has not changed with the advent of technology, but there are many areas where change is possible.

“The best example of this in South Africa is GetSmarter, which partners with global brand universities to provide high quality online short courses. Founded in Cape Town, this business was acquired by 2U, a US based company doing similar things in 2017, for R1,4 billion.

“Technology also promises more focused learning by tracking the progress of each student and adapting to make sure no child is left behind. We expect plenty of disruption and change in this part of the market.”

Related: How GetSmarter Got Smarter

What’s next for education?

In the unlisted space, Milpark Business School was bought out by private equity buyers several years ago and has recently been purchased by Stadio, Curro’s tertiary education spinout and Brimstone Investment Company. A third theme is consolidation. Scale is important in education and established players with capital are likely to continue purchasing smaller players to achieve this.

What the education sector looks like today

The education sector is divided into three separate investment and business opportunities, namely: High income schools, low income schools and franchises. Before investing in any of these sectors you’ll need to understand them.

Low income schools

Low-fee or independent schools are growing at a rapid rate in South Africa. In its 2015 report, Low-Fee Private Schools: International Experience and South African Realities, the Centre for Development and Enterprise (CDE), reports that low-fee private schools that charge annual school fees of less than R12 000, are educating an estimated 250 000 learners. The schools fill in the education gap left by insufficient or dysfunctional public schools in disadvantaged communities.

“The private education sector is not well researched or understood,” says Jane Hofmeyr, policy and advocacy director at the CDE. “But there is considerable potential with new players, local and international, coming into the market, looking for opportunities in South Africa and Africa.”

The growth in the independent school industry emanates from for-profit and not-for-profit chains of private schools at all fee levels. The main source of income for low-fee independnt schools is school fees, government subsidies and donations.

Investors in this sector face a number of challenges. A convoluted regulatory environment can impede the establishment of new schools. You’ll also face high compliance costs, and more accountability with severe sanctions for non-compliance. Further challenges are acquiring affordable premises, high teacher turnover and late or non-payment of school fees.

High income schools

ADvTECH, a listed private education provider, reported a 22% rise in revenue to R2 billion for the first half of 2017. Operating profits grew by 28% to R344 million, while earnings climbed 6% to 38,6 cents per share, and a dividend of 15 cents per share was declared. ADvTECH’s schools division comprises 90 schools across 47 campuses under the following brands: Abbots College, ADvTECH Academies, Centurus Colleges, Crawford Schools, Junior Colleges, Maravest Group and Trinityhouse.

There are also challenges in this sector: “The difficult economic climate and unsettled socio-political environment had a more significant effect on enrolment numbers than had been anticipated. We have seen a consistent rise in the number of families emigrating and this trend had a negative effect on enrolled numbers as we lose students in grades where it is difficult to replace,” says ADvTECH. “In addition, we have seen an increase in withdrawals and exclusions as a result of financial pressures. Therefore, while actual new enrolments have been in line with expectations, net student numbers have been adversely affected by these two negative influences.”

These factors, along with costs of investments in greenfield projects and school expansions, are constraining profits.

Franchising opportunities

Education franchises continue to grow and spread across South Africa, fulfilling parent’s needs to invest in their children’s early learning and critical skills development through enjoyable, educational programmes.

Related: Enko Education Investments Matches Money With Passion


BIG DEALS IN THE EDUCATION  SPACE IN 2017

GetSmarter

SOLD FOR R1,4 BILLION

2U, a Nasdaq-listed technology education business acquired Cape Town start-up GetSmarter for R1,4 billion. GetSmarter was founded by brothers Sam and Rob Paddock. The education business focuses on developing online short courses in partnership with higher education institutions, including Cambridge University, Harvard University, the Massachusetts Institute of Technology and the Universities of Cape Town, Witwatersrand and Stellenbosch (Business School).

Both companies focus on delivering “high-quality, high-touch digital higher education from world-class colleges and universities,” said 2U in a statement.

Milpark Business School

SOLD FOR R320 MILLION

Milpark Business School was sold to Stadio, in partnership with Brimstone, for R320 million. Brimstone will pay R96 million for a 30% stake, and Stadio will pay R224 million for a 70% stake in Milpark Business School. Stadio, which falls under the Curro umbrella, says this acquisition is just the beginning; it intends to acquire several additional programmes, including degrees, higher certificated and diplomas.

Mancosa

Undisclosed

Yusuf Karadia sold Mancosa to UK private equity firm Actis, two decades after he launched the distance learning school to teach South Africans business skills. Mancosa is now a part of Actis’s expanding African higher education portfolio. Since 2014, it has spent R3.65 billion investing in educational institutes across the continent.


CURRENT OPPORTUNITIES IN THE MARKET

A+ Students

Creative Minds

  • Investment: R200 000 to R300 000
  • Contact: +27 (0)82 785 7763/ +27 (0)21 939 6344
  • Visit: www.minds.co.za

Innovatus FET College

  • Investment: R700 000 to R1 million
  • Contact: +27 (0)32 541 0045/6
  • Visit: innovatus.co.za

Kip McGrath

Kumon Education South Africa

  • Investment: R50 000 to R100 000
  • Contact: 0800 002 775
  • Visit: www.kumon.co.za

MiniChess South Africa

Sherpa Kids

Young Entrepreneurs

  • Investment: R350 000
  • Contact: +27 (0)87 287 4038/ +27 (0)82 442 6267
  • Visit: www.younge.co.za

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Types of Businesses to Start

10 Business Ideas Ready To Launch!

Where do you find a good business idea? Right here. Here you’ll find several innovative business ideas that are ripe for plucking.

GG van Rooyen

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Where do you find a brilliant business idea?

It’s not as hard as it may seem at first. In fact, the idea is arguably not all that important. There’s a reason investors talk about backing the jockey and not the horse: It’s often not about the idea, but the execution.

A great entrepreneur can turn even a mediocre idea into a success; all that’s needed is a USP and great customer service.

That said, some ideas are undoubtedly better than others. And some businesses are easier to get off the ground. In the following pages you’ll find a curated list of business ideas that have reached a point where they’re just waiting to be exploited.

Related: 20 South African Side-Hustles You Can Start This Weekend

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