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?
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!
6 Steps To Building A Million-Dollar Ecommerce Site In 60 Days
Jared Goetz spent only 30 minutes a day and built a colossal Shopify sales machine.
Jared Goetz, serial entrepreneur and member of The Oracles, always had a knack for reaching an audience. At 26 years old, he’s co-founded four multimillion-dollar companies.
Whether he’s throwing the world’s largest foam party with fire breathers and circus acts (“Electric Flurry”) or selling inflatables to college students via viral campaigns (“Dumbo Lounge Sacks”), this serial entrepreneur knows how to turn an audience into a profit machine.
His latest venture, The Gadget Snob, is no different. An ecommerce store that supplies everything from jet-flamed pencils to laser keyboards, Goetz took his business from zero to $2 million in 60 days by plugging into the right audience. That’s no small feat in a competitive industry forecast to surpass $4 trillion in sales by 2020.
Goetz’s secret sauce to reaching the masses? Experimentation. As he explains, “You don’t know what people will respond to until you try a lot of things. Don’t be afraid to think outside the box.”
Goetz shares six key components to building his million-dollar ecommerce store and turning profits in less than a business quarter.
1. Don’t reinvent the merchandise wheel
“Many owners think they have to reinvent the wheel with the merchandise they sell,” Goetz explained. Instead, he suggests focusing on products with a proven track record of success. “An easy way to spot a market trend is gauging how a product performs on social media. If an item is getting 10,000 Facebook Likes in less than a few hours, that’s a tell.”
When choosing merchandise, it’s also crucial to differentiate between commoditised and unique products. Commoditised products are widely available. Unique products are less accessible handmade or niche products that aren’t mass produced.
“If you go niche, gauge demand first. Observe what people are looking for. You might be surprised to see what’s selling.”
2. Create a formula, then rewrite it
Ecommerce comes down to a formula, Goetz says, and the outcome is affected by different variables: Product, advertisement, landing page optimisation, and customer lifetime value.
“Once you figure out what produces the best margin, copy that. Most who fail in ecommerce are 90 percent there but haven’t worked out all the variables in their formula,” Goetz shares.
For Goetz, a pivotal variable was drop shipping. “I spent a lot of time bootstrapping my earlier companies. Drop shipping was a game-changer because it allowed me to advertise before securing the inventory, yielding greater outcomes.”
3. Build a legit Shopify store
A successful Shopify store must win confidence. “In the sometimes-fraudulent digital ecosystem, you have to earn a consumer’s trust,” Goetz says. “A money-back guarantee and free shipping guarantee are great places to start.”
Goetz also suggests choosing a theme that’s congruent with your industry. “With branding, you want to look professional, not spammy or creepy.” Gadgets are fun and technical, so his site has bright colours and precise language. “If I were running a men’s fashion store or toy store, I’d change my theme to match the merchandise and brand. Branding is key to converting customer views into sales.”
4. Find winning ads with huge ROI and scale
For Goetz, marketing comes down to one word: testing. “The only way to find out what works is to test it many times,” he says. “Test 10 audiences on each product, so you know where to invest your energy.” For The Gadget Snob, Goetz hired an ad manager to optimise Facebook campaigns. “When you strike gold with a successful ad, replicate it, but scale incrementally to ensure you’re staying targeted.” He suggests increasing ad spend 20 percent per day, not 500 percent.
When building campaigns, it’s also vital to use language that’s shareable and creative. Sales psychology is your friend. From his perspective, classic scarcity techniques have been around for centuries for a reason. “Try incorporating a quantity incentive: if you buy one, it’s full price; if you buy two, it’s 50 percent off and so forth.”
“Creating an email list is also vital. Email campaigns have a higher conversion rate than cold Facebook campaigns, and you can incentivise email campaigns with rewards. You can make money by merely pushing ‘send.’”
5. Hire a VA, then specialists
For Goetz, hiring a virtual assistant was essential to scaling. “At first, my VA helped with everything,” he says. Once his site got off the ground, Goetz hired people with specialised jobs for specific tasks.
He also stresses the importance of universal procedures. “Having clear onboarding processes and procedures is key to growth. Make your systems as easy as possible because while you might have 100 orders today, tomorrow you’ll have quadruple that.”
6. Get your customer support airtight
For a store to operate at full throttle, Goetz stresses the importance of customer support to maximise your profits. “You need your customer support to be airtight and available 24/7,” he says. “Online shopping goes all night and people place orders at all hours.”
To support questions and concerns, Goetz says that live chat and around-the-clock customer service is a must. “In our era of Amazon Prime, customer service expectations have never been higher, he says. “The last thing you want is a minute hiccup or technical goof obstructing a sale.”
Ultimately, ecommerce allows entrepreneurs to reach untapped markets and reap the rewards. As Goetz puts it: “My ecommerce site affords me ultimate freedom.” By following a few basic steps, you, too, can build a Shopify store to run from anywhere in the world, and perhaps even create your own million-dollar sales machine.
This article was originally posted here on Entrepreneur.com.
10 Businesses You Can Start Part-Time
Find your perfect match for a successful part-time start-up.
Start your part-time business today
- Public Relations
- Freelance Photography
- Corporate Videos
- Small Business Advertising Agency
- Writing, Editing and Proofreading Services
- Internet Marketing Consultant
- Web Design
- Tax Accountant
- Business Consultant
- Business Plan Consultant
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.
Are you looking for a business that you can launch in next to no time?
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.
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.
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.
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