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I would like to get started in the property sector. What should I know before starting a real estate or property related business?

You can start a business on a property if the land is correctly zoned.

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Estate.

The Basics

Knowledge and preparation are requirements for success in the property and real estate industry.

Related: What You Need To Know To Become the Next Property Entrepreneur

If you do not have skills in this industry, get some experience in the business first, such as working for a management company to learn the ropes.

Prepare a business plan

Before starting any business venture, a business plan is vital. One of the reasons that having a business plan is so important is that it will help you consider all the details of your business.

As you are working on your plan, you will probably find that there are many aspects of your new business that you have not considered.

For more information on how to write a comprehensive business plan, read Entrepreneur’s guide – How to Write a Business Plan: Step-by-Step Guide.

Sample Business Plans

For more information on what should be included in your business plan. Refer to one of our sample plans for guidelines.

Register the business

If you already have experience in the property management business, the next step is to find out what the legal requirements are.

Register the business entity you have decided on with Companies Intellectual Property Registration Office, (Cipro).

“You need to visit your nearest Estate Agency Affairs Board (EAAB) to establish what is required. If you are collecting rent and taking commission, you have to register with the EAAB,” says EAAB Representative, Thoko Makhubo.

More legal leg work

You will have to discuss the business with a lawyer to ensure you have all the necessary paper work.

Remember you will be signing management agreements, writing leases, evicting tenants, hiring repair staff and so on.

To get in touch with a legal expert or business in your area, browse through the Entrepreneur legal directory for options.

Sell your services

Once the business is set up, it is time to sell your services in order to recruit local property owners as clients.

You have to be able to show them that you are ready to manage their property and be the middleman between them and prospective tenants.

Be professional and kind. A prospective client is not looking for a person who appears inconsistent or unprofessional.

Background checks

Set up the business so that you can complete thorough background checks to insure proper financial responsibility on prospective tenants.

Being detail-orientated will increase your odds of having reliable tenants. Rent or lease to tenants that meet all requirements established between you and the client.

Set reasonable rent or lease agreements. Having a good relationship with tenants may increase the odds of renewing their lease or rental agreement.

Related: How To Start A Property Development Business

In this kind of business, you need to register with a company such as TransUnion, South Africa’s largest credit bureau that manages credit information on both consumers and businesses.

Advertising property for sale and rentals through the internet

To offer a search engine service and advertising opportunities, you do not require a real estate licence, even though you are focusing on the property market.

“Providing that you are not earning commission from sales or rental of property, you do not need a licence,” says EAAB representative, Margie Campbell.

Contact the EAAB for more information.

Is property a viable business start-up?

Every city and town in South Africa has a set of regulations to control development. These regulations are determined by the zoning of the property.

A good source of income

A well-run property business can be an excellent stream of income, especially if you plan to lease the property to other businesses. A properly maintained and well-run commercial property gains value.

There are disadvantages

However, the disadvantages include the fact that you are tying up a large amount of capital. On top of this, you are responsible for the safety of the building – for example, you need to keep up to date with and implement fire and health regulations.

Related: Want To Start A Property Business That Buys Property And Rents It Out?

The building has to properly insured and as the owner/manager, security and general maintenance is your responsibility. If a tenant defaults in the payment of rent, you may incur legal costs and loss of income. All these issues must be considered in the business plan.

Choose the best location possible

The right location for a commercial property is vital.

Conduct thorough research to determine if the location will attract the right target market, be close to suppliers, customers or related businesses.

You need to establish if the venue will be convenient in terms of transport links for workers and so on.

Investigate Government Grants

It’s worth investigating Government grants and incentive schemes set up to tempt small businesses into urban areas, such as grants for inner city renewal projects, or cheaper premises for small businesses in designated areas.

To find out more about the various options available to you, you can visit our comprehensive funding directory.

Property zoning must be checked

Property zoning is set out in the Town Planning Scheme, which determines possible land use, floor area, coverage, building lines, parking provisions and so on.  Development of any kind is also controlled by conditions of title.

Related: Persistence Can Beat Any Odds Says The Founder Of Rebosis Property Fund

These conditions are set out in the Title Deed of each property, and can restrict the way in which a property may be developed. Approach the Town Planning Department and establish if any restrictions apply on the property you are interested in.

Can you change zoning regulations?

If a proposed property development requires a change of zoning regulations or an amendment of the title conditions, this can be done; but it requires an application and a formal procedure.

There are many different kinds of applications, all of which are technically and legally complex. Therefore, it is a good idea to seek professional help.

Depending on the type of application, obtaining a decision may take as long as 12 months.

Property legislation

Before you attempt to write a business plan, research Land Use Management Laws as well as other pieces of legislation that regulate commercial development including the National Building Regulations and Building Standards Act (Act 103 of 1977), the Public Health Bylaws and various other Municipal Bylaws.

Any development of land that does not abide by legislation and its various sets of regulations can result in prosecution.

Find a mentor

Seek help before you approach investors – look for a suitable mentor. The reason for this is that a mentor will help you prepare a business plan and will provide guidance and support.

A business plan is the blue print of a start-up business, so to speak, and reflects what you intend to do with your business.

Mentors have access to realms of information and advice, from training and mentoring, business planning, and registration of the business

Why is a business plan needed?

If you haven’t yet written a business plan, start writing one as soon as you can so you that can turn your idea into reality.

Related: Business Plan Format Guide

A business plan includes a funding plan, market research, sales, advertising and marketing plans. Once the business plan is in place, you would then be able to approach investors.

Getting funding

If you have a good business idea and a well-constructed business plan, there is no reason why investors will not support the buying of land and the required building costs involved in property development.

These issues should be included in your business plan, giving potential investors a clear blueprint of what they would be investing in.

Investors need to see a business plan before they will even consider lending money. Depending on the type of business you are setting up, the traditional way to raise money is to apply to a bank for a commercial property loan.


Related: Government Funding and Grants for Small Businesses

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1 Comment

1 Comment

  1. Thandolwenkosi Mathabela

    Sep 10, 2015 at 22:21

    This is very helpful. I will take these steps as I am a person who is very much interested in starting a property management company

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Start-up Industry Specific

How Do I Start A Transport Or Logistics Business?

An all in one guide to starting a transport and logistics business.

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Thinking about starting a transport business?

Forecasts indicate that the demand for freight transport will grow in South Africa by between 200% and 250% over the 15 to 20 years.

Some corridors, (high volume transport routes that connect major centres), such as the corridors between Gauteng and Cape Town (which amount to 50% of all corridor transport) will increase even faster.

The scope in the transport and logistics industry is varied – from a one-man show using a small truck to transport goods and offer services, to a fleet of transport vehicles which travel the length and breadth of South Africa’s roads.

Road transportation includes commuter transport from taxis to bus transportation.

It can be a tough industry and there are many threats facing transport businesses but if you get it right, you can build a successful business.

What is covered in this guide:

  1. How to start your transport and logistics business
  2. How to get funding for your transport business
  3. What are the costs involved
  4. Finding customers and getting transport contracts
  5. Getting onto suppliers lists
  6. Buying trucks and employing drivers
  7. What are the regulations and risks
  8. Where to find guidance to start your business.

Ready to get going? Click the arrow button to learn how to start your own transport business.

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Start-up Industry Specific

How To Start A Farming Business

Keep these nine points in mind when launching your new farming business.

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Start-up Industry Specific

How Do I Start A Security Company In South Africa?

There are two kinds of security companies, one that sells products and one that sells services or you can combine both.

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To start a security service company in South Africa you must register with the Private Security Regulatory Authority (SIRA). There are two kinds of security companies, one that sells products and one that sells services or you can combine both. It is estimated that the private security industry in South Africa employs over 400 000 individuals.

If you’re looking at starting a security guard company in South Africa, the following guide will be able to assist you in the deciding if it’s the right decision for you.

You need a lot of capital

Starting a security business requires a good deal of capital outlay and it’s highly recommended that one should have a background in this field.

Decide what kind of company you want to start

There are two kinds of security companies, one that sells products and one that sells services or you can combine both. Each sector falls under its own regulatory body.

What about area competition?

Greg Margolis is the CEO of NYPD Security, a niche security company that has operated for the last five years in the leafy northern suburbs of Johannesburg.

“To run your own security service company I think that you have to be well rounded in terms of not just being a good business person, but you also have to be a people person, a marketing person and know a good deal about the business.

“There’s tough competition, but I love what I do and wouldn’t sell my business even if I was offered triple what its worth. I am passionate about what I do”, says Margolis.

Starting a Security Services Business

To start a security service company in South Africa you must register with the Private Security Regulatory Authority (PSIRA). This includes paying a registration fee of R2 280 and writing an exam. Once you have passed the exam, proved that you do not have a criminal record, SIRA will conduct an inspection to establish whether or not your business meets the infrastructure requirements. A further fee of R1 710 is charged for the assessment. Each year the business is re-accessed which costs a further R500 plus the annual renewal fee or R520.

The following documentation is required for registration:

  1. An authenticated copy of the CM1, CM2, CM27, CM29, CM31 and CM 46 (apply at Registrar of Companies or Attorneys), if the applicant is a company;
  2. An authenticated copy of the Partnership Agreement if the applicant is a partnership;
  3. An authenticated copy of the trust deed and the letter of authorisation to the trustees from the Master of the High Court if the applicant is a business trust

Related:Steps for Setting the Right Prices for Your Security Business

Also required:

  1. The Suretyship form (SIRA 4) to be signed by the natural person who has taken full responsibility of the security business
  2. Every director, member, partner (as the case may be) applying for registration as a security business must have successfully completed, at a training establishment accredited in terms of law, at least, the training courses Grade E to B
  3. An authenticated copy of the Tax Clearance Certificate from the South African Revenue Service (SARS)
  4. An authenticated copy of the VAT Registration Number from SARS.
  5. An authenticated copy of the PAYE number from SARS
  6. An authenticated copy of the COID number (Compensation for Occupational Injuries & Diseases) from the Department of Labour
  7. Sufficient information in writing to enable the Authority to ascertain that the applicant security business meets the requirements with regard to the infrastructure and capacity necessary to render a security service;

This include, inter alia, the following:

  1. Submit a business plan to the Authority including the location and activities
  2. A resolution by the applicant security business stating that it will be able to operate for the next year
  3. The applicant proves that it has an administrative office that is accessible to the inspectors of the SIRA
  4. The applicant must have equipment which is necessary for the management and administration of the security business, e.g. fixed telephone, fax machine, a hard copy or electronic filing system for the orderly keeping of all records and documentation
  5. Show that the affairs of the applicant security business are managed and controlled by appropriately experienced, trained and skilled persons
  6. The applicant security business has at its disposal a sufficient number of registered and appropriately trained and skilled security officers for the rendering of a security service for which it has contracted or is likely to contract
  7. The security officers must be properly controlled and supervised
  8. The applicant security officer has at its disposal sufficient and adequately skilled administrative staff members for the administration of the affairs of the applicant
  9. The business must have has all the necessary equipment, including vehicles,  uniforms, clothing and equipment that must be issued to its security officers
  10. The applicant security business is in lawful possession of the firearms and other weapons that are necessary offer security services in respect of which it has contracted.

Related: Get going with a One Page Business Plan

Landing contracts

security-contract

The most important thing you can do to start and operate your own business is to develop a good business plan.

It’s invaluable because the business plan forces you to come to terms with your business. Selling the business concept seems to the problem, said Margolis. These are his five tips that will help to get the business going.

“The security industry in South Africa is very competitive. You have to get out there and you have to keep knocking on doors, there isn’t an easy solution”, explains Margolis.

Top Tips

1. Look at your business plan and decide if you have a competitive advantage. If not, work out how you can make the market understand the unique value your small business has to offer.

2. It is important to make yourself known. It isn’t difficult or expensive to increase awareness about the business. Attend ratepayer meetings, spend time at the local police stations, and attend meetings the police have with residents and businesses in the area. This way people get to know you and respect you and half the battle is won. Networking is the way to go.

3. It’s my experience that bigger companies are reluctant to give security contracts to a company that is a one-man show. Make sure that you have a structure in place. Clients need to know if something happens to you, the business will not fall apart, and the services they have paid for and you have agreed to supply, will not cease. Clients need to understand that besides experience, that you are credible and that all the checks and balances are in place. This must be one of the key selling points.

4. Consider taking on a partner. Choose a partner who has the attributes that you lack. The ideal partner would be one with strong links and contacts in the community that you want to work with. Let your partner control the selling side while you handle areas you’re strong in, such as expertise and service delivery. The other option is to employ sales staff.

5. Stay abreast of new trends in the field, and update your skills. This is something that I strongly believe in. You have to be well rounded in terms of not just being a good businessperson, but you also have to be a people person, a marketing and sales manager and know a good deal about the neighbourhoods you work.

 

Are you new to starting a business? Read 15 Things Every Newbie Needs to Know About Starting a Business

Security products

What are the requirements to start a security product supplier business?

If you are starting a security company that sells electronic alarm systems and other security products it’s wise to become a member of SAIDSA in order to provide your business with the credibility it needs to be taken seriously by the public and security service providers.

The objective of SAIDSA is to upgrade the quality and standards of electronic security and to protect the public from unscrupulous, “fly-by-night” operators. When a security system is purchased, an ongoing relationship is entered into between the purchaser and the security service company concerned.

The security service product supplier must have the infrastructure and the required expertise to support the relationship continuously.

Security Sector Regulatory Bodies

The security industry has established a number of bodies to regulate itself. Membership in these bodies is voluntary. They include:

Ready to get going? Here’s 10 Steps to Start Your Business For Free (Almost)

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