Karen Wheller

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Jul 01 2009
How to Avoid Electricity Arrears and Reduce Consumption
Thursday, 02 July 2009

It has been made public and final that Eskom has been approved a 31.3% increase in electricity tariffs from the 1st of July 2009. This is less than the 34% which Eskom asked for.

Eskom asked for an interim increase of 34% in tariffs until it finalizes its’ financing plans. However, the National Energy Regulator of South Africa (NERSA) approved only 31.3% at this time and also reduced the time to 9 months for this interim increase.

The decision for 31.3% constituted 25% increase that was project by NERSA in 2008 and 6.3% on inflationary count. The 6.3% inflationary count is lower than Eskom expected. When Eskom submitted the requested it calculated inflationary count at 9%. The increase itself is really 4 times higher than the current inflation rate; hence it stands to reason that both consumers and businesses are very unhappy about such a large increase.

That said it is to be remembered that some municipalities will put an additional markup in addition to these increases, which in effect makes the increase in tariffs even greater than the 31.3% which is only the increase that Eskom was approved.

The 31.3% also included 2 cents per kw/h environmental levy on non-renewable energy sources.

In summary Eskom had been approved 31.3% increase from the 1st of July, which is less than the 34% requested and also only for 9 months rather than the 12 months requested. That said if one is to add municipalities markup this 31.3% will be higher.

So what happens after the 9 months?

Jun 17 2009
Landlords Negatively Affected by Electricity Price Increases
Thursday, 18 June 2009

In May the South African media announced that Eskom Holdings singed a loan agreement of 530 million Euro, which is about 6.1 billion Rands for its’ capital expansion program.

Since 2007 many have said that electricity may increase in the next few years by as much as 60%. With Eskoms new loan developments it all makes sense why such assumptions could turn out to be very accurate, or even a very low estimate.

It was also mentioned that the loan is supposed to be paid back over a period of 12 years, but that said, it looks like consumers will start paying for this immediately because it appears that Eskom has hopes of finalizing an integrated funding model by the end of its current financial year and has, in the interim, requested a 34% tariff increase from the National Energy Regulator of South Africa (NERSA) for 2009/10.

Dec 29 2008
Treoc Way Cover Story on FM by Ian Fife
Monday, 29 December 2008

In the FM Cover Story was The New Paradigm the Treoc Way is Down.

You can read it here: THE "NEW PARADIGM" The Treoc Way is down [had to remove the link because FM removed the article].

My only question is: why did it take so long for people like Ian Fife to voice this? Treoc has been around for a very long time and Robert Kiyosaki in one of his visits to SA told Coert Coetzee the system is doomed to fail (because of the large shotfalls etc.)

At any rate, I hope investors that burnt their fingers in this learnt a few lessons and will carry on building property portfolio in a sustainable way and those that didn't invest yet, have tons of lessons to learn from the past several years to ensure they don't make the same mistakes as others did.

There is nothing for free out there, not even property to buy for free, no matter how many claims and systems some gurus sell to the public. In my opinion any person that wants to invest in property should invest first in themselves and learn about this asset class and learn financial management before they even consider putting an offer to purchase. 

Either way, property is still one of the best asset classes to invest in, given you know what you are doing and you learn first and act only after you know what you are doing. 

You may also want to read  How to Identify Fake Property Gurus .

Oct 28 2008
Residential property market is still on its way further down
Wednesday, 29 October 2008

It was brought to my attention that there are even more predictions about real estate going down for another 2 years or more.

Can this be true?

As with any prediction, it can be true as much as it can be wrong. But, in essence for real estate / property investors that have purchased correctly – this does not matter at all. Never did and probably never will.

Sure any investor can buy one or two wrong properties in their portfolio that don’t make much money, but one “sour lemon” has never been the “end of days” for any property investor.

Unless, of course there is the “but” again, and the “unless” again…. those are the only properties that the investor holds. Then this could be a big problem.

So, why in essence it doesn’t matter where the market goes?

Read More: Real Estate Still Going Down in South Africa  


Oct 21 2008
Can you become financially free fast with property investing?
Wednesday, 22 October 2008

Investing in real estate is not a new path to financial success. It is a well worn path and it is so well worn because it is such an effective way to make a great deal of money in a relatively short period of time, if you buy in the right time – more about this just now. But you have to be a forward thinker to make any serious money in the buying, selling or renting real estate.

The objective is to buy low and either sell high or have loads of rental income that you can live on for the rest of your life. That means that you must have the knowledge and understand markets extremely well and a few other things such as simple legal concepts and some tax and structures etc.

Some will say that you have to make educated guesses. I say you have to know your market and be knowledgeable enough to make sound and educated decisions.

There is always risk in any decision, the world does not work in 100% absolutes, but what would you rather risk 100,000 or 1,500,000?

It doesn’t take much thinking to say that 100K is far safer to risk than 1.5 million and much easier to get out of if you make a wrong decision.

This is the reason why education in property investing comes first, capital second and then investing third.

If you doubt this for a second think about this:

Oct 14 2008
The Secret to Real Estate Riches
Wednesday, 15 October 2008
According to the old real estate saying, “The only three things that matter in real estate are location, location and location.” The fact is that a ten bedroom, eight bath home with cathedral ceilings and a swimming pool that is sitting next to a garbage dump is nearly worthless.

That said the there is big misunderstanding about LOCATION, LOCATION, LOCATIONS concept.

It is true that a LOCATION is important in the overall decision to purchase a real estate investment property but that is secondary to the first and foremost important factor and secret about real estate riches.

The big secret is: CASH FLOW . In other words; you will find the secret of each investment in CALCULATING the NUMBERS .

The numbers will reveal to you exactly if the investment is good or bad. When you start playing with scenarios do your homework, understand the returns then….


You will uncover everything there is to know about each property.

That said, once you learn to start calculating property deals rather than just looking at the beautiful development, the sea, or the tiles, you will find some other surprises, some one may say even unexpected.
Oct 11 2008
Tenderfoot Education in Property Investing
Saturday, 11 October 2008

Back in the days of the wild, Wild West, when easterners traveled across this vast country looking for opportunity in the newly opened territories, they were often referred to as a ‘tenderfoot’. Though South Africa is not the Wild West, many say it is an emerging country.

The Wild West was emerging and maybe far from the development we see in South Africa today nonetheless, South Africa and many other countries are emerging both in real estate and property investing for many reasons including economic an political.

Sep 05 2008
Buy Property Offshore or Not
Friday, 05 September 2008

I see a few people and media talking about buying off shore since the South African property market is depressed.

But here is my take.

First of all off buying off shore can be a good property investment, but it is only good if the deal has value in it and will give the investor the returns they are looking for.

However that said, there is a problem.

Aug 26 2008
You can beat Telkom at their own game now
Tuesday, 26 August 2008

This blog is mainly written for the real estate agents, small business and people who basically hate Telkom. Now you have your chance to get back - big time - and even make a not so small fortune.

My last post was about Phonet VoIP , and I didn’t say much about what it was or why I ever got involved in it, but when I watched the Donald Trump video it came to mind that some people may be interested in other opportunities.

In this post I had some time to write more about this and why I got involved in VoIP. Some people that know me know that my background is in technology and my “second life career” is real estate, though I work in both even now.

I know for some this may be hard to imagine, but when you love what you do, you kind of seem to find 100 hours in a day rather than 24 and you seem to achieve stuff that you never thought possible.

So, what was it that got me involved in VoIP that was so aligned to both my real estate business and my property investing business and how can you do the same if you choose to?

Aug 25 2008
Got into property investing by mistake?
Monday, 25 August 2008

This video of Donald Trump below came to my attention recently.

What came to my mind when I was watching it is that so many people got into real estate in the boom market in South Africa, some without even thinking much about what real estate investing really means, or what it takes.

It was a boom market everyone was doing something in real estate, many people where selling the “financial freedom” through the asset class called real estate or property and since the market looked so good and so many people were buying it seemed like a very good idea.

Aug 04 2008
How to avoid repossession by looking at the installment sale option
Monday, 04 August 2008

These days repossession is very much on the high agenda in the property market. From purchaser looking for properties in execution and property in possession list all the way to people trying to find solutions to repossession or just wanting to buy a property when they can't get a bond or the bank home loans offer are not that great.

There is one subject though that is hardly spoken about and I find that quite sad and funny in the same time.

Lets look at the situation and how or why would an Installment Sale work......

Jul 31 2008
How to Indentify a Fake Property Guru
Thursday, 31 July 2008

I guess this post really goes for anything not only property investing or real estate. People beginning to invest in property are concerned about the advice they get from so called property investing gurus or real estate gurus.

There are so many people and organizations out there that give advice about property investing or wealth creation that at one point it was very hard to know "who is who in the zoo" and who to listen to. Now the jungle of advice is only getting bigger.

The thing is that it goes beyond just who is right and who is wrong and which “guru” to listen to.

So, if you want to learn more about who to listen to and how to identify fake gurus, here is the full story How to Indentify a Fake Property Guru .

Jul 31 2008
Huge Potential Impact on Developers and Property Investors
Thursday, 31 July 2008

This has been written on the Property Investor Network form by Donnie. It is only a quote. If you wish to know more please go to the forum to discuss.

Topic: Homeloan updates - By Donnie

Interesting stuff from FNB...received yesterday. This could have a huge impact on Developers and Property Investment Groups which promoted and sold mainly in new developments.

Dear Business Partner

In light of the economic downturn and the numerous interest rate hikes over the past months, it remains our responsibility as a credit provider to limit over-indebtedness. FNB has decided to re-assess certain home loan applications which have been approved and are not yet registered. This will happen on applications where we believe that the affordability or deterioration of the applicant’s credit profile may have changed since the date the application was originally assessed.

Applications which have been lodged in the Deeds Office or Registered will not be affected by this process.

It is important to note that not all applications will be affected; we are only looking at the following two categories of loans…..”


Source: Property Investor Network Forum

Jul 24 2008
Owners of CBI PrePaid Electricity Meters
Thursday, 24 July 2008

I found out from that the CBI PrePaid Meters that have been purchased by landlords and letting agents in the past are no longer supported.

I am not sure why or how this came about however; this is what I find from people that call to get tokens for CBI Meters which of course is not possible because the meters on PrePaid Meters are not the same prepaid electricity meters.

I heard that that CBI was providing meters for Eskom at one point in time, but no longer do that also from what I hear.

This does not mean that landlords should go without prepaid meters or prepaid electricity metering solutions or without tokens for electricity. What it does mean that they will likely have to replace those prepaid electricity meters now.

It stands to reason that this may not be the most wanted option to invest more in a new PrePaid Electricity Meter however the thought of generating arrears is far more unpleasant than just replacing a metering device with another.

Commercial Property Growth vs Residential Property
Monday, 16 June 2008
We are now coming out of a residential property boom that lasted a few years. Many property investors invested in capital appreciation, while some banked on the appreciation for re-sale and/or...
Read more at: Property Investor Network Campus
Jul 09 2008
Real Options for Overexposed Property Owners
Wednesday, 09 July 2008

In these tough times one of the most frequent questions is what do I do if I am over exposed and can’t pay the bond/s.

Here are some practical solutions out there that others have employed:

1.    If you can’t pay the bond but the transfer has not take place yet, in other words you have bought into a development, please read this article: Property Transfer Nearing No Money to Pay the Bond

2.    If you have too many properties and the bonds are "killing your financial position consider selling some urgently.

3.    If you can’t sell at the price you want consider reducing your price to sell at bare absolute minimum.

4.    If you bought to high consider selling below price and just remain in debt to the bank with a little amount of money (better in debt with for example 100,000 or 200,000 than repossessed or bankrupt, anyone can clear that amount of debt in a year or two or even three than have a bankruptcy on your head).

5.    If you foresee only a temporary set back, please read this article: What to Do When you Cant Pay the Mortgage Bond , it explains the entire process of banks helping people that are over indebted. The article also explains the process before the bank will reposes your property.

6.    Bridging finance - there are companies that will give you bridging finance but this will cost you an arm and a leg more often than not. This is an option nonetheless if you foresee this to be a temporary situation. But do take into consideration that you will have to provide some sort of security, these companies usually look at the property equity to consolidate debt and this also means that you must have some equity in the property. It is a complicated thing; get professional help if you get involved in such ventures you may lose your property through something like this anyway if you are not careful what you are doing. But if you know what you are doing and have a solid plan behind your recovery even the bank may help you (not only debt consolidation companies).

7.    The next question asked is how about re-financing to get temporary help with debt. Again, whatever you do get professional advice. But generally speaking if you are already in debt the bank won’t give you more debt to take upon yourself because that would be considered reckless lending. After the NCA banks try their best not to get people over indebted because they will be on the loosing end. That said you may be able to work out with the bank a better situation. Turn to them because they have opened centers for their indebted customers. This means they want to help rather than lose more money. Don’t think that they are doing you a great favor because they are not; they are helping themselves to ensure they don’t lose the money they lent you in the first place.

The options in this blog post are something things that have been employed by other people in the market. This is not financial advice and please what ever you do, get professional help if you are over indebted and above all speak to your bank before the proverbial *sht* hits the fan, you get more chances to come out smiling after these difficult economic times if you act promptly and in the right time.

Jun 27 2008
Treoc Way Opinions and Reviews
Friday, 27 June 2008

Since I have had this blog, I keep getting emails asking me what I know about Treoc Way or the Treoc Club, about Treoc Trusts and so forth.

I have an opinion about a lot of things, but Treoc is a company and since I am not a Treoc member anything I say may not be of value because I have not experience with Treoc services nor the Treoc Way so to speak.

However, on the community forum of , I do know there are people who have been in the Treoc Way, or are still in Treoc Club and follow the Treoc Way. Of course I am not posting their website as all the questions are for an independent opinion and I assume you have been to their website already, so here it goes.

Jun 17 2008
How do you know the nation is over indebted?
Tuesday, 17 June 2008

Now it has become a simple matter of looking at banking services.

When major banks are setting up services and call centers to help their clients that are over indebted, you know there is a big problem. No bank will dedicate staff and call centers and pay these people to help out 1 or 2 people. So, it stands to reason that the problem is progressively getting worse.

Lately from the information I have received both FNB and ABSA have set up specific call centers and staff to deal with over indebted clients.

FNB came up with a call center for people that can’t pay their bonds...

Jun 06 2008
108% Mortgage Bond Discontinued from Nedbank
Friday, 06 June 2008

I started writing about this mortgage bonds offers a short while ago, how banks slowly and surely are taking back the excessive gearing offers for property finance.

Next in turn is Nebank. No more 108% mortgage bond, it is now discontinued

And it always come with more as they say....

Now also the first time buyer offer has gone down to 750,000 (excluding costs) and capitalised option now maximised at 104% Loan To Value (LTV) ratio.

But as usual there is even more......

Also the Initial Payment Holiday option is discontinued.

Ah well, though in the current market it is not surprising and if it goes south further, even these offers will probably go even more south.

But I still believe that first home owners, should have more opportunity now to buy bargains, unfortunately if they didn’t save a lot to put money in the property if the mortgage bonds are not as attractive as in boom market, they won’t be able to buy right now, when the bargains are getting more visible by the day.

Maybe this is a lesson for the next down-turn in property finance.

If you want a fancy and cheap house, save for the next cycle. Then you will be able to buy cheap but you will have to put something in it as you won’t get the wonderfull bond offers from banks in such market conditions.

May last post about this was about No More 108% Mortage Bonds for First Time Buyers .


Jun 05 2008
Should the government pay for your rental income loses?
Thursday, 05 June 2008

If the government doesn’t want to take responsibility for their own legislation they should pay for the consequences, or shouldn't they?

This is about rental income that property investors and landlords don't get paid and lose solely because of some misinterpreted and missapplied law and eventually may risk losing their property because they can't pay the bond.

The Rental Housing Act 50 of 1999 speaks of being “just and equitable” to landlords and tenants. Then why does the implementation certain parts of the act and surrounding laws put property investors and landlords at risk of repossession and losses?

And why shouldn’t the Housing Department pay compensation to landlords that get repossessed because of their own implementation and lack of proper definitions in the laws?

Imagine one landlord, a person, a property investor like any other person, like you and me, rents out the property to a tenant. This landlord has done nothing wrong, but all of the sudden the tenant doesn’t pay. This property investor, a regular person, can’t pay the bond all of the sudden because the rental is not coming in.

The law has clauses that protect this landlord and in the law this landlord has rights. But what if they are not implemented correctly? Or what if for a minor definition issue things drags out enough for the landlord to be repossessed while the tenant which now is an “unlawful occupier” still sits in his premises and has the unlawful enjoyment of the property.

Is this just and equitable? Ok, here is the story.

Jun 02 2008
Common Law Lease Agreements for Residential Property
Monday, 02 June 2008

Following my last post, I got a few questions that made me aware that my previous post about residential lease agreements , was not clear enough.

This will be a quick in an attempt to clarify stuff.

You can’t have a residential lease agreement that is based only on common law. Because in the process of years of legislations there are Acts such a the Rental Housing Act 50 of 1999 and Regulations created by each province, that must be adhered to.

These can change common law, which means common law is no longer applicable due to the Acts, and give new guidelines on what to do and what not to do.

Because these are acts and therefore law, writing a residential lease agreement based on common law only, may not comply with acts that have be written to override common law and therefore the worst that can happen is that the lease may be found none compliant and null and void.

It is highly advised that for the purposes of creating property a good residential lease agreement, one should use a professional person to get help.

You can read more articles here about Letting Residential Properties .


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