Real Estate Investor Magazine South Africa June 2018 | Page 23
PROFILE
ing industries in real estate, so we decided to step out of our
comfort zone and explore this model,” he says. Robin ex-
plains that they managed to get a good deal under contract
from a deceased estate: “The estate took a full 12 months
to be processed, and we took advantage of that. While we
did the refurbishment for the first four months, we didn’t
pay any occupational rent. The following eight months until
the property transferred, we only paid R3 500 occupational
rent.”
At the same time, they were collecting rent of about R23
000 a month from the newly refurbished student housing,
effectively saving in finance costs. Seeing a gap in the mar-
ket, Robin devised a plan to manage the student housing.
“There are no property managers for student housing in the
area, so we have since automated a series of situations and
professionals to take care of it.” This includes inspections,
applications, monthly student surveys, and the physical
maintenance of the property. Robin explains that they are
looking into scaling this model and eventually selling stu-
dent housing as a turn-key solution to investors.
Making real money from short term letting
We’ve all read about the magic that is Airbnb - it’s a great
way for property owners to earn additional income from
their properties. For Robin, however, this wasn’t good
enough: “In our case, we successfully created a scalable mod-
el where we rent from a landlord, and then sublet that out on
Airbnb - with everyone’s consent and permission, of course.”
This has allowed him to remove nearly all the risk, since
he is not liable for financing, repairs, rates, or insurance. “If
for some reason we need to terminate the agreement, we can
use the 21 day Consumer Protection Act to terminate the
lease. And as we know how to find long term tenants, we can
find someone to take over the lease, or to enter into a new
lease, thereby mitigating all the ‘damage’ to the landlord in
terminating the lease, ” Robin adds.
Off course, Robin is realistic about the fact that this
model won’t work for everyone: “This passive income model
is only as good as my ability to convince the landlord in
entering into this agreement with us. Most landlords don’t
like short-term tenanting, and for good reason. But we know
how to make this a win-win for everyone.”
Living the dream
Proving he knows how to make real estate work for all
involved, Robin has been effectively living rent free in his
beachfront home in Blouberg. “I love kitesurfing, and I love
the idea of landing my kite on the beach and walking into
my house,” he muses. In 2016, he saw and fell in love with
the home, but the rent was simply too high. Not one to be
deterred that easily, Robin devised a plan: “We were willing
to take a calculated risk that, if we could rent the house out
over December, that extra income would subsidise the yearly
rent, making it affordable to us.”
The plan soon paid off. For that first year, they ended up
paying an average of about R5 000 less per month, thanks
to the Christmas rental agreement. “But we kept looking for
other creative ways to maximise returns,” he explains. Since
2017, Robin explains, they have been living in the four bed-
room house for free. By renting out an ensuite room with its
own entrance, along with the original plan of renting out the
entire home over the holiday period, they have managed to
subsidise the entire year’s rent. Robin emphasises that they
wanted to make sure that the landlord was happy with the
agreement: “We wanted to make sure they knew that the
property would be well looked after.” They also negotiated a
deal with the landlord, avoiding annual rental increases by
instead paying for improvements to the property. This means
that the property improves for them to rent out, while the
landlord is kept happy with a well maintained ho