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Property ownership is a great starting point for the creation of generational wealth. PICTURE: ANY LANE/ PEXELS
Letter from the editor IT’S PEOPLE like Nano Shadung, who a few years ago became the first person in her family to own property, who inspire us here at Property360. Both her mother and grandmother were domestic workers and, for them, owning a home was something that “rich people did”. Her mother worked hard to put food on the table in their one-room house in Alexandra, and clothes on their backs, and she provided a decent education for Shadung and her sister. When Shadung bought her first home at 25 she began the journey of building generational wealth in her family. “When I got my first proper paying job it wasn’t a hard decision to make and I knew nothing mattered at that point other than to have a decent house to call home,” she tells us. Recently, when singing sensation Makhadzi, 25, built a home for her grandmother, and a home each for her father and mother (who are divorced), she also began the process of putting her hard-earned money into property. Makhadzi, who started her career singing in taxi ranks and is now Apple Music’s most streamed South African artist, released a new album last week. The Limpopo singer, with her magical Venda lyrics, took to Twitter to tell us it was her dream to see her grandmother and parents living a better life. Neither Shadung nor Makhadzi have forgotten where they came from and not only do they want to make their families proud of them, they also understand the importance of owning property in building wealth. Experts tell us how buying property can help secure financial freedom, not only for the purchaser, but for the generations before and after them. The achievements of Shadung and Makhadzi are those to which we can all aspire. As Makhadzi says: “I don’t care about wearing expensive clothes but to make sure that all my family have a place to sleep and to hide from hunger is a priority. When you pray and work hard, everything is possible.” We are inspired!
S E P T E M B E R
A foot in the door Buying a home means more than having a roof over your head – it is the first step in the bid to create a legacy BY BONNY FOURIE bronwyn.fourie@inl.co.za
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ROPERTY ownership can do more for families than just provide shelter, security and a space in which to create memories – it can create wealth for future generations. As these assets are passed down to children and grandchildren, they can continue being lived in by the same family or they can be sold for cash that can be used to buy other properties. Either way, this ownership gives future generations a muchneeded head start. For many South Africans, though, this advantage is not attainable. “There are segments of society where the concept of using property to create, store and transfer generational wealth is well understood and tested over time, and has yielded favourable benefits for the descendants,” says Vuyiswa Ramokgopa, chief executive of the South African Institute for Black Property Practitioners. “However, there are also still large segments of our society where we are now experiencing first-generation property ownership. So, it will take some time to really have an impact and shift wealth patterns.” She says until relatively recently black South Africans were largely prohibited from owning property or land, especially in urban areas, and were only able to rent. “In rural areas, land was, and is, largely owned in communal ownership structures, which makes it nearly impossible to reap the benefits of generational
property ownership. As a result, we are only now experiencing the first real wave of home and property ownership among young Africans and starting to build the foundations of generational wealth creation.” Aiding this movement is the fact that there is a lot more awareness about, and interest in, owning property for investment purposes and people are deciding to purchase property a lot earlier. “I think many young Africans are still grappling with ‘black tax’ and there is a desire to break the cycle and not inflict the same fate on our own children,” Ramokgopa says. Other challenges to the start of creating generational wealth through property ownership include unemployment and inconsistent employment. This reality inevitably delays a person’s ability to enter the housing market and maintain a consistent credit record. “Young people need to be taught how to cultivate responsible financial habits and build their credit scores long before they even start contemplating purchasing their first property.” She notes: “Property ownership is still very relevant and remains one of the most reliable long-term investment classes. There will always be newer, sexier things one can invest in – and people should always look to diversify – but property remains the most reliable method of storing and transferring wealth inter-generationally.” Another hurdle to creating
generational wealth is the lack of property ownership opportunities and savvy in many communities. Matseleng Mogodi, founder and principal at Snooks Estates, says: “Currently, we could maybe look at property ownership and who owns the vast majority of property? It is certainly not black people, and sadly, as the masses scramble for RDP housing and land to build shacks, the real business of property ownership is slipping through the fingers of South Africans.” In previously disadvantaged communities, she says, people first have to get over the hurdle of owning property; until then, building generational wealth is a “far-fetched idea”. It is, however, one that can come to fruition “if people are willing and ready to think and do things differently”. “Building generational wealth in property goes hand in hand with emancipation from not having basic shelter.” Mogodi adds: “Building generational wealth comes with being ready to build yourself as a person, holistically. It is important to have a family whose members are willing to work together to build this ‘generational wealth’. Ideas and dreams are good, but if you are not willing to do what it takes, it may not work.” While some young people are buying property, many others are caught up in “lifestyle management”. “There’s nothing wrong with having a great lifestyle, but if you
can’t pay for the lifestyle, you might even lose the property you own. It’s therefore important to ask yourself how this lifestyle is helping you grow your property portfolio. Your answer will help you see whether you have a desire to grow property wealth or not.” The South Africa of the past has created “such a dent in people’s minds”, Mogodi says, many do not believe they can own property or build generational wealth. However, she is blessed to have witnessed many families owning a property for the first time and to have shared in the “tears of joy”. “It is in those moments that one can build the next moment – of growing a property portfolio.” Echoing this, Ramokgopa says she is “personally very encouraged by the surge of young people, particularly women, who are taking the plunge and investing in property”. She hopes, over time, more of this trend will be seen. For South Africans who want to take that first step onto the property ladder, but perhaps are not in a financial position to do so, Paul Stevens, chief executive of Just Property, says they could consider buy-to-let partnerships. “I’ve always seen property as one of the best ways to create wealth and leave a legacy. There certainly are opportunities out there right now, and if you’re young or don’t have the capital to take advantage, then co-buying – setting up a buying partnership or a syndicate – can help you get a foot in the door.”
DISCLAIMER: The publisher and editor of this magazine give no warranties, guarantees or assurances and make no representations regarding any goods or services advertised within this edition. Copyright ANA Publishing. All rights reserved. No portion of this publication may be reproduced in any form without prior written consent from ANA Publishing. The publishers are not responsible for any unsolicited material. Publisher Vasantha Angamuthu vasantha@africannewsagency Executive Editor Property Vivian Warby vivian.warby@inl.co.za Features Writer Property Bonny Fourie bronwyn.fourie@inl.co.za Design Kim Stone kim.stone@inl.co.za
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