For those who didn’t know, in Gauteng, there is an organisation called the Gauteng Partnership Fund (GPF) whose vision is to be the partner in the mobilisation and optimisation of funding as well as a leading catalyst in the development of affordable housing in Gauteng.
For historically disadvantaged individuals, the EEPF is an incubator programme designed to promote participation of previously disadvantaged owned companies in the affordable rental property market, established in 2010.
Being the economic hub of South Africa, scores of migrants coming from all corners of the country and beyond our borders come to the cities within the Gauteng province seeking better employment opportunities.
But of course, this is the case in other cities as well as urbanisation is happening at a rapid pace. As a result, affordable housing is in short supply and it is for this reason that GPF’s role is to bridge the gap between government and the private sector on affordable housing projects.
Its product offerings include the Rental Housing Fund, Emerging Entrepreneur Empowerment Property Fund (EEPF) and the Social Housing Fund.
Further to that, it is involved in the management of social housing institutional subsidies, strategic partnership projects (banks and development finance institutions), facilitation of rental capital into integrated housing developments as well as unlocking funding blockages and bottlenecks in housing.
Funding for property entrepreneurs
For historically disadvantaged individuals, the EEPF is an incubator programme designed to promote participation of previously disadvantaged owned companies in the affordable rental property market established in 2010.
To date, EEPF has 71 companies on board, 31 of those have secured funding for their projects.
This programme is limited to would-be participants invited on a public tender annually.
Speaking at GPF Property Entrepreneur Seminar 2014 held at the Johannesburg Country Club in Auckland Park, Johannesburg, GPF acting chief investment officer, Vinolia Mashiane says for this year, GPF has a number of participants from the March intake and the next intake will take place in September and October.
Information or the tender will be widely advertised on the GPF website and in dailies and weeklies such as The Star and The Sunday Times newspaper as well as the likes of Summit TV.
Interested parties can also contact the GPF directly and will be given the information on how to apply and what is expected from applicants. For example, a business plan is a must-have when applying for this funding and guidelines on how to draw one can be found of the website.
The seminar brought together the relevant stakeholders from the public and private sectors that represent the affordable housing market in Gauteng.
It was only last year that Morodi completed his first project which is a 22 unit apartment block located in the Kempton Park CBD in Ekurhuleni. Units are rented out for R3 700 for a one bedroom unit and R4 300 for two bedrooms.
According to GPF marketing and communication executive, this allowed for an opportunity to present funding opportunities to property entrepreneurs in the affordable housing market and to encourage public and private sector dialogue.
Speakers included GPF chief executive officer, Boni Muvevi, who discussed available opportunities in the affordable housing market in Gauteng and how the GPF is able to assist property entrepreneurs in using those opportunities.
Mashiane who spoke about funding opportunities available to property entrepreneurs in the GPF product range and South African Institute of Black Property Practitioners' president Tshepo Matlala focused on the transformation and funding exposure in the residential property sector.
Others were National Housing Finance Corporation (NHFC) chief executive officer Samson Moraba on NHFC funding opportunities, the partnership between the NHFC and GPF on the Entrepreneur Empowerment Property Fund and the partnership’s view towards funding property entrepreneurs.
The Trust for Urban Housing Finance (TUHF), chief executive officer Paul Jackson spoke about TUHF product offerings and its partnership with GPF in the Inthuthuko Fund.
Affordable Housing Company (AFHCO) managing director Renney Plit told about AFHCO’s access to the GPF funding and its success as a property entrepreneur.
He also spoke about the experiences, challenges and opportunities that guided AFHCO to its success in the property industry.
Property consultant Henry Chitsulo talked about how property entrepreneurs can develop business plans for their particular affordable housing initiatives.
There were also two EEPF participants Dennis Marodi and Themba Buthelezi as well as the Executive Mayor of Johannesburg, MEC Parks Tau.
All the presentations from the seminar will be available on the GPF website a week from today.
Who qualifies?
Any 100 percent historically disadvantaged individual owned companies that provide rental or delayed ownership schemes to households with monthly income of less than R15 000 (adjusted according to the Consumer Price Index).
Companies must also demonstrate that they have the technical resource capacity to successfully complete the project and manage the property thereafter.
Luckily, GPF provides extensive mentorship to participants incuding among other things, assisting entrepreneurs with understanding of the property market, identifying projects, how interest free loans work and how to access them (these are up to R2 million and can be used with payments where one has to have building plans approved), explains Mashiane.
Documents required include
1. A comprehensive business plan. According to Chitsulo, a business plan is a proposal to your financier, therefore, it should include your product offering and your competitive advantage. Further to that, the plan should include an executive summary which should not be more than three pages of the overall proposal. He says it is important to talk about company ownership, the vision and mission of the company in a very clear and concise manner.
2. On product offering, he says the location of the property is important to have. For example, for the project, state clearly that the property is located in the Johannesburg CBD, close to all amenities as well as specify the type of development.
The GPF has three types of projects for this fund, inner-city refurbishments or predominantly residential buildings, conversion of offices to residential units and Greenfield developments for social housing.
3. Market analysis is key to include in your plan, he says. With this, include information about the macro and micro indicators of what is happening in that particular location.
Relevance of information is absolutely important, if your location is in Durban for example, do not write about some CBD regeneration projects taking place in Johannesburg.
Also briefly explain how this will be of benefit or impact your project.
4. Strategy – include three things, the short, medium and long term of your vision, demonstrate how empowerment filters down within the company and issues of procurement; a good idea is to check this against the Property Charter requirements.
5. SWOT analysis – talk briefly about the strengths, weaknesses, opportunities and threats associated with your project. As an example, rising interest rates could be a threat to your project.
5. Why us? – in a nutshell, flesh out your competitive advantage, so here you may include things like, is it your effective management style that makes your company stand out and how you will stay relevant going forward.
6. Financial analysis – which gives the financier a clear picture of what you are proposing and whether they can take a risk by lending to you, is required. What are the ratio numbers and what do your financials look like (expenses, income etc.), the financial performance of the company and the way forward (how would you ensure cash flow stays positive etc.)?
Most importantly, he says the financiers will look at your ability to service debt and you must understand the project you are undertaking fully.
For example, GPF investment is 30 to 40 percent of the total projects with a maximum period of 20 years depending on project cash flows.
Other documentation required includes the company registration, essential project information, copy of the latest audited financial statements and shareholders statement of assets and liabilities.
Successful entrepreneurs
Marodi was part of the 2011 EEPF intake and it took him a year to identify a project. GPF requires that participants identify a project within 12 months.
It was only last year that he completed his first project, which is a 22 unit apartment located in the Kempton Park CBD in Ekurhuleni. Units are rented out for R3 700 for a one bedroom unit and R4 300 for two bedrooms.
These are modern units, safe and secure and he is already working on his second project, a 30 unit apartment block in Betrams in Johannesburg.
He says lack of capital, knowledge and workings of the real estate industry were a huge challenge for him.
Luckily, GPF provides extensive mentorship to participants incuding among other things, assisting entrepreneurs with understanding of the property market, identifying projects, how interest free loans work and how to access them (these are up to R2 million and can assist with payments where one has to have building plans approved), explains Mashiane.
Financial analysis, which gives the financier a clear picture of what you are proposing and whether they can take a risk by lending to you, is required. What are the ratio numbers and what do your financials look like (expenses, income etc.), the financial performance of the company and the way forward (how would you ensure cash flow stays positive etc.)?
“Identifying a project and drawing up of lease agreements as well as understanding of town planning rules was hard for me.
“For anyone wanting to be a property entrepreneur, if you ever get this opportunity, grab it with both hands and never waste time.”
He says being an entrepreneur means working round the clock and being able to make decisions fast, but warns that one has to be careful as there are other people standing on the sidelines waiting to take advantage of your lack of knowledge.
For Buthelezi, becoming a property entrepreneur followed an advert on Summit TV and until then, he never knew about the work that GPF does.
He contacted their offices and was given all the information, applied and as luck would have it, he was chosen to take part.
Buthelezi’s message is simple, “uzoyithola kanjani uhleli ekhoneni – walala, wasala” (loosely translated to mean you have to be out there to tap into opportunities otherwise you miss out).
He took on a project in the Kempton CBD comprising 24 units with rentals of R4 300 for a one bedroom unit.
As for challenges he has faced, he points to dodgy estate agents when it comes to pricing and the local municipality when it comes to approving plans (lots of delays there).
For those wanting to be where he is now, it’s a full-time job which requires one to be hands-on.
“Tenants will move in on 1 July, and since this is not a once-off deal, as soon as this one is out of the way, I will start on my second project,” he adds.
If you have equity of R450 000, you are fully committed to making a success of yourself and are able to identity projects, email Vinolia Mashiane more information on how to apply. – Denise Mhlanga
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