Pieter Smith is a property developer who has completed 70 developments consisting of about 8 500 units.
But his journey to success could have taken a completely different turn if he had accepted an engineering bursary after matriculating in 1997.
Instead, he followed his heart for property, and the footsteps of his parents who advised him that money was to be made from this asset class. Smith’s mother was in property sales and his father was a contractor and developer.
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“So I had a bit of a feeling for property.”
Smith tuned down the bursary and became a real estate agent at the age of 18.
“The agency threw me in at the deep end, and I am ever grateful to Lubba Allen, who gave me a chance.”
Two years later, at the age of 20, he bought his first property in Oak Glen, Bellville. When he applied for the bond, he had to get permission from the Master of the High Court.
Five years after that, Smith started his first development, the 106-unit Four Seasons, in Arnold Street, Strand.
With June being Youth Month, Smith shares his story – and advice for aspiring property investors, with his long-time property agents, the van den Berg brothers of Just Property Prosper in Cape Town’s Northern Suburbs. He has consistently worked with this team over the past two decades, purchasing and developing properties.
How extensive is your portfolio?
Currently, through various entities, we own about 206 units in rental stock and an additional approximately 900 units, which are in various development stages. We also own about 11 hectares of industrial land.
What are your thoughts on using property to create generational wealth?
Over time, it is the best and easiest way to make money. The key to success lies in timing – don’t rush things and do accept that while some may get lucky, it’s best not to look for get-rich-quick schemes.
What is your best advice to youngsters who dream of building a property portfolio?
Work hard to put down that first deposit in your mid-20s. Then, aim to add a property every second year. This will give you a sizeable portfolio over time with limited risk.
What do you think prevents people from owning their own property?
It’s a mind-set. People think they can't afford to buy, but they can. The problem is that they want more, so they rather rent a better property than what they could buy or afford for the same monthly payment. People are unwilling to sacrifice in the short term, whether on a monthly payment, luxury, or holiday. Once they are in the rent trap, it becomes tough to own their home.
What sector or band should new investors look at?
There is never a single correct answer. In 2008 everyone thought retirement or storage was the way to go. In today's economy, in my view, the market above R3.5-million is more robust. Others would say student rentals. There’s never a right or a wrong answer; sometimes you’re lucky, and other times you must sit out the bad times.
Is gearing the magic wand some say it is?
Gearing can be suitable while interest rates are low, but as we’ve seen, low rates can’t be guaranteed. So yes, you can make money on the bank’s money, and all can be good while we are at 7% or 8% levels, but suddenly, prime is at 11.75. I don’t think that’s favourable for gearing.
I view deals differently today compared to 20, 10, and even five years ago. I used to be very keen on taking a chance, but my children are 1, 9, and 12 this year. Everything in life comes with some risk so I prefer to have manageable risks should anything go wrong.
Where would you advise a first-time investor to look for property?
The key is not to be emotional. If you buy with emotion, then you will lose out on good deals. Keep an eye on areas close to public transport, in the low to medium price brackets, where properties attract a variety of tenants, from students to young professionals. Generally, yields are better there.
What is your advice to anyone trying to decide on a career?
Ultimately, you must do what you enjoy and have fun. If your work is no longer fun, then you should take a break and reconsider why you are doing it.
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