“We came across the property [Elvon Court] in July 2020, just after the hard lockdown began to lift, through a real estate agent with whom we had built a relationship. We liked the building, but because of the uncertainty brought about by the pandemic, we held off on purchasing it until September.”
Msizi describes the property’s state at the time as extremely neglected. “For example, it had wooden floors that hadn’t been maintained well, there were broken windows and the bathrooms weren’t in great shape. Its occupancy level was low – about 10 out of the 21 units had tenants,” he says. “But we believed that the property had great potential, even though it has been undermanaged in the past.”
Playing the long game
Msizi’s journey is an interesting and inspiring one. Raised by a single mother in Pietermaritzburg, he originally attended a township school until he earned an academic scholarship to attend Maritzburg College. “I learned about KPIs very early in my life,” he laughs. He was later awarded a bursary from one of the state-owned entities to study towards an electronic engineering degree at the University of KwaZulu-Natal, and later joined an engineering firm upon completing his degree. He quickly realised engineering wasn’t a fit for him and moved into management consulting before progressing to investment banking. He and his business partners – who are both practicing engineers – intend to become full time property entrepreneurs.
Msizi’s journey towards full-time property entrepreneurship began in 2014. “I came across TUHF when we started looking for our first property asset. We were specifically interested in the inner-city, where we knew we could expect better yields and high occupancy rates,” Msizi says. “I found TUHF through an internet search, and then reached out to my network who put me in touch with people at TUHF.”
It took some time and perseverance to find the right property. “This project is our sixth-time lucky,” Msizi points out. “We’ve walked a journey with TUHF, where we’ve brought properties to them that we thought would make good investments and they’ve advised about the feasibility or appropriate pricing for the purchase, and we’ve ended up not going through with those deals for one reason or another. But our experience was always very supportive and collaborative. TUHF was always keen to keep on looking and to let us know if they came across appropriate opportunities through their network. Our experience with TUHF is one of ‘partnership’ in a very true sense of the word.”
The equity built up through the stokvel enabled Msizi and his partners to apply for a loan with TUHF to purchase Elvon Court, but needed to be supplemented to make up the full equity contribution required by TUHF. The shortfall was funded through the Intuthuko Equity Fund, and the dream to own and manage a portfolio of property assets met its first milestone. The Intuthuko Equity Fund is managed by TUHF21, with funding from The Jobs Fund. IEF’s objective is to finance the equity portion of a TUHF loan for PDIs who may not otherwise have access to the required equity.
The existing units were refurbished and updated in three months, with repairs done to the damaged windows as well as new bathrooms, new floors, and a fresh coat of paint. The building is a combination of 1 and 2 bedroom units, with bachelor studios on the top floor. It was 80% tenanted in May 2021.
Msizi’s advice to other aspiring property entrepreneurs is to take their time building up their capital and finding the right asset. “That’s actually one of the great value-adds of working with TUHF,” he says. “They bring in-depth market knowledge, a sharp commercial lens as well as a deep understanding of property management that really enriches you as an entrepreneur as well as the deal.”
“The other piece of advice I must give is to be ambitious in your thinking,” he adds. “Your dreams must be worthy of your pursuits. So, start small and get to know the business and the industry, but keep your dreams and ambitions big.”
