Thandeka Sithole’s interest in providing student accommodation began when she herself was a student at UCT. She had been accommodating students for a night or two, for free, as they arrived in a new city to begin their studies. She had shared this experience when she first came to UCT from Lady Smith, and as she found herself accommodating more and more students for short stays she realized there was a good business opportunity in it.
At first, she began renting out her first house to test the viability of the business idea. Later, she was approached by the CEO of a company in Cape Town – a friend who knew she was subletting to students – and asked if she would be able to provide accommodation for their students. She agreed, and began subletting fully-furnished flats to these students in Cape Town.
“Accommodation, and especially fully-furnished flats in Cape Town, is expensive,” she says, “and though the individuals I was letting too had proved reliable tenants so far the financial pressure was becoming too much, especially at scale.”
Thandeka decided to start approaching companies to become a service provider of accommodation for their students, in order to make her income a little more secure. But she also realised that owning a property would be easier to manage and made more business sense. She began looking for opportunities in Cape Town.
While living in Cape Town, Thandeka saw advert for a building in Durban that looked appropriate to expand her business. She felt it would suit her purposes and that her business could afford the R4 million asking price. She put in an offer, which the agent helped her negotiate down to R3.2 million.
She found traditional finance institutions unwilling to approve her bond, though. In her last meeting with one of South Africa’s major banks, in which her bond application was turned down again, the bank’s representative gave her contact information for TUHF.
Thandeka approached the Cape Town office, and they reviewed her profile and her proposal. Keen to invest, the portfolio manager in Cape Town referred Thandeka to the Durban office because of the building’s location. TUHF’s Durban office agreed to support Thandeka with a loan after meeting her and reviewing her application, pending owners equity contribution of R1.4 million.
“I didn’t have that kind of money on hand,” Thandeka says. But friend loaned her the equity contribution, leaving only the lawyer’s fees to be paid before transfer could go through.
“I didn’t have that money either,” she laughs. “The life of an entrepreneur is hectic. Most people only see you doing well, and they don’t realise you’re not sleeping or eating and nobody can understand you.”
Towards the end of December 2016 the process was done, but Thandeka still needed funding for lawyer’s fees. Fortunately, she had the support of another colleague, who loaned her the money for the lawyers. This allowed the building purchase to go through in January 2017.
The building was in the process of being renovated when Thandeka ownership. These had to be completed to get the building ready for occupation. When they were done, Thandeka went to Durban to view the building and start advertising for tenants. Two representatives from DUT came to see her – letting agents who were operating on behalf of the university. They were looking for accommodation for DUT’s students, and came out to look at the flats. They agreed to take the building almost immediately, provided the units were fully furnished.
Thandeka then had to furnish the flats appropriately, and determine appropriate rates for rental. One of the letting agents gave her some guidance on appropriate rental rates, as well as the facilities students would need.
Thandeka increased the units in the building from 18 to 20, of which six are 1-bed and 14 are 2-bed sharing units. Each unit features a kitchenette, its own bathroom and wifi, and is fully furnished. The building’s communal area is a passage with TVs and couches where students can relax.
The building is within walking distance from DUT, making it ideally positioned for students. In its fourth year of operating, it has historically been fully tenanted during the academic year and was 50% tenanted in March 2021. Thandeka expects it to be fully tenanted by the end of April as students return to campus. “The universities only opened in March, so we’re very happy with how quickly the units have been rented out,” she says.
“With student accommodation you don’t earn rent in December and January because campus is closed, so you have to save up during the year to make those bond repayments and still keep up with ongoing building maintenance and utilities,” she says. “TUHF has been amazing, showing real understanding for the nuances of my business and being extremely supportive whenever there was a need to defer payments.”
Her advice to aspiring property entrepreneurs is: “Just do it. Sometimes you just have to do it and trust God with the rest.”
