Showing you how to become a Property Millionaire through Property Investing


How I Navigate The Financially Distressed Property Chain To Source deeper Property Discounts..

Table of Contents

Freedom of choice for you & your family

~ Introduction

~ The Distressed Property Chain in South Africa

~ Sourcing Opportunities for Investors

~ Risks to Consider

~ Conclusion: Which Investment Option is Right for You?

~ Offers

I want to help create a more prosperous world in which as many people as possible empower their personal growth.

That’s why I’m passionate about sharing with people like you to become well-to-do property investors.

The Distressed Property Chain in South Africa

Most of us know how to source properties on the open market through the Property portals of Property24 and Private Property.

And whilst there is nothing wrong with those properties, they don't always provide us with what we want and need:

Below Market Value Properties.

You would also already know the benefits of buying Below Market Value properties, as well as the tools needed to do this, from reading my blog, but in case you haven't read it, Click HERE

Whilst the blog outlined a few options for sourcing below market value properties, today, I'll be discussing the Distressed Property Chain which offers much more potential for deeper discounts the further right we go. From urgent sales, to Properties in Possession (PIP), each comes with the potential for deeper discounts, albeit at a deeper risk.

TAKE NOTE!

Remember, my aim as a Property Investor is to try and help people, and that includes stopping foreclosure where possible! The more I work to resolve problems for the seller, the more likely I am to get discounts. Foreclosures result in negative credit records for sellers, whereas selling to me, avoids that!

Foreclosure

What is Foreclosure:

A property that is under order or is advertised for sale by the lender (Typically a bank)

The Foreclosure Process

1 ~ The bank contacts you numerous times by phone, Email and/or post.

2 ~ The bank enters into detailed conversations with you to understand your situation and reach a solution. This includes offering you the option to catch up on your arrears, to go for debt counselling, or to sell your property. This can be under the urgent sale, bank mandated, or bank assisted

3 ~ Once the bank has established that you are not able to rehabilitate your loan, and/or unable or unwilling to sell your property to reduce the debt, the bank forecloses.

4 ~ The bank instructs its attorneys to issue a summons. The summons is delivered by a sheriff of the court to your chosen address.

5 ~ An application to the High Court is made to allow the property to be sold by a sheriff of the court.

6 ~ A judge assesses the application and ensures that a fair process has been followed.

7 ~ The sheriff sets a date for the property to be auctioned and advertises the auction in the Gazette.

8 ~ The bank calculates a market-related reserve price in an attempt to maximize the price that you will receive, to offset your loan.

9 ~ If the reserve price is not met, the bank will buy the property and then sell it on the open market, via estate agents or auctioneers.

10 ~ When the property is sold, any proceeds are credited to your account, less the costs incurred.

11 ~ If there is a shortfall during any part of this process, it will be collected from you usually in the shape of an Acknowledgment of Debt (AOD)

The Financially Distressed Property Chain in South Africa


A financially distressed seller is someone facing financial difficulty and is often forced to sell quickly to avoid foreclosure or other financial consequences. The Financially distressed property chain moves through several stages where investors can find potential deals. With each stage comes different risks, challenges, and opportunities.

Its important to note though, that the stages are not set in stone as each property and seller is different. For example, investors with larger portfolios may be given more leeway in comparison to an investor with only 1 property and no other means of income. A person with 29 years of payments, on a 30 year mortgage, and an unexpected life change, will in most cases be given more leeway, in comparison to someone not making payments after only 2 years.

Never the less, the overall process is outlined below:

1 ~ URGENT SALES

The Top 5 reasons urgent sales come about:

- Divorce / business relationships break down

- Owner relocating or immigration

- Financial difficulty, accounts behind (levy, rates etc)

- Deceased estates

- Funds required for another purchase or equity required

These sales can offer good deals if your friendly with agents as they will contact their little black books for investors who have proven they can act fast, whilst also performing due diligence to ensure they are not inheriting legal or financial problems. Its the biggest reason I suggest keeping contact with several agents to constantly let them know you are looking for these types of properties.

In the case of a seller entering financial difficulty, the seller has recognized their need to sell as they have missed 1 or 2 payments. The bank has made contact and are in discussion with the seller to let them know that if after 3 missed payments, they will move into the "2 ~ Bank Assisted Sales" process

Urgent sales usually come to me from 3 sources:

1 ~ Estate agents

2 ~ Pre-legal (Divorce attorneys, builders, sourcing agents etc)

3 ~ Private sellers

The seller is liable for rates, taxes, levies, agent fees, electrical and water certificates etc. as per a normal sale.

But remember, I'm a problem solver. If it's a financially distressed property, the owner may not be able to afford this. As such, im looking for where I can take on the cost, at my risk, and because I'm doing that, would ask to be compensated through a lower purchase price.

At this stage I can still use my own OTP and simply add that to the OTP

1 ~ BANK ASSISTED SALES

In a bank-assisted sale, the bank works with the property owner to sell the property before it goes into full foreclosure. These properties are often in good condition and can be bought at a discount, making them an attractive option for investors who want to avoid the renovation costs of physically distressed properties.

3 ~ BANK MANDATED SALES

These are properties where the bank has taken over the sale process after the owner defaults on their bond. The bank typically mandates an estate agent to sell the property quickly, often at auction. Bank-mandated properties can be a great opportunity for investors to purchase assets below market value, though competition at auction may drive up prices.


The Top 5 reasons urgent sales come about

- Divorce / business relationships break down

- Owner relocating or immigration

- Financial difficulty, accounts behind (levy, rates etc)

- Deceased estates

- Funds required for another purchase or equity required

These sales can offer good deals if your friendly with agents as they will contact their little black books for investors who have proven they can act fast, whilst also performing due diligence to ensure they are not inheriting legal or financial problems. Its the biggest reason I suggest keeping contact with several agents to constantly let them know you are looking for these types of properties.

In the case of a seller entering financial difficulty, the seller has recognized their need to sell as they have missed 1 or 2 payments. The bank has made contact and are in discussion with the seller to let them know that if after 3 missed payments, they will move into the "2 ~ Bank Assisted Sales" process

Urgent sales usually come to me from 3 sources:

1 ~ Estate agents

2 ~ Pre-legal (Divorce attorneys, builders, sourcing agents etc)

3 ~ Private sellers

The seller is liable for rates, taxes, levies, agent fees, electrical and water certificates etc. as per a normal sale.

But remember, I'm a problem solver. If it's a financially distressed property, the owner may not be able to afford this. As such, im looking for where I can take on the cost, at my risk, and because I'm doing that, would ask to be compensated through a lower purchase price.

At this stage I can still use my own OTP and simply add that to the OTP


4. Properties Under Auction

Auctioned properties can be either physically distressed or financially distressed. The auction process can be competitive, and investors need to be prepared to act quickly. It's important to secure financing in advance, as auction sales often require immediate payment.

5. Property in Possession (PIP)

Properties in possession are those that the bank has repossessed after the previous owner defaulted on their bond. The bank is typically eager to sell these properties quickly to recover its losses, and they are often sold at a discount. However, PIP properties may require repairs, and investors should conduct thorough inspections before making a purchase.

Opportunities for Investors


Both distressed properties and financially distressed properties offer unique opportunities for investors in South Africa:

1. Distressed Property Opportunities

For investors with experience in property renovations, distressed properties offer the chance to purchase below market value, invest in necessary repairs, and either flip the property for a profit or rent it out for steady income. These properties are commonly found at auctions or through bank-mandated sales.

2. Financially Distressed Property Opportunities

For investors seeking quicker transactions and fewer upfront repair costs, financially distressed properties present a simpler opportunity. These properties are usually sold below market value by motivated sellers or through bank-assisted sales, where the condition of the property is typically sound.

Risks to Consider


Investors must be aware of the risks associated with both types of properties:

1. Distressed Property Risks

The main risk with distressed properties is the potential for renovation costs to spiral out of control. Structural problems, compliance issues, or hidden defects may only become apparent after purchase. Additionally, auctioned properties often require immediate financing, leaving little time for due diligence.

2. Financially Distressed Property Risks

The key risk with financially distressed properties is the legal or financial complications that may accompany the sale. These properties may have liens or unresolved debts that need to be settled before the sale can proceed.

Conclusion: Which Investment Option is Right for You?


Both distressed and financially distressed properties offer compelling investment opportunities, but they come with different challenges and rewards.

  • Distressed properties offer the potential for significant upside if you have the skills and resources to handle renovations. They can often be acquired at auctions or through bank-mandated sales, but investors should be prepared for higher risks and hidden issues.

    • Financially distressed properties provide a faster path to acquisition with fewer immediate costs, as they are often sold by distressed sellers or through bank-assisted sales. These properties are typically in good condition, making them an attractive option for investors who want to avoid major

Ready to Take Your property Investing knowledge to the Next Level?


Congratulations on taking the first few steps and being
amongst the few who take action!

I commend you for coming this far!!

And as a thank you, I want to show you a few more ways in
which I can further help you. And this is truly only for those that are
interested and want to level up faster in their cashflow and wealth journey.

So far we have covered the basics of finding below market
value property, but their is so much more to come. Our sourcing course dives
deeper into additional places to find below market value properties, how to
financially analyze deals beyond the basics, and how to get investors to invest with you.

This truly is a remarkable course led by a remarkably supportive lady!