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New Business Trends  Property Investment
Property sales are putting money in the bank
House prices have risen by between 3% and 7% in the last four years. Estate agent’s commission has stayed constant, ranging anywhere form 2,5% - 7%, more often, a comfortable 5%. This means, hypothetically, that sales agents’ salaries have risen almost 300% before tax in the last four years.
This sounds like an amazing business opportunity to get into. SA Guides investigates if there is not more to it than that.
Executive chairman of the Private Property Group, Justin Clarke, gave us his thoughts on investing in a property sales franchise, and the market as a whole.
What makes property sales a good business opportunity to buy into?
The business of Property is no doubt one of the most exciting industries to be in, and South African residential property has performed better than most countries in the world over the last 5 years, creating thousands of new millionaires. Owning residential property is still the easiest way the average man in the street can create wealth. This is an industry where you deal with real tangible assets, of significant value. Property is an industry you can get really hooked on, so why not be part of it.
What makes Private Property a good franchising opportunity?
Private Property is a new and modern approach to an old industry, and we stand in a category of our own. We compete with traditional Real Estate industry by providing a better value proposition than what the industry can provide. Although we are nearly 9 years old we are a young company, filled with passion and great courage. In fact we have built a web-based system that is world class, and national brand to match. Many of our existing franchises have been with us since we started and there is a strong team feel.
If you want to be a piece of this, and think you have the professionalism, courage, passion and a desire to achieve results then this is really an awesome business to be part of.
What makes Private Property’s franchising concept superior to other property sales franchises?
We own a new space that we have created and it will be very difficult for others to follow. We rely on volume and have taken years to build trust in our brand, so customers think they are selling and buying the Private Property way. If you consider the traditional agents to be our competition, then we have so many advantages to a traditional real estate franchise. Firstly consider the value proposition. We charge no commission, so it is easier to convince clients to list with us. Then our model is based on an upfront fee, so most of our running costs are covered upfront. Finally the Private Property Franchise does not terminate at a future date, which most other property franchises do.
How has your strategy, mission statement or business focus changed and developed to accommodate your company’s growth?
Our vision is to be the peoples champion, so our products, systems and services continue to evolve in order to achieve this objective. We listen to the customers needs and provide the solution. We were very out-the-box in the early days and have become a service industry rather than an Internet listing service.
Are you modelled or based on any foreign franchising system?
No. We are proudly South African, born and bred. There are many international players, especially in the USA, but our model is unique in that we combine Internet with people on the ground. The overseas model would not work as well here.
What systems, processes or products do you use that make your franchise superior?
Our entire business system is web based, electronic, track-able and instant. The fact that we are paid our fee up front means we don’t have to protect a “mandate” and can disclose all the facts about the property, including the address on the public domain. This makes the process of finding a property easier for a buyer, and is fundamental to our model.
Are any sales leads/ marketing/advertising provided to franchisees?
Private Property has budgeted to spend R10 million this year alone on generating customers. Hundreds of leads are sent directly from the web to the franchise offices every month. Our call centre and magazine also generate substantial leads but the most important lead generator of all is word of mouth. The work put in over the past 8 years has created goodwill that will continue to generate referrals even with no advertising spend. As a Private Property franchise, you own a geographic area, and all leads for that area belong to you.
In addition our 10 person strong marketing department create and support franchises with micro-marketing product, ideas and presentation.
What growth is there for property sales franchises within the South African market as a whole?
This is the most exciting aspect of our business. We are profitable and on target to sell 1000 houses per month before 2009. That is a projected 100% growth from where we are now, and with this massive piece of the real estate market in South Africa, we will still only have scratched the surface with only a small 10% of the market. With our strong value proposition and efficiencies that our systems provide, we are confident that this is only the beginning.
There seems to be many new estate agencies entering the market. Is there space in the market for new estate agencies?
There are many challenges facing the traditional Real Estate Industry, and new training requirements to be introduced by the Estate Agents Board will reduce the volume of agents significantly. Also the pie will only grow bigger at a marginal rate so new industry entrants will have to fight hard for their piece. We are in a unique position in that our product offering is completely different. We help the client to sell without an estate agent, and avoid the commission altogether.
How much would a franchise cost?
Franchise set-up costs depend on the size of the area, but you would pay R120 000 for the rights for an entry level area, and require R250 000 in working capital.
For more information on Private Property franchises, please contact:
Barbara Haupt. Website: www.privateproperty.co.za
new business trends  property investment |
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section specialist
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Jason Lee
Jason Lee has a BA LLB degree from the University of Cape Town and is an admitted attorney of the High Court of South Africa. He is the co-founder and a director of TCB Properties, a dynamic property investment and development company offering a range of property services. Since the publication of his bestselling book Making Money out of Property in South Africa , Jason has been featured in a number of magazine and newspaper articles and has appeared on radio and TV. He is also a regular guest speaker at property-related functions. You can visit his website at www.jasonlee.co.za. |
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