Who pays this man for nonsense like this?

Firstly, before I go to the topic of the day, just a bit of feedback on my mail of last week. The response was fantastic! So far I received 1119 mandates to the value of R517,530,606. Thank you very much for the confidence placed in me. I think we now have a big enough base for negotiations and I will start with it immediately. I will keep you posted. If you missed last week’s mail and would still like to participate in the Treoc Type Bond project, click here.

Back to the topic of the day.

I’ve been reading that the respected property economist, the bearded Doctor “DON’T-BUY-RATHER-RENT”, is once again seeing only doom and gloom in the residential market. This isn’t news, of course, because that’s how he’s always seen it. The bearded doctor maintains that real property growth is lower than inflation, so you’d be better off investing your money in other commodities. He doesn’t take into account that we can gear property. Let me give the doctor a simple example again, because one day someone is probably going to forward this to him, and I don’t want him to struggle to understand it.

Let’s take an investment of R250,000, on a Treoc-type townhouse of R500,000, with a bond for the balance. If the capital value grows by just 5% per annum, the return on investment in the first year will be 10%. But this type of property doesn’t grow at a mere 5% per annum. According to ABSA’s annual property statistics, properties like this, 80m2 – 140m2 have been growing as follows:

Average for the last 5 years is 6.3% per annum
Average for the last 10 years is 13.8% per annum
Average for the last 20 years is 11.5% per annum
Average for the last 40 years is 11.4% per annum

So if someone had invested his money for 40 years in Treoc-type properties, with only 50% bonds, his return would have been on average 23% per annum. If he used 90% bonds, the return would have been approximately 60% per annum.

By the way, every time I publish calculations like this, I get a lot of criticism from the financial advisor industry. They say my calculations are incorrect. Guys we work with many variables and therefore it is understandable that my calculations might differ slightly from yours, but the bigger picture is 100% correct.

I’m sure the learned doctor can do these calculations himself. So why doesn’t he, then? I wouldn’t be surprised if the money powers pay him to put forward this rubbish. After all, the money powers want people to believe this nonsense and rather invest their money in useless annuity products and savings plans.

As I said, his story isn’t going to change, and in the past he has already attacked me personally from the podium because I tell people that property is an outstanding investment. But what is different with his latest nonsense is that he apparently can’t understand why South Africans are so obsessed with property ownership, and he recommends that they rather follow the European practice where 60% of people rent and never buy property. To hold this up as the ideal is the most ridiculous remark, advice, or whatever else you want to call this sort of nonsense, that I’ve ever heard.

In my first book, Let There be Light on Wealth Creation, one of our Treoc members, Bettina Horvath, told her story. I’ve published the relevant excerpt below. If you read it, you will see why 40% of Europe’s people are getting richer while 60% of them are getting poorer. Is that what the doctor and the money powers want? Someone should stop them!

The upside, of course, is that the doctor is creating tenants for us. Thanks, Doc!

Property Investor By Accident
by Bettina Horvath