Provincial housing funder the Gauteng Partnership Fund (GPF) bridges the gap between government and the private sector on affordable housing projects. We asked Vinolia Mashiane, investment officer at the GPF, what draws her attention to a project.
What does the GPF look for in property entrepreneurs?
We look for people who want to get their hands ‘dirty’, who show commitment and who will have a hands-on approach to the project.
What are the red flags?
There are four dead giveaways: Lack of initiative when it comes to conducting their own market research and location analysis in accordance with our business plan framework; an absence of updated compliance documents such as a tax clearance certificate; little interest in attending training programmes and workshops that are offered by our mentoring companies as this indicates a self-entitlement mentality; and compromising on the quality of a project to save funds.
What attributes do you see in successful entrepreneurs?
Those who do well work hard. They have a team-focused mindset and engage with the entire professional team. They get involved at every stage of the development, making time to attend training programmes that enable them to understand the whole property development value chain. They also have a vision for their company and they want to make a success of it.
Can these attributes be taught? If so, how?
It starts with a vision, and doing some desk-based research into the type of business you want. Once you have that, it’s easier to be committed to working hard and making your venture a success.
The ‘business’ of investing in property can be taught through training programmes such as those that our mentoring companies offer to our participants under the Entrepreneur Empowerment Property Fund Programme.
How important is the pitch and what information should it contain?
The funding proposal is critical because it gives a first impression. It will show if you have really done your homework. The GPF provides a business plan framework for prospective entrepreneurs, which indicates what information is required for a bankable business plan.
Most investors will have a specific mandate and a business plan framework, so do your homework and research the funder before you approach them. This way you know if you suit their funding criteria, and you can get all your paperwork right from the beginning.
In our case, the proposal must include information about the borrowing entity, the directors and shareholders of the company, and the vision and mission of the company. All legal company documents – including the tax clearance certificate – must be included in the proposal. Project-specific information includes:
- Valid offer to purchase
- Type of development (medium- and high-density affordable residential rental units)
- Project name
- Location of building (city, town, precinct and erf number)
- Type of unit
- Estimated construction start and end dates
- Mode of construction (greenfields, upgrade, conversion)
- Estimated project cost, including refurbishment and construction costs.
What really captures your attention when it comes to property projects?
Location, location, location! Projects should be close to amenities such as schools, areas of employment, social amenities, shopping centres and public transport. Also important is the type of units proposed – they have to be affordable for people earning below R15 000 per month.
It must also be proven that the proposed rentals are achievable in a given area and that the income will be sufficient to service the loan.