FIFI PETERS: These days you hear a lot of businesses talking about making a profit with a purpose. Gone are the days where it was just about making money. Nowadays many businesses have seen that they can strike a balance between being profitable and improving the lives of others. One of those business people is Khosi Makolota. She has given some people a sense of dignity by improving their livelihoods and living standards – and she’s making money out of it at the same time. She joins the Market Update.
Khosi, thanks so much for your time. Tell us a bit about your project and what you did with this vacant piece of land that once used to be quite full of shacks.
NOMAKHOSI MAKOLOTA: I bought the stands in 2011, two or three stands next to each other with shacks. Then I tried to raise funds to develop them, but I was not getting funding. So I sold one of the stands to raise money to develop. The money still was not enough.
So in 2017 I made a decision to leave my job and focus on getting funding and making my dream a reality. My mentor introduced me to uMaStandi, which is a financing company that focuses on township development. I applied for funding and was approved in May, and then in September we started with the development. So we developed 13 student units, the bachelor units that we are renting out.
FIFI PETERS: How much did you initially buy the three stands for?
NOMAKHOSI MAKOLOTA: R150 000 ……[check]…1:43.
FIFI PETERS: And then afterwards you say that you needed more money to develop these stands. At the time you didn’t have any luck in raising funding, so you sold one of these stands for R150 000, I imagine.
NOMAKHOSI MAKOLOTA: I sold it for R350 000.
FIFI PETERS: That’s quite a premium that you made. How did you manage to strike that deal?
NOMAKHOSI MAKOLOTA: Well, I sold the stand through an ……2:04 agent. Because of that venture, I didn’t make much out of that – I had to pay about R80 000 …… and the lawyer’s fees and stuff. I got about R200 000 out the deal.
FIFI PETERS: And then you say even with this R200 000 it still wasn’t enough because you needed money to develop the stands that you had bought. So how much in funding were you able initially to access?
NOMAKHOSI MAKOLOTA: I got funding for R1.2 million to develop ……2:33 of the project.
FIFI PETERS: Wow. And in the process you say that you also quit your job, so that you could actually be fully committed to the project.
NOMAKHOSI MAKOLOTA: Yes. I left my job in 2017 so that I could focus on getting the funding and give it all my attention because, when you are working, sometimes you need to attend meetings and you can’t because you need to work and stuff. So that was another thing that was delaying my getting this project kicked off.
FIFI PETERS: It’s quite a risk that you took. In 2017, if I trace my memory back, things were pretty tough for the economy, and at that time unemployment was high. So quitting your job, I imagine, wasn’t a decision that you took lightly. Why were you so committed to this project in seeing it through?
NOMAKHOSI MAKOLOTA: I’ve had this lens for over five years now and there’s nothing happening. In fact, rates are coming up and we are ……3:27 out of time. So that’s when I made that decision that ……
FIFI PETERS: Okay. So now we are in 2021. Just describe to me what these stands look like. What kind of units have you been able to build on them?
NOMAKHOSI MAKOLOTA: It’s open studio with a shower suite. They have like a kitchen mate, your wardrobe and open plan with your lounge and your bedroom. There are 14 units, seven downstairs and seven upstairs.
FIFI PETERS: That’s incredible. And do you have tenants for all of them?
NOMAKHOSI MAKOLOTA: All of them. We were very lucky – even through Covid the places were fully rented out.
FIFI PETERS: That’s incredible. And just on average, how much is the rental at one of your units?
NOMAKHOSI MAKOLOTA: It’s R2 500 for the smaller units, and then R3 000 for the bigger unts. They are designs that they ……4:16 2005, but they need a ……station and they’re high rise. So we get …… very big, and there is enough light as well.
FIFI PETERS: What was the most challenging process about seeing this project through? We’ve seen with many construction developments there are a whole host of delays. Sometimes it’s an issue around bad weather and the rains, sometimes it’s an issue around maybe a supplier running short of a certain product. What were some of the most challenging things that you faced in this process?
NOMAKHOSI MAKOLOTA: My biggest challenge was when my contractor passed away during the foundation phase. We had paid him a deposit and we were meant to reach our target within six months. I didn’t have time to go through the legal route to get out of the contract with his company, so I had to step in and take over so that we [could] finish the project.
FIFI PETERS: You clearly overcame this project [hurdle]. As you say, you now have tenants who are paying you rent and who manage to pay you rent despite the pressures of Covid-19.
You invested quite a lot of capital – not only your money, but also your time and also a lot of emotion in seeing this project to success. Is it profitable? Have you realised the return on your initial investment?
NOMAKHOSI MAKOLOTA: Yes, I have. It’s profitable. I’m making enough and I have enough funds to pay for insurance, the loan, and I also have two people who are employed full time. So it’s very profitable.
FIFI PETERS: Your project is something that quite a number of people have admired, such that you were even awarded for it – quite prestigious awards in terms of the efforts that you have made. The question I have for you, Khosi, is: what’s next after this?
NOMAKHOSI MAKOLOTA: As of next month in December, I’ll be starting with phase two , which is next door to the current [project]. It’s called ……nai 6:15. We are starting with that construction, hoping to finish on time in six months, and then moving there I’ll be branching out to look for other properties outside Soweto now, to develop the same quality with Venture Property.
FIFI PETERS: How will phase two differ from the units in phase one? Are we still looking at bachelors, or maybe you’re looking at something a little bigger?
NOMAKHOSI MAKOLOTA: We’re looking at the same thing, but only at two one-bedroom units to be top studios, and two one-bedroom units. But everything else will be the same.
FIFI PETERS: And what’s your final message for people who are wanting to invest in a property like yourself?
NOMAKHOSI MAKOLOTA: It’s for them to do the research on the property before purchasing. They should work with professionals and must never compromise on the quality of their development; and if you have a dream never give up on your dream.
FIFI PETERS: Exactly, because it can come true and make you money – as has happened in your case.
Thanks so much for sharing your story with us, and best of luck on phase two and all the other phases that you have up your sleeve. That was Khosi Makolota joining us on the Market Update.