THE STATE OF THE MARKET AND THE GLOBAL ECONOMY: WILL YOU RISE OR FALL?

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My apologies for this blog so late in January 2016. To be honest, I have been thrown by the state of the market and the global economy. Little positive has come out of all the news and the negativity has taken on Grim Reaper proportions. Every article seems to be focussed on the negative and bad news aplenty has been there to write about. El Nino and El Nene, the collapse of the oil price, the pressure test of the Oil industry and oil-producing countries, threats of social unrest as the drought intensifies and the oil-based economies suffer, Donald Trump and Hiliary, and the Rand on its way to R20/$. Each and all contributed to a flood of depressing information.

But that said, some sanguine voices have arisen and a semblance of encouraging, well-backed information has begun to emerge. So let’s have a look at a few of the pillars that underpin some good news and find our way into February and beyond. Cliché or not, Henry Ford sounds clear: If you think you can or you think you can’t, you’re right.

Low Oil Prices: I often think Thank Goodness for the lowest oil prices in a decade. For the consumer of oil, that has been a saving grace. Imagine having to buy Oil at R16.50 per Dollar? I guess the price at the pump would be R14+. Macroeconomically, the oil price also contributes positively to Inflation which, as we see later, must be on the rise.

The problem that is being referred to by many writers, however, is the impact of low oil prices on the oil-producing countries. Of the BRICS countries with whom we have close co-operation, Russia and Brazil both have significant economies built on oil. Then there are the Asian countries like Saudi Arabia and closer to home, Nigeria and Angola. If a country endures dramatic, sustained drops in the price of its richest export, what happens to its people? Of course, the worst is feared especially at levels below $30. Today (25 January) it is up to $32.18 from last week’s sub-$30 prices. That could prove to be good news even for own Sasol.

USA interest rates rise: The USA interest rate rise signals the FED’s satisfaction with the US economy. 2% GDP growth is not fantastic but coupled with a 5% Unemployment rate, is cause for a small move. This is the first rate rise in 8 years and sent the currency markets into a flurry. Thanks to our Reserve Bank, we had already begun the process of raising interest rates. This did help cushion the decline of the Rand. The FED has signalled more increases but I suspect these will be 6 monthly and of the order of 0.1 to 0.15% – right now nobody wants to allow the US economy to stumble.

Inflation: The world has experienced extremely low inflation as the interest rates and China have functioned in tandem. Inexpensive production out of China to global markets and very low interest rates have kept Inflation at lows for record periods. But, post the sub-Prime crisis, the printing of money became commonplace and it was just a matter of time before inflationary pressures would reappear. Rather than focus on the rest of the world, South Africa will be hard hit by this issue. A weak Rand, set to weaken much further, and the drought with its Maize imports will hit Inflation hard. A particular make of 4X4 has risen from R713000 in 2012, to R890000 in 2015 to R980000 in 2016. That’s 13.5% per annum or twice the upper range of the SARB’s target. Far more relevant is the current requirement of Maize to be imported at a cost of R20bn; once we’ve paid for it, our producers need to make a profit on sale. The Poor amongst us will bear the brunt of the drought.

My sense is that our Inflation will rise significantly this and next year and exceed the target range of 3-6% even this year.

Interest Rates: In all of this, our interest rate was generally projected to rise by 1.5% from about mid-2015 to end-2016. My sense is that we could see a rise of another 2% this year in order to protect the Rand/$ exchange rate and in an attempt to curtail Inflation. This will result in a  corresponding rise in mortgage rates.

What is really positive is that Pravin Gordhan said last week at a Press conference that he would do everything in his power to prevent the Rating Agencies re-rating South Africa to non-investment grade (Junk bond) status. By the way, Brazil and Russia are already there and Saudi Arabia is, like us, on the brink so we are not the only ones in this pickle. The question will be if he has the resources in the budget to do so and a tax hike seems to be on the cards as part of his attempt. Sadly, a downwards rating will weaken the Rand and increase Inflation and interest rates.

China at 6+%: The way many people have been writing, you would think China is in recession. This is not true and that country is currently growing at about 6.8% per annum. Their stock market seems to warn of an underlying crisis but it has 50 million [you read right: Fifty million] personal investors and their layman’s view could be “run to avoid the stampede”. Assuming this is not the problem, the Chinese stock exchange should settle at a new, albeit, lower equilibrium, and stop spooking the other world markets.

Goldman Sachs report: Prime Minister Modi in India is credited with the revival in that country. India is growing at 7.2%  and has introduced business friendly policies that have brought about a marked improvement in growth and employment. China’s 6.8% is then ahead of Indonesia at 4.5% and Turkey at 3%. Overall, Goldman’s report puts 2016 global growth at 3.5% (2015: 3,2%), confirming the World bank view of 2016 growth between 3 and 4%.

It would seem therefore that many economies are progressing well even though stock markets worldwide have found themselves in a fear-and-greed state. The consequence of this is volatility and we will need to get used to it for the next quarter or two assuming the oil price retains some stability above $30 and China settles down enough for a recovery in commodity prices. Hold thumbs!

So, as we read about this mixed up world economy, there lies a decision for each of us – Rise or Fall. I understand that it’s “talking psychology” again but I think Henry Ford had a point. Why is it that some businesses will do well despite the headwind and others will crumple into a heap? Surely attitude, determination, a go-through spirit and sound leadership has a massive role to play. Look how India – complex beyond compare – can be turned around by a man and his vision translated into action by his government. Compare that to what we endure despite our blessed resources, sound financial system, great infrastructure and people; really, there is no excuse. On the other hand, we are not immune nor an exception – Australia is suffering the commodity price slump, Europe is struggling to come out of its economic woes, the whole of Southern Africa is in the grip of drought, and the USA and the UK are two of the most indebted countries on earth. But, instead of bemoaning our dear country, stand up and be the difference you want to and need to see.

Homeloan Junction will commit to putting its best foot forward. In doing so, thank you, in anticipation, for the support we will receive from you in 2016.

Yours in Property,

Jack

THE “PEOPLE MATTER”

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In our December blogs, we commenced a trilogy of practical, challenging and good news articles for the Christmas Season. One of the quotes that I referred to was that of Anatole France: To accomplish great things, we must dream as well as act. It is repeated for ease of reference.

As a quick recap, in our first article we wrote of four mission critical activities that you could undertake before Christmas so as to ensure a successful 2016. They are:

1.      Set a Vision bigger than you
2.      Determine the timeframe and set the milestones that need to be achieved
3.      Set the goals for the milestones
4.      Write down the plan of action

The second article was focused on the all-necessary, Execution. Indeed, the first is daydreaming if you do not Act with Intention. The headings were:

1.      Clear and communicated goals
2.      Bringing the resources to bear
3.      Management control
4.      Hard work

In this third and last blog as we rise into the fun and family of Christmas, is the most important mission critical activity in my humble opinion. In order to introduce the topic, one of my best learnings from a programme at Harvard was a quote by the ex-Chairman of ALCOA [the Canadian equivalent of Huletts Aluminium]. As background, he had been the CFO for many years when the board sought a new CEO. Of course he was highly competent at finance but may have lacked the “leadership flair” required to be the CEO. He managed to convince the board and was appointed. He tells of how he sweated over what he would do to stamp a culture of “People matter” into the organisation. He decided that as people do matter, he would introduce a culture of Care to the organisation.

Given the nature of his industry, he decided that Safety would be his first priority. Soon after his appointment with the issue of Safety clearly communicated as a matter of priority, he visited one of Alcoa’s plants. There he came across a person grinding metal without safety glasses. He asked why and discovered there were not sufficient glasses to go around so, on a first-come-first-served basis, some workers were allowed to take the daily risk of eye damage. He called the Supervisor over, confirmed the story and fired him on the spot. Word sped around and his leadership was stamped on what became an incredible period for the company. He then said this, which I repeat often:

People give you their hands, their heads and their hearts [and then what really struck me] and they give them to you in that order.

He made the reality and the requirement of making People your primary focus absolutely clear to me. He encapsulated all we require to make our businesses happy and healthy. He also raised the bar very high for me and every one I worked with. Indeed, it is obvious to me that Mutual Respect and A Sense of Belonging are core pillars for any business.

Let’s spend some time on the cusp of Christmas, unpacking these four elements:

1.Peoples’ Hands
You buy peoples’ hands. When you interview a new person and appoint the best of the candidates, you make them a job offer which they accept. The first thing they read is the salary, the benefits and the bonus. The rest is waffle that they eventually prove or disprove. I read my son’s job offer the other day and it commenced, quite un-customarily, with a statement about the culture of the company and the style of management and employee interaction that they sought to portray, them to him and him to them. I was impressed with that and wished I had applied such a statement in my offers over the years. It became the mirror against which he and they could reflect every interaction going forward in his career. What’s most impressive is that they have not let him down on one issue so far. But that said, they have paid him and bought his hands. His labour, or as the economists would call it, his unit of labour is R”So much” per hour and his Letter of Appointment tells him the hours he must work per day for the pay he will receive.

It is tragic that many labour polls repeatedly confirm that staff have decided that, treated as a unit of labour, you can only expect their work. Given the hours [obviously excluding lunch, tea times and smoke breaks in this scenario] and the job’s instructions, that’s what you can expect. No more, no less. I have worked with many people in large corporates that see work as a means to an end – it’s not just prevalent in government.

2.Peoples’ Heads
So how do you break out of such a menial, labour-only mentality? Begin to see people having a sense of meaning and a desire to achieve.

Two well-known motivational theories come to mind: Maslow and Herzberg’s theories. Maslow believed people seek to rise from Physiological needs, through Social and Emotional needs to the Need to Self-Actualise. Stephen Covey of Seven Habits of Highly Effective People fame, took this a step further to Self-transcendence being the need to actualise in order to serve others and live life at a level higher than your self-centred needs. Of course, self-preservation to self-transcendence is a journey but, as a leader, you can assist in motivating the upward tendency at the level of each individual’s potential.

Herzberg [Google his theory for further insight] speaks of Hygiene factors and Motivators. Hygiene factors eg never enough paper for the copier machine [or the toilet :)], aggravate people but only become conspicuous by their absence. They need to be solved before their irritation turns into a reason for demotivation. But, Motivators such as Achievement, Promotion, and Recognition, become lasting forms of motivation. Only once in my life have I seen a person who questioned their promotion and eventually stepped down; the rest were extremely happy. When last did you restructure a job to give more responsibility, catch someone doing something right, compliment achievement or tell someone they have what it takes to succeed? If you want heads at work – thinking, questioning, curious, initiating, deciding, improving heads at work, then look to yourself and the manner in which you handle people.

3.Peoples’ Hearts
Hearts are not easily or quickly won. Just watch The Bachelor J. We all feel vulnerable giving our hearts to someone – will I let them down, will they reject me, it’s just silly or too emotional, will they hurt me or divulge confidence? How much more unlikely giving your heart to your company or your boss? It’s very tough to win people’s hearts. So what is the secret to getting the brain switched on as the employee enters their office and then giving it everything they’ve got as an individual and as a key team player with their colleagues and their team? You build trust and confidence; it takes time and patience. Look how the ALCOA CEO started – Safety first – and then the rest. In a multi-billion Dollar enterprise, he put the People first and fired anyone who didn’t understand the Rule – for him it was not a game; the protection of his employees was non-negotiable and sending them safe to their families every night was HIS responsibility. How do you think it feels when you work with [never “for”] a boss like that? If you can trust him to worry about your eyesight, perhaps you could trust him with other important things. And, by the way, his Union relationships improved dramatically as well.

So it is, you win peoples’ hearts one step at a time. What do you get for your effort? Commitment, Dedication, Loyalty [not the kind you only get from a Labrador], Compassion, Others-centeredness, Care, Growth and, a big one, Willingness. I have been blessed to experience those kinds of people even in the most dire of circumstances. Each of us who floundered our way through 2008-2010 needed every scrap of “heart” that everyone could muster. Try retrenching people when you’re still doing well because pipeline is still strong whilst explaining that the pipeline was going to collapse soon [by 90% eventually] and the packages they are receiving now would not be available when that happened. You need Heart right then ‘cause hands and heads just don’t cut it. And even better, when things are going well and recognition is being handed out, Heart accepts it gratefully and determines to do more. Perhaps, in a nutshell, it’s just amazing to work in a company where hands, heads and hearts come together every morning to enrich colleagues’ and customers’ lives.

4.Peoples’ Order of Priority
Let’s dwell on the negative for just a moment to make a point. If you breach “heart” in a relationship, everything recedes immediately back to “hands”. A sad fact. It is no different in your personal life as what it is in your business life; it takes years to build trust and confidence and minutes to dent, or worse, destroy it.

On the positive side [it’s Christmas after all], the process of building from hands to head to heart is quite possible. Believe it or not, the Golden Rule is a very good place to start. How do you like being treated? You accept a job you’re confident you can do, you get paid month after month, you get some targets and you work hard to achieve them and then you are promoted by a boss who indicates they like you and you receive an increase and carry on performing and then, when your parent dies, the boss goes to the memorial service out of respect for you……..not too difficult when you read it. And what’s the Golden Rule – “Do unto others as you would have them do to you”. It sounds childlike, but it isn’t that much more complex. Let’s try it another way. You take the job, but it’s a little more than you can chew so you approach your boss and they agree to help you. You start with some mentoring and they set tasks for you to achieve. If you don’t, they correct you and if you do, they compliment you. Slowly but surely, admitting mistakes and building self-confidence, you achieve higher and higher targets and get rewarded in the process. How does it feel and what would you not do for that “fabulous” boss? You could probably mention someone who has meant that much to you – a teacher, a spouse, a boss – someone who built your confidence, enthused you to higher things and privileged your life. The order is always the same – hands, head and then heart – and your personal values have much to do with the process. To explore this further, you may wish to look at McClelland’s X and Y theory. How you choose to see people often determines the height to which they rise; starting with your spouse and your children.

It has been a privilege writing these blogs for Homeloan Junction. They have stretched me and caused me to revise what I know and research what I need to know. If they have benefited you in any way, we are pleased that we could make a small difference in your life. 2016, in the light of local and global events, looms before us. But, as a nation, we have known worse and overcome with application and faith. We will do so again. For each of us, the challenge is to do what we can, to influence what we can and to harness the resource of our People to achieve the goals we have set and agreed. It is no different for a self-manager, or Homeloan Junction, a corporate or a country. We trust you will take the time to reflect on a vision greater than you and then action it to the point that your heart knows meaning and blessing in the years that lie ahead. Two sayings, believe it or not, off T-shirts in a gym:

Whoever you are

Wherever you go

Whatever you do

Be Yourself and live your dreams.

AND

I determine to:

Be Active

Be Healthy

Be happy

Be Me.

 

And one for the road, the prayer of St Patrick of Ireland:

May the road rise to meet you, 

May the wind be always at your back, 

May the sun shine warm upon your face, 

May the rains fall soft upon your fields, 

And, until we meet again, 

May God hold you in the hollow of His hand.

 

Happy Christmas!

Yours in Property

Jack

 

South Africa can be very proud of its property industry

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I was having a look at the ‘net and came across this headline: SA property sector worth R4.9-trillion

I know, I felt like that as well: So much property and so little in my name. It happens to all of us!

But, that got me thinking about our country and the industry…………

The South African property industry is significant in many respects:

  • Property rights are secured in our Constitution and we trust that it will stay that way.
  • The Deeds Office nationally is functional and does relatively well in securing our property rights as well as the rights of our financiers.
  • Our property law is well established and we produce outstanding conveyancers and property experts in many fields of the property market.
  • It is very well managed with a number of globally competitive property funds that own significant amounts of property on behalf of shareholders.
  • Our estate agents are highly skilled and requiring of continuous training and development in order to stay at the top of their game. Estate Agencies, are widespread and whilst the large franchises dominate, there is still room for the smaller business owners to ply their trade off the back of excellent exposure and/or relationships in their community.
  • We are building property across the spectrum of requirements, from the poor to the aged and up to the rich. Whilst the process could be much better, developers are getting access to land, and we hope ever-improving, to electricity which was a real issue a few years ago.
  • In our cities we have leafy suburbs and our own “Hollywoods” and, by and large, we live safely though behind some very high, secured walls.

 

Not a bad situation to be in as a country. Yes it could be better, our cities could be better managed in key areas of delivery, our poor ramshackle areas could be revitalised and our informal settlements are a blight on us, but it is probably fair to say that we have a good property industry overall. In fact, I would be prepared to call it a significant and contributing national asset.

The CEO of the Property Sector Charter Council, Portia Tau-Sekati, presented excellent research to the industry in September. The sector contributes significantly to the country’s economy and in 2009 comprised 8.3% of gross domestic product (GDP), according to a South African Property Owners Association research report entitled “The economic impact of the property sector in South Africa”.

According to the Charter Council’s study, only 1% of the country’s land is urban and residential, about 73% is natural pasture, approximately 12% is agricultural and the remaining land is comprised of conservations and reserves. Two-thirds of the property owned in South Africa is residential and worth R3-trillion, while commercial property is worth R780-billion. Undeveloped land that is zoned for development is valued at R520-billion and publicly owned property, including national, provincial and local government and state-owned enterprises, is worth R570-billion.

“Retail property has the highest value of the commercial property sectors in South Africa at R340-billion, followed by office properties at R228-billion and industrial properties at R187-billion,” the Charter Council reported. “Representing a small comparative value of R25-billion is hospitality, leisure and ‘other’ property.”

According to SAinfo reporter, the study will be an annual one and the Charter Council aims for it to become the benchmark against which progress in the industry is measured. “The study is a useful tool for understanding the South African property market and its dynamics,” Tau- Sekati said.

To read more go here.

I make my point again against the backdrop of this recent and defining research that South Africa can be very proud of its property industry.

Against this backdrop, the SARB’s decision to hold off on an interest rate hike late last month augers well for the industry. Inflation figures will be announced today [19 October 2015] but are expected to remain within the 3-6% range so no serious danger there. Of course, the whole world seems to be waiting for the USA rates decision and we have the unfortunate matter of the weak Rand, ostensibly because of the US$ strength. There is no doubt that the SARB decision, as much as it would like to raise interest to protect the Rand and still inflationary fears, is set against the context of South Africa’s dismal economic growth. That will probably be revised to a 1.5% forecast but it is, at best, hovering unacceptably low.

John Loos, FNB’s Property Economist, speaks to the interest rate and makes valid points as usual. Firstly, a gradual rise in interest rates prevents any need to over-react later and keeps lenders and borrowers cautious. Secondly, he makes the point that lending does not grow the economy but only productive lending does that with any sustainable effect. Finally, he states the obvious that we all need to hear: Indebtedness is not good for our economy [and back pockets] and we should use the low interest rates as an opportunity to reduce our household debts as quickly as possible.

According to Private Property, Cape Town has the most exclusive properties and precincts of incredible value. Private Property, quoting Lightstone research, reports, “Cape Town may not be the financial epicentre of South Africa but it continues to dominate the list of most exclusive addresses and data has revealed that the Mother City lays claim to three of the five most elite addresses in the country. According to the Lightstone research, the most expensive street in South Africa currently is Nettleton Road in Clifton, where the median price for houses is R27.1 million, followed by Glen Beach Road in Camps Bay with an average house price of just under R24m. Head Road in Fresnaye takes fourth place with an average selling price of R21.44m. Sandhurst in Johannesburg scoops third and fifth places with a median sale price of just under R25m in Coronation Road and R20.76m in Rivonia Road. In the list of most expensive addresses in the Western Cape, not surprisingly, four of the five most pricey are situated on the sought-after Atlantic Seaboard, with fourth place taken by Eastcliff in Hermanus.

Lew Geffen says: “The upswing on the Atlantic Seaboard started in 2002 when a property in Chilworth Road in Camps Bay sold for R23m, but the demand for luxury homes really began to peak 2008 when 13 properties in the R20m plus price band changed hands to the combined value of R414.193m.”  “In spite of the credit crunch which hit in 2008, property values on the Atlantic Seaboard have continued to grow exponentially and now it is not only home to the most trophy properties in South Africa; it also fetches the highest price per square metre.”

Closing on this article, Cape Town may be home to the most luxury properties in South Africa, although data from New World Wealth shows that Johannesburg still has the most Dollar millionaires in the country.

So there you have it, Cape Town has the properties and Johannesburg has the money. Like Homeloan Junction’s excellent service, some things never change.

Yours in Property

TO ACCOMPLISH GREAT THINGS, WE MUST DREAM AS WELL AS ACT

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individual or firm; they are not more important or less important. A friend of mine consults to a coffee company. They have the opportunity of cracking the Retailer market [high turnover, low margin] or of rolling out a franchise of brilliantly branded coffee cafes. The first strategy looks powerful on paper, but the second, by far less in turnover, makes more money. Interesting for the entrepreneur because he physically can’t do both. He is faced with goal prioritisation and then goal optimisation as he executes. Poor goal clarification can lead to a “straddled” strategy –  attempt to do everything and, whilst I may not fail at everything, I don’t optimise outcomes as I could have if I was focussed. In the book by Ashbury and Ball, The Winning Ways, they quoted Meyer Kahn, then-CEO of SAB, as saying he just did one thing every year. Sound seriously simplistic, almost childish. But you see his goal in those days was to internationalise SAB and become the biggest brewery in the world. His business managed 2nd and anyone who has SAB shares knows what’s happening right now as Anhauser Busch moves to acquire SAB, gain and African footprint, and be by far, the #1 brewer in the world. So your goal needs to be owned and communicated as the most important thing you need to achieve. If not, beware the new year resolution quandary.

  1. Bringing the resources to bear

In the course of establishing milestones or, in other words, laying out the journey of the Plan, you would have given thought to what it takes to achieve the goals. Apart from the caveat that entrepreneurs often take big risks, knowing what it requires to take on your goals is fundamental to Execution. Early January, you will begin committing resource to your Vision and its Plan. In the coffee example above, the owner needs to employ a Financial Manager without whom his tax, debtors and quick expansion could vaporise his business. A friend of mine taught me that businesses fail for two reasons: Success and Failure itself. Whatever the latter is you will understand, but the former is harder to comprehend. Success, and what the bankers call Overtrading, goes hand in hand. You may need new staff, more staff, new offices, more offices, more cash resources, more marketing, more stock – whatever is “more” could lead to unsuccessful Execution. From observation, Success fails even more conspicuously than Failure or, put another way, it’s just a bigger mess. So dedicate the resources that you have to the top priority goals and don’t overstretch them. Getting “one thing” done properly is more important as you build success than attempting everything. The only antidote to inadequate resources is clear prioritisation.

And, by the way, for many estate agencies, the most vulnerable resource is the Principal – You. Stretched too thin, you cannot execute optimally. You may put in the effort but something is bound to fail – your health or relationships, for example. You’re human so pace your ability to Execute as if it is a scarce  resource. By doing so, you may avoid much disappointment.

  1. Management control

I often think that this management discipline is the most neglected of all. In 1916, Henri Fayol laid down 5 functions of Management which were condensed over the years to four: Planning Organising, Leading and Controlling. Let’s face it, by the time you’ve done the first three successfully, the fourth seems redundant. Nothing could be further from the truth and, I would go so far as to say, what you don’t Control will control you. The five pillars of Management Control are: Set the Goal, Measure Performance, Evaluate Performance, Correct or Reward and Feedback [into Goal Setting]. A process is required to control an outcome. Space allows for just a few points: (a) Ensure that you can measure your goals. Some say you only get what you measure. (b) Evaluation takes time and effort. Look at what went wrong and what went right, assess future performance and what needs to change and compare current to desired outcomes. (c) We all correct well but few of us stop to reward well. From a pat on the back, to a restaurant voucher, to a monetary incentive to a large bonus – all Reward is good to ensure continued performance to goals. (d) Feedback is the process that informs direction. Think of it this way, you get to a destination by steering the car away from deviation and putting it back on course over and over again. Management Control is just like that and is mission critical to Execution.

  1. Hard work

The founder of Twitter was interviewed the other day. Asked about their success he retorted: Isn’t it funny how 10 years of hard work looks like an instant success? To the same point, many years ago our Bank came up with a slogan: Work smarter not harder, as part of a values campaign. I’ve got to be honest, I have never understood that and have always resorted to hard work, the right kind of focussed work, as a prerequisite for success. Continual attention to detail, looking for new things, personal application to the task, risk management and expenditure of effort has a way of winning through. I know successful people and all of them look like an instant success after years of hard work and sacrifice. Why should you and I be any different? In the process, don’t ignore three things: Exercise, Eating and Sleep.

Execution makes the difference between success and failure. In between is mediocrity. Only Success is desirable. 2016 can only be successful against a Plan that is well Executed. Otherwise hope for a geluksskoot [“a lucky shot”]. On the other hand, it is highly probable that a well-considered Plan and a great Execution will pay you rich dividends and serve others in the process. Why would you choose anything less for yourself and those you value?

There is one more ingredient, I believe. People.

Yours in Property

If you knew you had December to make your business highly successful in 2016, what would you do?

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“‘Tis the Season to be jolly tralalalalalalalah”.

So the carol goes. But just reading the pre-reporting on the Fitch rating which may see SA Inc achieve junk bond status on 4 December 2015, the “jolly” turns to “golly” in one foul swoop.

So for that reason, at the entree to this beautiful Christmas Season [I really struggle with “the Holidays” so please forgive me], I deem it a good idea to write a trilogy of uplifting articles. Trilogy, because I also need a break between Christmas, that very special Holiday, and New Year, that time when all the resolutions kick in.

If you knew you had December to make your business [read Life, if you will] highly successful in 2016, what would you do? Run for the hills, Dream big, Plan, Act, Take advice, Retrench your dead wood, Drink champagne, Motivate your people, Have a workshop, Write your thoughts down, [Eat, Love and] Pray; really, what would you do? This is the month of determination; in it you set the course for all that achieves success in 2016 – so what would you do?

We don’t know your circumstances, but if you’re reading this blog, you probably are a person who seeks to learn by being informed and challenged. You probably take the smallest scraps of thinking and learning and coagulate them into something you can work with to develop yourself and your relationships and your business. If you’re that kind of person, read on. Below are four major highlights that will define your year commercially and which deserve attention this month before you take a break. Four is not magical and I’m sure there may be more for you. However, dedicated focus on these four things are proven to be key ingredients of success.

First, an anecdote from my days at Nedbank.  At one Homeloan conference, a thoughtful organiser put a small card on my pillow that said: To accomplish great things, we must dream as well as act. The quote was by the famous French poet, journalist and novelist, Anatole France, who was awarded the Nobel peace prize for Literature in 1921. Another anecdote, which quote by Zig Ziglar I sent to my Son a few days ago, is: When you catch a glimpse of your potential, that’s when passion is born.

1.Set a Vision bigger than you

You see, Anatole was right to call the dream into being. Nothing in the conditionality he places on action detracts from our God-given right and responsibility to dream. There is  a thought that if your dream doesn’t scare you, it isn’t big enough. I would say that is extreme but something in there does raise the bar. My school motto is Per Ardua ad Astra which means “By hard work to the Stars”. I like that and wouldn’t if I believed in get-rich-quick schemes. It’s the “to the Stars” part that lifts your chin, drives out your fears and burns in your heart. It is the Vision in you that keeps you constantly thinking, wondering, searching and striving until you find the Confidence that this dream, this Vision, is for you. If you can’t buy the “hyper” in what I’m saying, then think about this – What would you like to change so that you double what you have now in one year? Sales, originations, the depth of a relationship, turnover or money? What would it take to do that versus what price you are prepared to pay? If the formula is acceptable to you, then what stops you from achieving that dream? In the stating of it comes the angst of how I would do it; in the envisioning lies the challenge and the risk. But without the genesis of this thought “any ol’ place” would be good enough. If there ever was a distinction between our soul and our spirit, it would be the deep desire for more that lies in the spirit. You can be content with what you have and where you are or you can begin to thirst for more. Set a Vision that is bigger than you. 

2.Determine the time-frame and set the milestones that need to be achieved

Bring your Vision down to earth. Unless you’re a dreamer, dreaming is a beginning but not the desired outcome. Our minds love pictures and can bathe themselves in daydreams and images all day long. Sweet dreams we say to our loved ones, but then they’re going to sleep! Given our December challenge above, there’s no time for sleeping just yet. We can rest later. You need to begin to think out what milestones will direct your achievement and when you would expect to see them on the journey to success. To keep it simple, milestones are quantitative indicators of your achievement. Think of it like this: any salesman loves the “hockey stick” approach to his annual goal. For years I’ve seen that, off target up to September, the super-salesman thinks he can achieve the rest in the last quarter. True maybe, if you’re GM of a holiday resort, but for the rest of us mere mortals, you probably can’t “shoot the lights out” in the final sprint any more than you could in the previous 3 quarters. Salespeople, yes you and me my Originator and Estate Agent friends, love the hockey stick and it’s expected air-punch but, alas, it seldom works. If you’re travelling Joburg to Cape Town in 14 hours, doing 90km/hour for the first 900kms will leave you with much catch-up from Worcester. The problem then is you hit law enforcement, sharp bends through the Hex and more traffic. Life and its achievement is no different and by the time you realise your mistake, it’s too late. From a brain point of view, as you click from the Vision in the right brain, you enter the Reality of the left brain. There you need milestones and a good sense of timing to keep focused on the destination.Determine the time frame and set the milestones that need to be achieved.

  1. Set the goals for the milestones

In point 2 I said the milestones are indicators. Give or take an hour or 30 kilometres, not achieving a particular milestone is not a major issue when you’re on the road. But in business, indications are not enough. Goals are required. If you look at the five pillars of Management Control: Set the Goal, Measure Performance, Evaluate Performance, Correct or Reward and Feedback [into Goal Setting], then you can see that a process is required to control an outcome. “Ag, it’s only 30 minutes” is fine for normal day-to-day driving, but winning rally drivers have their navigators assess their progress by the second, literally. Goals enable the fine tuning necessary for specific achievement. Goals are the hard rock of success. Over is good but Under is simply not acceptable to a Winner. Setting goals is hard work. You need to think and challenge yourself and re-think. You need to drill down into the milestones, decide on the price you’re prepared to pay and then drive out the appropriate, non-negotiable goals you want to achieve. Anything less in a plan is simply wishful thinking and the next time to get to think about it, you’ll be facing the indeterminable “hockey stick” reality. Set the goals for the milestones. Now!

  1. Write down the plan of action

In the Good Book, Habakkuk was told to write the vision down. Hey but it such a cool Vision, why not just announce it and turn it into reality. The reason was simple: We Forget. The plan is the document where you write down the Vision, its milestones and the goals. Then you write down the actions required and mentally rank their level of difficulty so as to understand the obstacles to their achievement. What you need to overcome is as important as prerequisites. You can reach for the stars as long as you like but you better get a ladder or “go virtual”. Not seeing these obstacles to a Plan and dealing them upfront is a figment of the imagination. One word of caution though, as I revert to this almost mathematical process.  Entrepreneurs see the vision, the milestones, the goals and the action plan but often choose to ignore the requirements. Sheer passion says I will [read: want to] do this “whatever it takes”. Fundamental to this approach and attitude is that I am a firm believer that Risk and its concomitant action, Risk Management, is fundamental to success. Entering a business, creating a BIHAG [Big Hairy Audacious Gaol], deciding to marry, all require you to take risks and then manage them. Why? Well, on the one hand, little goals are “more of the same”, they’re incremental and risk mitigating whilst big goals need you to jump at some stage. Once you jump, you’re committed; no turning back. On the other hand, you just cannot see all the pitfalls in the beginning. We often read about the overcoming of a Hilary Tensing team, Ford and Edison. The question is would they have started in the first place if they knew what they would face along the journey? You can’t see it all and the bigger the goal, the longer the timeframe, so the less you can see. But what Reward awaits Success! Write down the plan of action.

So there you have it plain and simple. You now have a choice, get ready to go on leave and just enjoy the silly season, or, do the hard yard to revolutionise your circumstances. It’s always a choice and the choice confronts us many time about many things in life.

In our next part of the trilogy, we’ll have a look at Execution. It truly is the sine qua non of Success. It is the as well as act of Anatole’s quote.

Homeloan Junction epitomises what we’re speaking about. It was built out of the ashes of Sub-Prime to be a top Performer in Evo, Ooba’s Aggregation business, in a few years. Why not approach us to see how we could help you turn your dreams for starting an origination business, or multiplying your existing success, into reality?

Yours in Property.

5 tips to selling your home fast!

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When selling your home fast is your top priority, it pays to get tips from the experts.

There’s nothing more frustrating than wanting to sell your home in a hurry, and not being able to.  It could be that you want to move to another part of South Africa to start a new job or improve your career prospects, or maybe you want to be nearer to a family member? It could even be that you’re moving abroad, but if you can’t sell your home, it might feel like your dreams are drifting away.

A home buyer’s journey can be an exciting adventure, starting by getting yourself prequalified for a homeloan to searching for a property. You don’t want the challenge of selling your home to ruin your chances of buying the perfect property, so how do you make it happen?

How can you get your home sold, and fast?

Life moves at a giddy pace, and spending months waiting to sell your place so that you can move on, can seem like torture. And what if, in that time, your dream home is snapped up by someone else?

Homeloan Junction’s tips take the headache out of home selling.  Not only can you rely on our national team to prequalify you for a homeloan for your new property, you can start your house hunt right away, knowing that you are doing the right things to get your current property sold fast.

Here are 5 tips on how to quickly sell your home and make the most of a homeloan to buy a new and better property.

Price To Sell

To sell your home fast, you’ll need to price it competitively.  Take the time to do your homework. Look at similar properties in your area: how much are they going for, which price range is selling quickly and which is remaining on the books? Use this as a guide to pricing your own home, but don’t be afraid to take advice from the professionals.

Use The Power Of The Internet

Busy South Africans, especially those serious about buying property quickly are avoiding time-consuming personal property viewings. The trend is to take virtual tours of properties that are advertised online. Take advantage of this trend, and advertise your property online with photos and a video tour.  Without the inconvenience of a show day, you will be reaching serious buyers actively searching for a property just like yours.

Make First Impressions Count

In today’s competitive housing market, South African buyers are quick to compare properties. To sell your home quickly, you’ll need to take a fresh look at it. Does your home deliver? If you’ve lived there a long time it can be easy to become blind to what it actually looks like.

Someone looking at it for the first time is likely to notice the flaws that you no longer see – like the half-painted wall in the bathroom or the marks on the carpet in the lounge.

Walk around your home and take a good look at it. Is the driveway weed-free? Are the bathrooms fresh and clean?

Put yourself in a buyer’s shoes, and ask yourself what could be improved. You only get one chance to make a first impression, so make sure that your property looks inviting.

Get Help From The Experts

When it comes to selling your property in a hurry, a professional estate agent can be your best friend. They can help you simplify the process that comes with buying and selling property. Just how do you find a great estate agent? One way is to talk to your bond originator, as not only do they provide homeloans, they also have long standing relationships with estate agents, and are able to recommend agents that have a great track record.

 Get Prequalified for a Homeloan

The South African economy is starting to rise again from the dip caused by the global economic slump, that’s good news for our country’s housing market. Nevertheless, some people find it hard to get the funds they need in order to buy a new home. That’s where the services of a bond originator such as Homeloan Junction can prove invaluable, let us give you buying power by prequalifying you for a homeloan.

How did you fall in love with your home? Was it quite by accident, or have you been looking for  some time? The trouble is, once you’ve found the home you really, truly want … how will you sell the one you already own? By following these 5 simple, yet effective, tips you can be in your new ideal home quicker than you imagined possible.

Yours in property

Vincent

IT’S TIME TO BE A FOX ( Part 2)

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Our previous blog ” It’s time to be a fox” looked at the concept of hedgehogs and foxes. In this blog, we suggest some assertive behavior for the next period of our economic cycle.

But firstly, let’s reiterate. Hedgehogs

  • know one big thing
  • see the world through a filter of one big idea
  • stretch the idea and build data around it
  • are confident to predict and make many of them
  • drum on about the “tried and tested” formula
  • love complexity
  • are better in stable environments.

Foxes:

  • know many things
  • gather information from a wide spectrum of inspiration and sources
  • are self-critical and update their beliefs when faced with contrary information
  • are cautious about predictions
  • look for a new idea if something is not working
  • drive out with simplicity
  • are better in rapidly changing environments.

With that reminder, we are approaching rapids in our economy. That may sound like “one big idea” but it certainly is the consensus view of many writers at the moment. Just reading JP Landman’s article, Coming to a Standstill, dated 9 September 2015, he states that electricity and strikes initiated the SA growth problem, but these factors have been exacerbated by lack of confidence, a growing chasm between the public and private sectors, and a incoordination in key growth sectors. The SARB has also revised growth predictions and raised interest rates right into the headwind of a deteriorating economy in order to deal inflation. Not pretty at the moment, I’m afraid.

So what should you be, a fox or a hedgehog? We’ve been there before and survived, is a real hedgehog statement. You should’ve been around in 2008 to 2010, is another. Alles sal regkom, is a grand old hedgehog statement, loaded with stoicism and sense of duty. May I put to you that there is another way and explore the alternative.

The Foxy thing to do is to

  1. Review your business Good times layer in costs and make income assumptions. As for costs, scan every cost in your business and eradicate what even smells of complacency. As a radical move, you may wish to signal this effort to your people – stop the cake on Friday, change the coffee brand; just do something that makes everyone aware that times have changed.
  2. Review your activities – Golf on Wednesdays is really cool but stopping it will give you 6 good hours of extra work. And the message for your people will go without saying – news will get around. Start every day with a 2-Do List. Know what is optional and what must be achieved today, without exception. Follow-up on outstanding payments – years in business have taught me that “your best client [read, friend] will always pay you” probably means he is battling to pay. The other poor souls have already passed that point and you need to be the one creditor who collects. In property, chase up registrations and outstanding mandates. Remember management control is: Setting standards, Measurement, Evaluation, Correction or Reward and a Feedback Loop. Nothing short of that journey, is Control. Don’t delegate control if you’re accountable – by the time “your bank account tells you” it could be too late.
  3. Accept a Lower Standard of Living but not a Lowering of Standards: You can be poor but you don’t have to be dirty. Values drive behaviour and the values in your firm can leave space for facing the negative reality in the bad times, but not for excuses. You cannot create motivation but you certainly can channel it. Don’t allow your people to become de-motivated. There is a process of excellence in the business that needs to be maintained; maintain it. Customers certainly don’t need to know if you’re responsibly dealing with lowered economic growth. Stand up when answering the phone, convey positivity in your voice and your eyes, remain solutions-orientated and think possibility – there is nothing like sticking your chest out and tilting your chin upwards to make bad vibes go away. Remember your brain doesn’t know if you’re imagining or telling the truth when you decide to be positive in the face of circumstances. Imagination rules your world.
  4. Hunt for business: I have sat in airports recently reading the newspaper. I have even read the latest RW Johnson book and I am convinced that the day you believe it’s over, it is. Hunt for business. If you don’t someone else will. Jack Welsh had a famous saying: “Take control of your life, or somebody else will.” How true! No excuses, just down-to-earth action. No half-jobs, just hard work. If you want to read the paper and believe that China is your road to success, then go and work somewhere else. Remember this, people don’t leave you when they leave; they leave you in their heads a long time before that. You wish they would leave when they “opt-out” because that would save you money. The problem is they leave after months of “trying”, hours of toxic conversation with others, and a couple of unhappy customers. Watch for it in the daily activities and attitudes. Root it out asap. On the other hand, where genuine efforts are made by those great people who are with you for the long-run, encourage them and build them up. Remind them that “this too will pass” and that Action Conquers Fear.
  5. Find Inspiration: Running a business is tiring and battling cashflow, exhausting. Find a friend, a confidante, to whom you can turn. Pray, read, take “me time”, breathe deeply – 10 out, 10 in – to relax and replenish your soul. You can only give what you have, and be who you are. It is fair to say that your people “don’t need their leader with sweat on their brow.”
  6. Change BEFORE it hurts: It is always written about for one simple reason, people change WHEN it hurts. It is so difficult to simulate adversity in a successful company. It feels treasonous to even speak about the need to alter course when the island of delight is right on course. But, change you must. Bill Gates puts it this way:

When your business is healthy, it is difficult to behave as if you are in a crisis. That is why one of the toughest parts of managing, especially in a high-tech business, is to recognise the need for change and make it while you still have a chance.

Lots more could be said on this subject. Truth is that this is not the only recession we have faced and we have come through. Whether or not there is fundamental difficulty in this one, remains to be seen. Chance is there is little you can do to change that. But for foxes, they take inspiration from many sources, they re-consider the tried-and-tested, they try-abandon-try until their possibility thinking becomes their reality and their “new normal” meets their definition of excellence despite changed circumstances. They encourage others. They trade in hope and they are merchants of good news, truthfully spoken. Their word is their bond and their people trust them.

Hedgehogs have a place as well. They may be the very calm in the storm your company needs right now. Their idea may be good despite not ever pretending to be the silver bullet. Like all people, make allowances for them to enrich your team.

Yours in Property.

It’s time to be a Fox

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Howzit China! will certainly be on our lips after the global markets slumped this week in response to the yuan decline and other economic news. Our real good news is that some experts are questioning our SARB decision to raise interest rates in the face of a deteriorating market for consumers.

So it is time to pick ourselves up, improve our game and focus our efforts. It’s time to be a Fox.

I first heard the concept from Clem Suntner when I read his book Hedgehogs and Foxes. The article below is copied from Business Day and was written by Michel Pireu on 18 August 2015. All credit to him therefor for the first part of this blog.

In 1953 the philosopher Isaiah Berlin divided thinkers into two categories – the hedgehog and the fox – borrowing from Greek philosopher Archilochus who said, “The fox knows many things, but the hedgehog knows one big thing.” Hedgehogs, argued Berlin, see the world through the prism of a single overriding idea, whereas foxes dart hither and thither, gathering inspiration from the widest variety of experiences and sources.

Recently, University of Pennsylvania psychology professor, Philip Tetlock conducted a multi-year study of the outcomes of expert political forecasts about international affairs. He studied the aggregate accuracy of 284 experts making 28000 forecasts looking for patterns in their success rates. Most findings were negative – conservatives did no better or worse than liberals; optimists no better or worse than pessimists. All were only slightly more accurate than chance, and worse than basic computer algorithms. Only one pattern emerged: how you think matters more than what you think.

“ The most important factor was not how much education or experience the experts had but how they thought, “ says Tetlock. “The better forecasters were like Berlin’s foxes: self-critical, eclectic thinkers who were willing to update their beliefs when faced with contrary evidence, were doubtful of grand schemes, and were rather modest about their predictive ability. The less successful forecasters were like hedgehogs: they tended to have one big, beautiful idea that they loved to stretch, sometimes to breaking point.”

Beginning with the idea that foxes are better at predictions than hedgehogs. Tetlock looked at the underlying differences in cognitive approach and found clear differences. Foxes are cautious about making predictions. Hedgehogs are not, but are more likely to suffer from overconfidence and hindsight bias. Foxes are avid gatherers of ideas from many sources. Hedgehogs specialise and resent ideas that contradict their thinking.

If something isn’t working foxes will look for a new idea or model. Hedgehogs seldom vary their approach and are more likely to use new data to tweak existing theories. Foxes readily accept they’re wrong. Foxes accept complexity. Hedgehogs believe in an underlying simplicity in everything. Foxes are more concerned with the evidence than the theory; hedgehogs see data as “noise” that obscures underlying truth. Consequently, foxes are better equipped to survive in rapidly changing environments in which those who abandon bad ideas quickly hold the advantage. Hedgehogs are better off in static environments that reward persisting with tried formulas.

Little did I realise on the 18th that the global economy would take such a fast turn. In our next blog, we will look at the whether a fox or a hedgehog is needed for the next period of what has been a fairly good run in the property market. Look forward to “meeting you again, at the Junction”, that’s the Homeloan Junction, of course.

Yours in Property.

Affordable housing market [ Important Message]

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This blog has taken little effort but the message is so important for those of us in the home loan industry that, if you have not read it, you need to.

Three reasons why:

  1. If the country is housing its people, that’s good. People don’t break what they own, generally. If the property gains in value, they have an asset to increase their wealth. Whilst doing this, their creditworthiness increases which could assist them to access borrowing for brown and white goods. In short, the economy grows and further jobs result.
  2. More homes for different target markets will be built and our shack dwellings will decrease. How cool would that be! Dignity for our people and, on a smaller scale with millions more people, the same virtuous cycle above.
  3. Knowing this, you can direct your sales attention to the mass market. Hard work we know but those that I know are doing it, find it lucrative. Opportunity in the wings!

Here is the article from Moneyweb, 12 August 2015:

 

Affordable housing market sparkles

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CAHF report: since 2011, bonded sales in the R300 000 to R600 000 category rose faster than others.

Ray Mahlaka  | 12 August 2015 | moneyweb.co.za

Read Full Article

 

Yours in Property

Is your tenant an illegal occupant?

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There’s a thorny issue in renting and that is when your tenant is an illegal occupant of your apartment.

Let’s consider the issue in this blog.

If a rental contract is breached by a tenant and, after receiving notice, he does not undertake the necessary rectifying actions in the specified time, then the landlord may cancel the contract. The tenant is then considered an illegal occupant.

If the occupant refuses to perform his duties in terms of the rental agreement, then he will be found to be in breach of his contract. As an example, the tenant refuses to pay his rent on time. The landlord must inform the tenant in writing that he has decided to cancel the rental agreement so that the tenant, within a reasonable time or a time agreed between the parties, can vacate the premises.

If the tenant chooses to ignore the cancellation notice, and continues to occupy the premises, he will be seen as an illegal occupant. The same principle applies when the tenant continues to occupy the premises after the termination of the rental agreement. An illegal occupant may be evicted from the premises by the landlord. This process will occur in a magistrate or high court so the services of an attorney will need to be retained.

There is no longer a common law right to evict a tenant. All landlords and tenants have to follow the processes and procedures of the PIE Act [Prevention of Illegal Evictions Act, 19 of 1998]. According to PIE, before an eviction may occur, the tenant must be informed about the pending action against him. At least 14 days’ notice must be given of the trial and its date and location. This notice must also be sent to the respective municipality.

On the date of the hearing, the court will consider various factors, such as, if the tenant is an illegal occupier, if the landlord has reasonable cause for eviction and the question of alternate accommodation will be considered. All of these factors will be considered before the court makes a decision to issue an eviction order or not. It is currently a criminal act to evict a tenant without a court order. In turn, constructive eviction, such as disconnecting the electricity or water, is also illegal and considered a criminal act.

The type of action or application that a legal advisor will propose will depend on the facts and circumstances of the case. These actions or applications will be heard in the magistrate or high court. If the legal process is successful, the eviction notice will be issued after which the landlord may proceed to evict the tenant.

There are certain clauses that must always be in a rental contract in order to protect both parties against lack of payment or breach. These clauses include: time limits, court jurisdiction and responsibility for costs if the parties decide to go to court.

The PIE Act clearly sets out the steps and procedures that should be followed to obtain an eviction order. Various definitions and interpretations of other terms are set out and clarified as they apply to the landlord and the tenant. These should be clearly documented in the rental agreement that the parties sign.

The moral of the story is simple: If you wish to protect your investment in the face of an errant tenant, you need to obtain professional help early in the process. The PIE Act is not against landlords but it certainly does protect the rights of tenants; but not without holding them accountable for proven, unacceptable breaches of a well-compiled rental contract.

Yours in Property.