Everything is better with a team – whether it’s exercising, working on a project or even travelling. Saving is another activity which is better with a group of people and this is why the stokvel market has increased considerably in South Africa.
With today’s unpredictable economy, South Africans are looking for alternative ways to create wealth and work towards financial freedom. According to the National Stokvel Association of South Africa, there are over 800 000 active stokvel groups in the country, each one of them collecting an estimate of R50 000 each year. It’s almost easy to see why the concept has seamlessly transferred to property investment.
“This type of investment keeps you accountable.”
Is a property stokvel a good investment?
This type of investment keeps you accountable. Stokvels are started for various reasons – a group vacation, Christmas time, events, etc. It’s no secret that South Africans are finding it difficult to save. With a savings group, you’re likely to not spend unnecessarily and build good saving habits.
For first-time property investors, this is the best way to enter the market.
“These groups usually include fewer members because it’s less of a hassle to manage.”
How does a property stokvel work?
Depending on your property investment goal, you’re required to contribute a certain amount each month. If you fail to make a payment, you’ll be excluded from the group. There is usually a minimum of 12 members in a group but the number can be agreed upon by whoever started the group.
These groups usually include fewer members because it’s less of a hassle to manage. However, there are stokvels with 100 members. So, how do you ensure that your property stokvel runs smoothly? Try setting some guidelines for the members:
“… find members who are reliable.”
Know who to select for your group
Stokvels are popular amongst friends and families but because we’re so close with these members, we let bad habits slide. If you’re serious about investing in property, you need to make sure that the members of your stokvel have the same goal in mind. It’s no use including a family member or friend who a) may struggle to contribute each month or b) the excitement wears off for them very soon and they stop contributing.
Your stokvel doesn’t have to include friends or family, it could be people you meet at a networking event. The rule is to always assess their reliability and goals.
Unanimously decide how the money will be collected
All members need to decide where the monthly contributions will be saved. Will it be debited into a savings account each month? Will one person be in charge of collecting the amount from each member and then transfer it to the main account? These are all questions that need to be answered before the stokvel ‘kicks off’.
“Create a contract and have each member sign it.”
What happens if a member fails to make a contribution?
This circles back to the first rule – find members who are reliable. However, there may be a circumstance where a member may miss a payment or two because there’s been a financial emergency of some sort – doctor’s bills, etc.
Members need to discuss what will happen in this situation – do other member fees increase for the month? Will the profit share be less for this specific member?
Put it in writing
Finally, put all these rules in writing. Create a contract and have each member sign it – and provide each member with a signed contract. Should there be a dispute, you can refer to the document.BOOK NOW
Starting your property stokvel
With a stokvel, you have the chance to invest in commercial property or larger residential dwellings – this depends on the number of members in your group and your monthly contributions. It’s not just about pooling your resources but working with a team to achieve your financial goals.
Perhaps your stokvel members can be found at one of our property investment seminars. Join us and a group of other individuals who are looking to get started on their wealth creation journey.
Our experts have created a guideline on the South African property market that caters to everyone – from first-time investors to those who are searching for a new property strategy. Secure your free seat today before they fill up!BOOK NOW