FIFI PETERS: These days, you hear a lot of companies talk about making profit with a purpose. Gone are the days when it was just about making money. Today, many companies have found that they can strike a balance between being profitable and improving the lives of others. One of those entrepreneurs is Khosi Makolota. It has given some people a sense of dignity by improving their livelihoods and standard of living, and at the same time is making money from it. She joins Market Update.
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Khosi, thank you very much for your time. Tell us a little about your project and what you did with this vacant lot that was once quite full of shacks.
NOMAKHOSI MAKOLOTA: I bought the stands in 2011, two or three stands next to each other with huts. Then I tried to raise funds to develop them, but could not get funding. So I sold one of the stands to raise money and develop it. The money was still not enough.
So in 2017 I made the decision to quit my job and focus on getting funding and making my dream come true. My mentor introduced me to uMaStandi, which is a finance company that focuses on municipal development. I applied for funding and was approved in May, and then in September we started development. So we developed 13 units for students, the undergraduate units that we are renting.
FIFI PETERS: How much did you initially buy the three brackets for?
NOMAKHOSI MAKOLOTA: R150 000 ……[check]… 1:43.
FIFI PETERS: And then he says he needed more money to develop these stands. At the time he was out of luck in raising funds, so he sold one of these stands for R150,000 I imagine.
NOMAKHOSI MAKOLOTA: I sold it for R350,000.
FIFI PETERS: That’s a great bonus what he did. How did you manage to close that deal?
NOMAKHOSI MAKOLOTA: Well, I sold the booth through a …… 2:04 agent. Because of that company, I didn’t earn much from it – I had to pay around R80,000 …… and attorney’s fees and stuff. I got around R200,000 from the deal.
FIFI PETERS: And then he says that even with these R200,000 it was still not enough because he needed money to develop the brackets he had bought. So how much money were you initially able to access?
NOMAKHOSI MAKOLOTA: I obtained funds for R1.2 million to develop …… 2:33 of the project.
FIFI PETERS: Woof. And in the process you say that you also quit your job, so that you could really be fully committed to the project.
NOMAKHOSI MAKOLOTA: Yes. I quit my job in 2017 so I can focus on getting the funds and give it my full attention because when you’re 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 launch of this project.
FIFI PETERS: It is a great risk that you took. In 2017, if I go back to my memory, things were quite difficult for the economy, and at that time unemployment was high. So, I guess quitting your job wasn’t a decision you made lightly. Why was he so committed to this project to get it done?
NOMAKHOSI MAKOLOTA: I have had this lens for over five years and nothing happens. In fact, rates are going 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 are like. What kind of units have you been able to build on them?
NOMAKHOSI MAKOLOTA: It is an open studio with a shower. They have as a kitchen companion, your closet and open space with your living room and your bedroom. There are 14 units, seven below and seven above.
FIFI PETERS: That is incredible. And do you have tenants for all of them?
NOMAKHOSI MAKOLOTA: All of them. We were very lucky, even through Covid, the venues were fully rented out.
FIFI PETERS: That is incredible. And just on average, how much does rent cost on one of your units?
NOMAKHOSI MAKOLOTA: They are R2 500 for the smallest units and then R3 000 for the largest units. They are designs that …… 4: 16 2005, but they need a …… station and are high. So we become …… very big, and there is also enough light.
FIFI PETERS: What was the most challenging process to carry out this project? We have seen that in many construction developments there are a lot of delays. Sometimes it is a problem due to bad weather and rain, sometimes it is a problem due to a supplier that is running out of a certain product. What were some of the most challenging things 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 destined to reach our goal in six months. I didn’t have time to go down the legal route out of the contract with your company, so I had to step in and take over so that we could [could] finish the project.
FIFI PETERS: You clearly got through this project [hurdle]. As you say, now you have tenants who pay your rent and manage to pay your rent despite the pressures of Covid-19.
You invested a lot of capital, not only your money, but also your time and also a lot of excitement to see this project successfully. It is profitable? Have you realized the return on your initial investment?
NOMAKHOSI MAKOLOTA: If I have. It is profitable. I am earning enough and have enough funds to pay the insurance, the loan, and I also have two people who work full time. So it is very profitable.
FIFI PETERS: Your project is something that many people have admired, so you were even awarded for it, quite prestigious awards in terms of the effort you have made. The question I have for you, Khosi, is: what’s next after this?
NOMAKHOSI MAKOLOTA: Starting next December, I will start with phase two, which is next to the current one [project]. It’s called …… nai 6:15. We are starting with that construction, hoping to finish on time in six months, and then I will move there. I will branch out to look for other properties outside of 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 for singles or maybe you are looking for something a little bigger?
NOMAKHOSI MAKOLOTA: We’re looking at the same thing, but only two one-bedroom units to be the best studios and two one-bedroom units. But everything else will remain the same.
FIFI PETERS: And what is your final message for people who want to invest in a property like you?
NOMAKHOSI MAKOLOTA: It is up to them to do the research on the property before buying it. They must work with professionals and never compromise 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 earn you money, as has happened in your case.
Thank you very much for sharing your story with us and good luck in phase two and all the other phases you have up your sleeve. Khosi Makolota joined us in the Market Update.