Property developer Witness Mudau, founder of the property platform AdProp, told the Justify podcast hosted by Justice Tshabalala why most township landlords with dozens of rental units still struggle for cash flow, and how he built AdProp after years of running his own portfolio in Tembisa.
Mudau said he was introduced to the property business as a teenager, when his mother, a nurse, discovered she had overpaid her home loan by R150,000. She used the money to build back rooms, and put him in charge of managing the tenants while he was still at school. By his twenties he was managing more than 40 units, with rents he put at roughly R2,500 to R4,000 a unit at the time (“units were ranging 2.5, 3,000, some 4,000”). The video’s own title puts his income at over R140,000 a month from that portfolio, a figure that lines up with 40 units at those rents.
Treat the building like a business, not an asset
Mudau’s central argument is that landlords confuse owning property with running a business. “Property investing also require a lot of capital injection, and that’s why even when you buy a property you buy it as though you are buying a business. A business has to generate cash flow. A business has to give you income,” he said. A heavily geared portfolio, he warned, can carry large debts while paying its owner almost nothing every month once the bond and costs are covered.
He was blunt about who tends to get this wrong: “There’s in business there’s junior class and senior class. So which class are you in? And can you look in the mirror and say I’m still playing junior level and I’m expecting to operate at income that commands senior respect.”
Why township developments struggle to get bank finance
Mudau said the bigger problem for many township landlords is that their rooms were never built with approval. “You have to make sure that the approved plans in place with the municipality. A lot of people don’t do that. They just have the plans drawn and they start with construction,” he said, adding that owners also need to check with a town planner so the number of units does not breach the property’s zoning.
Without an occupation certificate, he said, a bank’s valuer will flag the property the moment they see more units than the approved plans allow, which makes it far harder to sell or refinance later. “You must build anything that you are building at least with the understanding that you might one day want to sell it. So make it as valuable as possible. Make it as legal and compliant as possible,” he said.
On what a bank will actually lend, Mudau said the standard affordability test allocates “30% of your gross income” to a bond repayment, so a R1 million property needs a roughly R10,000 monthly instalment, which he said is comfortable on an income of about R60,000 a month. That matches the affordability guideline South African bond originators use, where a bond instalment should not exceed about 30% of gross monthly income.
From a 29-page document to a R4.4 billion platform
Mudau said the idea for AdProp came to him in 2018, while he was still running his own property development business. He wrote a 29-page document setting out the concept, then under the name Property Juice, and emailed it to himself on 28 November 2018 to timestamp the idea. It took until a later, failed partnership with a technical team fell through before he built the platform himself. “Entrepreneurship, when you study the definition of entrepreneurship, it’s you are taking a risk. A person who takes a risk to create something that’s valuable for other people so that he can make money. But you hear the definition doesn’t say money first,” he said of the gap between the idea and getting it built.
Once he rebuilt the platform with a new team, growth was fast: AdProp signed up more than 17,000 users and listed over R4.4 billion worth of property in under six months, according to Mudau. He says the next step is to let property owners already on the platform access loans and financing through it directly.
For an owner starting from the back-room stage Mudau describes, the compliance side is not optional: our guide to registering a company and the compliance calendar for running one both apply as soon as rental income is treated as a business rather than a side hustle, and the business idea generator is a starting point for anyone trying to work out whether a concept like his is worth building before committing capital to it.
