Introducing property entrepreneur Obaratile Semenya:

With a background in law and economics, Obaratile (OB) Semenya’s approach to property includes exposure at practically every part of the value chain.

From developing high-end residential projects through Legaro Property Development to driving sales at his real estate agency, Natural Property, he’s mastered the full property journey.

And with extensive experience working closely with Balwin, OB also knows his way around the biggest developments around.

On episode 3 of The Finance Ghost Plugged in with Capitec, he talks about building the world he wants to see around him, all while ‘nerding out’ on the business and sector he loves most.

Episode 3 covers:

• The risks and rewards of the property sector
• Lessons from working across the full value chain
• Insights from balancing development and real estate sales
• Why passion for what you do often makes the rest fall into place

The Finance Ghost plugged in with Capitec is made possible by the support of Capitec Business. All the entrepreneurs featured on this podcast are clients of Capitec. Capitec is an authorised Financial Services Provider, FSP number 46669.

Listen to the podcast here:

Read the transcript:

Intro: From side hustles to success stories, this is The Finance Ghost plugged in with Capitec, where we explore what it really takes to build a business in South Africa. This podcast features Obaratile Semenya, a property entrepreneur with experience across the value chain from sales to development.

The Finance Ghost: Welcome to this episode of The Finance Ghost plugged in with Capitec. This is a wonderful podcast series in which I get to speak to some really interesting entrepreneurs. I get to dig into their backstory. I get to understand more about what they’ve built and why they are still building it. And of course, we get to learn along the way, which is something that I really enjoy because entrepreneurs are such inspiring and interesting people. And of course, my thanks to Capitec Business for making this possible.

And on this episode, I am grateful to be able to speak to OB Semenya. OB is a property entrepreneur. This man has got a lot of things going on. I’m not sure how he remembers which business to work on, on which day! The fact that he’s wearing a branded hoodie of one of the businesses tells me that maybe he just matches his outfit to what he’s working on that day. I guess we’ll find out shortly. OB, thank you so much for doing this podcast with me. You’ve got so much to share about the world of property, and I’m really looking forward to digging in with you.

Obaratile Semenya: It is an absolute honour. Thank you, Ghost, for the invitation. I appreciate it. I just hope that I can rise to the occasion for you.

The Finance Ghost: So spill the beans. Does that sweater that you’re wearing there, that hoodie, does that remind you what you need to work on today? It feels like you’re wearing your diary on your chest, basically.

Obaratile Semenya: Sort of! You’re not wrong. Today is very much a real estate day. There’s a sale that was closing this morning, so that’s the hoodie that we’re wearing today, but it will change late in the day meeting. So, yeah, not wrong.

The Finance Ghost: I love that. The life of an entrepreneur with a finger in many pies. And we’ll obviously dig into that, definitely.

But I think before we do, let’s just understand more about the backdrop of what got you into property, when this started for you, because it’s really interesting to understand the background of entrepreneurs and what gets them to the point they’ve gotten to today. I mean, in the last episode of this podcast series, which I would encourage listeners to go check out, I got to speak to Rabia Ghoor and she started swiitchbeauty when she was 14, dropped out of high school two years later, and 10 years after that she’s sitting with this wonderful eCommerce business.

So was property an early thing for you, OB? Was this something where even in school you were interested in it, or was it something that happened later? Because what’s fascinating with property is I find when I meet people who are property people, that really is what they are, right? Their whole career kind of sits in property because it’s such an interesting and specialist space. It’s not like, oh, you know, today I work in retail and then tomorrow I go and work in a different kind of client-facing business. People flit around other sectors a lot in their careers, but it feels like once you’re in the property stream, you’re in it. Has that been your experience?

Obaratile Semenya: So I think you’re not wrong. The more my journey into property develops, the more I find that to be a very common theme among people who if property is what they do, property is what they love, property is what they eat. Because of, I guess, the all-encompassing nature of the industry.

For me, actually, I wish I could say it’s the same, but it’s really not. I never even considered myself a property person per se. If I had to think about when my journey into property started, it started way before I was in school. My perspective even today about property mostly comes from my reality. I mean, I was born, geez, I don’t want to give myself away here, but I was born, what, 1990. So, I was born on the cusp of understanding the notion of property. The first home I can remember is one that I remember my dad buying in Kelvin with a CC, right. And him constantly reiterating to me how ridiculous it is that we live where we live. Because he’s a dad, right?

But my understanding of property has just been infused throughout my life as a discussion about, well, what does this country now look like? And I think that’s partly because of when I was born, but also because I come from a family of lawyers. So my property understanding actually comes from the law. And I only find myself being a property person later in my life, but it definitely is my passion.

The Finance Ghost: Yeah, that’s incredibly interesting. And obviously it talks to the history of South Africa and how property has been a really hard thing for a lot of people historically. And obviously we live in a very different country now and thank goodness for that. And as you say, born 1990 – that was right on the cusp of – I love the way you put it, where property starts to become a concept you can actually attach to. It’s actually such an incredible way to describe it really.

And interesting as well that you’ve come at it from a legal angle as opposed to more of a finance angle. I’ve got to say, some of the best people I worked with in my corporate finance career were attorneys by profession. Lawyers are very capable of great dealmaking, definitely. And it’s just interesting to see that, really.

So I think let’s get a lay of the land, of what it is that you’ve built, because if you need to, as I said, change your clothing based on which business it is that day, then there’s clearly a lot going on there. And I know from the discussions we had as the build up to the show, you do have your finger in very many pies in the property game and also at different points in the value chain, which makes this extra interesting.

We will obviously talk through some of the more detailed projects in the development space, etc. But I think just give us the sort of elevator pitch of OB the property entrepreneur. What do you have in the stable?

Obaratile Semenya: So me today, now, as you rightly point out, I’ve always been a generalist. I just enjoy property as a sector. So that’s reflected in the things that I own. It’s not for financial reasons primarily. It’s mostly because I’m fascinated about where property intersects with people’s lives. The hoodie that I’m wearing now would be one of the first places that I engage, which is Natural Property, which is a real estate agency that I own with my partner, Slade Brooks. It is nothing but a real estate agency.

It’s one that we built three years ago – actually turned three, two weeks ago. Natural Property does nothing but sell. It’s an agency. But the depth – the depth and intricacies of what it takes to run a real estate agency, property is a really deceiving industry because it’s accessible, but it’s also ridiculously inaccessible if you actually try to do anything more than sell or buy.

So that’s the first pie I would say, is that I own Natural Property, which is a real estate agency that’s doing very, very well. It is the primary seller for Legaro as a developer as well as does a lot of Balwin sales and it does a lot of private sales. That’s one of the pies.

The others would be the developers. That’s what takes up a lot of time. And Legaro is a big part of my life. It’s a private property developer. We do largely estates, homes and we did do a little bit of commercial, but we stick to residential in Gauteng, Joburg and the Western Cape. Our largest developments are now in Hyde Park and in Paarl. So that takes up a lot of my time because it’s a private company, it’s a small team of passionate people and what we try to do is large developments with too little people, if you ask me, but passion makes up the difference. That would be one other place that I find myself.

And then Balwin, which is a different kind of animal, takes up the rest. Those are the three big pies that I find myself engaging with on the day to day. But I do own a lot of smaller businesses, but they’re all nonetheless related to property.

The Finance Ghost: Yeah, it’s really interesting. So there’s some involvement there in what is essentially a listed company in the form of Balwin, which is a great big throughput machine of residential properties. You’ve got Natural Property there, which is, as you say, a sort of vanilla real estate agency, which is actually kind of cool. And I want to talk about that a bit more. And then Legaro, which is your property developments, primarily residential, some really high-end stuff, which is very cool.

So something I wanted to ask you about Natural Property and you made that great comment there where it’s almost talking it down a bit to say, well, it’s just an estate agency, but of course there’s a really interesting concept here and I think entrepreneurs, they almost kill themselves trying to think through what makes my business incredibly unique or incredibly different. Like what is that key differentiator? Sometimes I feel like just great execution is a differentiator. And that’s something that I wanted to ask you because an estate agency, a real estate agency in and of itself is not a unique business model, as you said, but if you do it to a very high standard, you can still build yourself a really great business. Not everything has to be this ultra innovative, unique play. So is that part of what you focus on in that space is to just do everything really well and then make sure you’re competing adequately in that market?

Obaratile Semenya: So that’s actually a very good point. And what I like about an estate agency, it’s one of those weird businesses in which there isn’t a correct answer. I’m blessed enough to know a bunch of people in a bunch of sectors and property and real estate is one of them.

There are people, for instance, like Jonathan Tagg, who is one of Pam Golding’s primary sellers and he operates out of Mauritius – a very good friend of mine who would be adamant about why would you start your own real estate agency, OB? And he raises great points in that it’s one of those industries you can do by yourself. You can be a sole proprietor, you can be an estate agent, you can go and get a license and you can legally sell the same properties that an agency could. And on the other side of that scale, you can go and build an entire agency, have the overheads, the infrastructure, the expenses, the costs, the human resources management, and find yourself backwards to a sole proprietor.

It really lends itself to: what is it that you’re trying to do? If you don’t actually have a very specific goal that I would suggest is catered towards your niche, where do you have value-add? As you pointed out, an agency is a meaningless term without that because there’s just too many properties and too much competition for you to just do a vanilla agency without it being hyper-focused on what it is that you have an advantage in.

Natural Property is just that. We were the developer. I was the developer and I felt that I will go through this slog of creating an agency in order to claw back the 4% or 5% that we might have been giving away to other agencies. I clearly don’t care about my time, but I had an advantage. It’s not just an agency.

The Finance Ghost: Sorry, I’m laughing because not caring about your time is just such a great point. I feel like most entrepreneurs suffer from this overarching affliction. How many years have you been at this for actually, in terms of being this busy would you say? Like specifically this busy?

Obaratile Semenya: So it’s interesting because my entire life is about the law. This is what’s interesting. It’s not about property. But my father, who’s somebody who I actually credit a lot of my decisions to, not because he wanted me to get into property, but because he’s always – the nature of what he did, is an advocate. And my father was chairman of the Johannesburg Bar Council for a very long time and was also very instrumental in our property and constitutional clauses and how our property regime works in a democratic dispensation.

Every dinner was an inescapable conversation for me because I’m “his boy” in a sense. And my dad has always been passionate about rights. Given his history and given our history and how that relates to your lived experience. So how I got into property per se was me abandoning becoming an advocate, right? Which, much to my dad’s chagrin, that’s something I would say, eleven years ago – oh no, I was dead to him. We get along great now. But his dad was a lawyer. My dad is a lawyer, my sister’s a lawyer. Everybody around me are very experienced advocates. So I’ve only ever been in property conversations that were from a legal perspective.

It’s only when I started the journey of Natural Property, sitting with the developers and abandoning the law and clearly my time, that property properly started for me. But I’ve always been in property. I can’t describe to you – pretty much my entire life and that I credit to my dad.

The Finance Ghost: Your dad sounds like a champ. Very, very cool person to be able to learn from and then disappoint for a short while and then impress later on in life. That does feel like the father-son story arc actually for so many!

But well done. It is a very cool story and it’s interesting you talk about abandoning your time because the incredible irony of this is that property is actually one of those sectors where you can build a business that is independent from you, which is something that entrepreneurs struggle with tremendously. Much as it’s abandoning your time, the truth of it is that advocates sell time quite literally, whereas actually what you sell over time is (1) you’re building an agency which exists without you – I mean, you’re not even on the website, I know because I’ve looked – and (2) property developments, where those properties literally last forever.

That’s kind of the brand promise, right? Is that these things have lasting value. You sell them, it’s done, you move on to the next one. It’s very different to my world, my business relies 100% on me, literally me, so I’m in this boat where I’ve also given up my time terribly. But it’s not ever going to actually get better and I don’t really mind because I absolutely love what I do, so it’s fine. But I think with you it’s, yeah, it’s not quite a time treadmill.

It’s just an interesting dynamic of “I’m not an advocate, I gave up my time” – I almost feel like long-term it’s going to be the other way around. You’re not billing by the hour.

Obaratile Semenya: That’s true. I’m not billing by the hour. That actually frames just so much of how you think. I don’t think one is better than the other. I just think that those are two completely different ways of thinking about the exercise of industry. And because, like I say, I come from a family of professionals. My mother’s a chartered accountant, my father’s an advocate. By nature of their success, they did well, and so by extension, they own – but what they own has never been itself a business.

So by just that structural dynamic by itself, I ended up becoming somebody who concerns himself more with, okay, well, now what do we now do with property? Which you’d be surprised how much your viewpoints about that is informed by how it is that you make your money in the first place.

My dad and I probably still couldn’t agree about a patio, let alone a building, but I don’t think it’s because we don’t like each other or we don’t get along. It’s I genuinely think a mindset thing in which I think they’re both important. He’s good at what he does and he earns a lot for what he does. I like to be the person in the background. I don’t like being the face of anything. And I like to build businesses that are able to work without me. My time’s not something I would like to sell. I like to use as much of it as possible to do what I love, which is property.

The Finance Ghost: Makes perfect sense. Kudos to your mom, fellow CA. There are too many accountants and lawyers on this podcast and in your immediate vicinity, I think. But it’s cool, it’s amazing to have those influences around you in your early life. Later on, it’s amazing how much of a difference it makes, the influences we have around us. Both previous guests on this podcast series, very similar story in terms of how early influence makes a huge difference on what they do later in life.

I don’t know if you have kids, but I do and I take a lot of that on board. I think to myself, what experiences do I need to give them early in life to try and just expose them to these things and figure out what they’re good at and everything else? It’s amazing to see the difference that makes later on. I think to the parents listening to this podcast, you’re not overthinking your kids. The desire to try and give them all this exposure really makes a difference later on.

Obaratile Semenya: Absolutely. And I think the difference between my father and I iterates that more than anything. I knew that I was passionate about development and property where the first time I watched my dad build a home – now, my dad was, what, born in ‘59. My dad is a very important person and I’m not trying to say that to flatter him, but I say it more to say it’s always been fascinating to me that, well, if this is his experience, imagine what an ordinary South African experience is like.

And watching him build a home was the most fascinating experience I could see. His younger brother is a civil engineer who got his qualification from P.W. Botha allowing him to go to Wits because he was the top student. I watched these two men fumble their way into building a home, they had no one to ask and so I’ve always been acutely aware of the privilege that I’m exposed to. I primarily gotten to go to good schools in which I could just ask Russell’s dad or Dennis or – I was never too far away from somebody who was in some way related to the built environment, which is just something I can’t be grateful enough for. Because watching my father, as talented as he is, also exposed me to the notion of okay, actually, where would this guy get a quantity surveyor? It’s a very good point.

The Finance Ghost: I love that.

Obaratile Semenya: I truly see property as like a calling for me rather than a passion. I don’t see it as a business. I see it as, wow, I’m actually just really lucky that I get to be exposed to information, knowledge, and education that my parents would never have been able to.

The Finance Ghost: Would you say that financial success almost becomes the by-product of that journey? Because again, I think it’s pretty consistent across successful entrepreneurs is you’re going to be spending so much time on this thing and taking so much risk on it and dedicating such a big chunk of your life to it – you have to be passionate about it. It cannot just be a job that makes you money. It obviously needs to make money, because otherwise something’s wrong and you can’t pay for basic life expenses with something you’re passionate about all the time, unfortunately, if you’re really lucky then you can.

But do you find that money kind of just comes with doing something really well and then learning where that niche is and the economics kind of fall into place? Or do you feel like within the property sector, you actually picked out places where it looked as though there was definitely money to be made?

Obaratile Semenya: If I’m being honest, money was not the motivating factor for me. And I’m not trying to sound humble. It definitely is a by-product. But property is an arduous long trek. For a lot of people, I think it would take you – it would be shorter for you to be a doctor than to try to be a developer, right? And I don’t say that to discourage people. I say that so that you plan your life around that kind of journey. I don’t have kids, for instance. I’m not married. And I’d say that’s a deliberate consequence of my decision to be in property. I can’t see how I would have done that. I can do that and I hope to do that now.

Definitely, I think you’re right when we say things like that – financial success is something that I wouldn’t expect or put as a pressure on myself, but must be ever-present on that journey and understanding. I think of property like trying to be a doctor. I think when people are near residency, they don’t say, oh, I’ve wasted my time. As long as you’re just deliberate about understanding that you’re trying to do something that by its nature, buildings take 10 years to go up. You can’t expect in less time than that to be good at them.

The Finance Ghost: Yeah, absolutely. I mean, we haven’t talked much about the development side yet, and maybe that’s a good opportunity to just jump into some of those points. And one of the words you used earlier, because I wrote it down while you were talking, was “inaccessible” – and I would imagine that at least part of that is probably just access to balance sheet, because from a property development perspective, that’s quite a thing.

But what do you find it is about South Africa at the moment, where property development is still a relatively inaccessible game?

Obaratile Semenya: So he might be upset – no, he won’t be – if I bring up his name here. But Steve Brooks is such an important person to me and in my personal journey and in my life because his approach to development in the climate that we live in is, if he was anybody else, insane, right? But such is his devotion to both the country and his craft that I’ve been fortunate enough to get to engage in development at its absurd level. Even at the smaller level, you’re correct – balance sheet, balance sheet, balance sheet. But while a balance sheet might allow you to get to do something, it really, I think, beguiles people – well, if you have credit, you can go and develop. And I think that’s why it’s such an emphasis on that first half is because it’s one of those industries you can literally go bust on a single development after having worked so diligently, consistently, methodically and cautiously your whole life.

So the balance sheet is necessary to get there. But I think knowing when and what to strike on is way more important because property is just not one of those things you can just, oh, well, I made a mistake. We’ll just recover here. It’s really something – you want to rather spend your time at smaller scale, understanding your skills, your expertise, resources before you worry about when you get that balance sheet. You don’t want to get it too early. You don’t want to get help too early before you understand what you’re doing.

The Finance Ghost: Yeah, absolutely. And for those who maybe don’t know the name Stephen Brooks, if you go and do some googling of Balwin and who has built that business, then you will find that answer.

And I think that’s great. I mean, it’s fantastic to have access to, I suppose, not just a mentor, but also a partner who can help you kind of break into these things. And you’ve also referenced some of the risks there, which are really valid. And it’s one of the things I wanted to ask you. I feel like on the risk-reward spectrum, property development is about as far along the risk spectrum as just about anything. You are literally only as good as your last project. As you say, if something goes wrong, if the stuff doesn’t sell. I guess if you had some kind of big construction issue, if there’s an issue with the properties after the fact, I mean, there’s so much that can go wrong. It reminds me, I’m going to age myself now – and you’ve only got two years, you’re two years younger than me – but I always think of that, remember that 50 Cent album? Get Rich or Die Tryin’? I always think the name of that album – I feel like there are sectors that are very much the 50 Cent sector, it is Get Rich or Die Tryin’. Because it’s this binary outcome – you either do really well or something goes really wrong. Would you say that’s a fair statement about development?

Obaratile Semenya: It’s a very, very fair statement. And I think while Steve is by no means the only developer in the town, I think the types of development he does gives the most fast-tracked insight into the absurdity of how developments can go, particularly in a developing country. I mean, as Balwin, we found ourselves often going all the way into doing the municipal work right, way outside the scope of when you planned. Because when you decide you’re going to do something, it’s five years before you’ve put bricks down, and possibly nine, ten years before you have something to sell. The economy has born and reborn twice in that period. So it’s something that you, I think you have to have kind of like a feel for. And so access to the kinds of people who’ve done that is priceless. I think more than balance sheet, more than balance sheet – I think that’s what’s important is exposing yourself to developments that have happened.

And luckily, we live in an era where you can Lightstone, you can CMA, you can do your homework. There is absolutely no excuse not to understand the trends, the patterns, the costs. We’re very lucky to live in an information age, and there are a few people who have done the noble work of risking themselves to the stars for the rest of us to kind of understand or what’s plausible in this country.

Would I do that? Okay, maybe I would, but I think it’s not something that’s for everybody. Nor do I want people to think that you have to be an insane person to try to be a developer. It’s a spectrum. But all of them are risky. Absolutely. All of them. I think anyone who’s built a home will tell you.

The Finance Ghost: Yeah, absolutely, to your point, the balance sheet is just one ingredient, right? If that’s all it took, then all you would have is a situation where the richest people in South Africa would be the best developers and there would be nothing else. So obviously that’s not true. It’s only one part of the equation.

You are obviously quite a natural risk taker. And is it – interestingly enough, is it only in your commercial life, does that get you the full kick or are you like riding jet skis on every Saturday and bungee jumping on Sundays?

Obaratile Semenya: I’m a risk taker, but I taught economics at the University of Cape Town, and I was telling – I was actually, my degree was an economics and law, and at some point I taught the PDPA class at the graduate school. So I don’t want to sound like I’m a property person who just has an adrenaline rush for nearly going broke, more that I feel that it’s important that I take risks, because while I might be a risk taker, and here is my opinion, I find my people, black people, which is where my framework comes from, and understandably so, to be almost absurdly cautious, right? And I understand, I completely understand. It’s built into cultural norms. You see, even the notion of private property is foreign to most black people in this country. That’s not – that idea still blows my dad’s mind that someone can own land, right?

So that conservatism can be lethal in and of itself. So while, yes, I am very – I don’t actually take risks, I genuinely don’t think I take risks. I don’t put large amounts of capital down into projects on the hope that people will buy it. But I am a massive risk taker in that I believe in the stability of a property market anchoring an economy. So most of the things that I do, I do behind the backs of elephants that allow me to stay safe. That’s why I keep reiterating that I feel very grateful for the kinds of people who – I’d say it’s like launching rockets. There are some people who are like, well, okay, I don’t mind losing six on the way so that everybody else can learn how to tweak a booster. That’s how I see the Stephen Brooks, the people who are willing to constantly risk their personal fortune in order to play the game. But I personally don’t have an adrenaline rush about it.

I have an appreciation for how acutely lucky I am to get to participate in something that I have no business affording. Anyone who looks like me has no business affording. I might have done well for myself now, but without the banks and those sorts of people, the economy would grind in terms of the property sector.

The Finance Ghost: Yeah, yeah. It’s legacy balance sheets, the amount of money you actually need to be able to do the really big property stuff is big, big, big, big, big balance sheets. And obviously for many decades that was simply just not possible to build in South Africa for groups of people and thankfully now it’s changed. It’s great – I enjoyed the – whenever you speak to entrepreneurs about risk and people think that entrepreneurs are these crazy maverick risk takers because they’ve gone and read one Richard Branson book or they’ve seen a video and they kind of ascribe these one or two really niche case entrepreneurs who look like they basically just rolled the dice and just rolled a six every day for 30 years and there are one or two people who have done that. But actually good entrepreneurs are not necessarily people who get a kick from risk. They just understand how to take risk and they understand where the safety nets are.

And, again, if I refer back to the last couple of podcasts that I’ve done in this series, they were young entrepreneurs. So both Makomborero Mutezo, who did TheHungryMute, and then Rabia Ghoor who did swiitchbeauty, both started young and that helps a lot, definitely, in terms of the amount of risk you can take. Rabia made this great comment about someone in her family who said if you’re going to play with a bomb, take it outside. Which I thought was such a great analogy because – don’t go and blow up the house you’re in, don’t go blow up the thing that’s looking after you. Go take the risk and then do it in a safe way  and that’s entrepreneurship. One of the books that I always recommend to people is to go and read Shoe Dog by Phil Knight because he worked as an accountant while he was getting Nike off the ground. It wasn’t just cool, let me quit my job and then see what happens next month.

And I often have friends who will say to me: “I’m thinking of leaving corporate and I’ve got this idea” and I’m like, no, whoa, let’s just stop right there. There’s no thinking of leaving corporate and I kind of have an idea. Do it as a side hustle for nine months first and see that this is the life you want. And then maybe, just maybe, you then need to think about taking a risk on it. So, yeah, it’s – the point is risk is not the goal because otherwise you are going to blow yourself up. It’s going to happen. Then you’re not taking risk for the right reasons, right?

Obaratile Semenya: Absolutely. So I would equate property development to farming. I look at farmers and I think they’re insane. To dedicate that much land to sometimes a single crop is objectively, from the outside, an absurd thing to do, right? You’re literally praying upon the gods to favour you a year in advance.

The Finance Ghost: I think there’s a reason why religion tends to be strong in rural communities. I think that’s exactly why.

Obaratile Semenya: I think that’s why! I still drive on farms and I get shivers because I just go, oh, please don’t go wrong, right? But I think a farmer would say: I know corn. I might not understand everything else, but one thing I know is corn. And if people can start to think of property like that, rather than look at it as though it’s one thing, it’s not – there are just so many tranches, subgroups, categories, classes in property that nobody can be that – even someone like Steve Brooks is particularly good at the particular products that he particularly builds. And disciplined people stick to that, right? They don’t take wild, irresponsible risk and blow up the home. So similarly, I don’t think a corn farmer is going to wake up tomorrow and say, you know, beetroot looks nice. I don’t think you do that.

The Finance Ghost: Yeah, let’s do grapes. Let’s do grapes. Exactly. That’s such a great point.

Obaratile Semenya: Yeah. So it might look from the outside like an insane thing to do. If you properly go into those people who are successful, you’ll realize that they’re conservative too. They’re just hyper-confident in what they know. And if you step them outside of that, they’re any other person. So I don’t want people to feel like this, this industry is inaccessible. It just looks that way.

But you find your niche, find what it is that you’re passionate about and that you would nerd out on, and you’ll see that the risk is really a lack of information, a lot of it. Most of it can be mitigated with just knowledge.

The Finance Ghost: I love the nerd out point. So that’s exactly what it is, right, when you have your own business. You need to be willing to nerd out on whatever it is you do, because you’re going to have to be the best at it of anyone you know. That’s what you’ve got to aim for. That’s the amazing thing with business – sportspeople get all of the fame and all of the glory because they are one of the 10 best people in the country at a certain thing, or 15 best or 20 best or whatever it is. It doesn’t matter. But actually, if you’re going to make it big in a specific sector, there’s a really good chance that you’re going to be one of the 10 or 20 best in the country at a specific niche. And to make it really big, you’re going to need to be one of the top five. It’s just that niche isn’t on TV and we don’t all wear jerseys of that person’s job. But that’s what’s required if you really want to make it big. You’re going to have to nerd out to that level where you chase actual greatness, right?

Obaratile Semenya: Absolutely.

The Finance Ghost: So I think, while we’ve still got time, let’s maybe move on to one of the things we did talk about, which is to say that whilst the balance sheet might not be the only thing you need to make this work, it is obviously one of the ingredients. And at the end of the day, this podcast is made possible by Capitec and that’s because Legaro, at least as I understand it, is a Capitec Business client.

What I really want to ask you is the high-level question, which is from a debt perspective, whether from Capitec or elsewhere, that is a very important ingredient in property, especially because the thing about the property sector is that debt is used all the time to juice up those returns. And that is certainly true whether it’s a Real Estate Investment Trust – you go and look on the JSE and it’s  a structure that’s built for renting out property, they use tons of debt, the loan-to-value ratios there are a key part of the analysis.

In the property development space, I can imagine the debt is even scarier in some respects because there you don’t have such certainty on your cash flows. If you’ve got a huge portfolio of 100 properties that you’re renting out, you kind of know that you’re going to get this much rent every month. And so the bank and you can feel quite good about how that debt works. In the development game, you’ve got to have a really close relationship with your bank because you need them to understand the risks and you need to structure stuff accordingly.

So what do you find works well in terms of know what makes a good banking partner, specifically in the development side of the property sector?

Obaratile Semenya: Absolutely. And this is again when we go back to that statement that you made that the balance sheet isn’t everything. When it comes to development, unlike you trying to buy your house, the bank truly is your partner, right?

So more importantly than getting access to the capital, you really want to have a banking partner and this is why Capitec have been so fantastic for Legaro. You really want a banking partner that understands what you’re trying to do, that you’re not just a simple number, which Capitec are fantastic at doing, that understands development itself rather than just being financiers. Because you are going to go through bumps, you are going to go through unexpected shortfalls, you don’t have control of a lot of those variables. And what you don’t want from your banking partner is somebody who’s skittish or actually ill-informed about, well, what does this particular moment look like in the scale of the broader property market? What does it look like in terms of the time of the year? It’s June, relax, for instance. If you don’t have a banking partner that understands development itself, which we’re very lucky to have Capitec, you’re going to struggle because you’re going to find yourself at odds for reasons that actually objectively aren’t really problems. So that’s why it’s invaluable to have somebody who understands that.

But then on top of that, you are correct – at the end of the day, it’s their money. Developments are just way too expensive for individuals to finance. It’s just not going to happen. Ideally, you would structure your developments well. You would make sure that, for instance, you have some control of the land, that you’re able to put in enough that you can at least hold the land cost yourself. There’s good hygiene that you can do to mitigate against the risk, but nothing will help you escape that you do need a good credit partner. And that’s where the banks are really the engine of the property market. And we’re really grateful for them.

The Finance Ghost: Yeah, it’s that old banking joke that I loved from my investment banking days: OPM, Other People’s Money, and the fact that OPM sounds a bit like opium, I think is just a nice coincidence, I’m sure, in the world of banking.

But yeah, it’s an important concept, which is that you’ve got people who are capital providers in the markets and then you’ve got people who are risk takers and who can go and generate a great return on that capital both for themselves and the capital provider. That is capitalism 101, right? That’s how it works. That’s how free markets work. That’s why we can all go and invest in almost whatever we like, really, with variable outcomes. And it’s a very important and wonderful ecosystem. And it’s what develops our economy at the end of the day – we need more of it, not less of it.

Obaratile Semenya: Absolutely, absolutely. And with the housing shortfall that we have in this country, we just – I’m really grateful for banks like Capitec who are proactive about helping developers, particularly in things like that we do like which are high-density developments, tackle that problem because it’s expensive. And I don’t take that for granted that they are putting their necks on the line every time they believe in us.

And it really is a partnership, it’s not simply a transaction. And so there are some just fantastic people at Capital, from the marketing team all the way through to credit, all the way to accounts, they really will listen to you. And it’s not just because you owe them. Trust me, they’ll let you know that you owe them, but they’re really there to help you.

The Finance Ghost: Yeah, it really is great. So maybe let’s start to bring it home then with talking about the current projects keeping you busy. If someone wants to see a good example of a Legaro project, maybe they’d like to come and buy a property from you, talk us through current on-the-go projects. What’s keeping you busy at Legaro? What are they called? Where can people find out more?

Obaratile Semenya: So today. Well, on this podcast, I’m at home right now and I live in a Legaro development. So if that’s putting your money where your mouth is, I hope that says that. Currently Legaro is focused on two large developments. One is in Joburg here in Hyde Park. It’s The Emerald. We sell one, two and three bedrooms and now penthouses. They’re sectional titles in a fantastic area. It is upmarket, but they rent incredibly well.

And this entire development has been powered by Capitec through and through. We’re about 185 units into this development, which is well past halfway.

The Finance Ghost: I can see the learnings from Balwin coming through – if there’s one Steve Brooks instilled in you, it’s a willingness to take on big projects!

Obaratile Semenya: Yeah, yeah. And at this point he’s more my dad than my mentor! And I don’t want to again downplay how incredibly lucky I am to get to be in these developments. And that’s why I live there. But yeah, that’s our Joburg development. It’s largely where I’m at most of the time. It’s a fantastic ecosystem in a great area. And I’m glad that areas like this are starting to have accessibility for people who otherwise would have absolutely no chance of living anywhere here. Like I said, we have one bedrooms, two bedrooms, three bedrooms and penthouses. In fact, we just sold a penthouse last week.

And then the big monster that Legaro is tackling is the Western Cape, Paarl. We are building a development there called Drakenzicht, again with Capitec. The first phase has already been sold out. It’s on phase 2 of Drakenzicht 1. There will be a retail centre there. It’s there in the valley by Val der Vie. And it’s absolutely gorgeous. Yeah, it is upmarket but what I love about Legaro is that it’s able to piggyback off I think a lot of the school fees that Balwin would have had to have learned over its nearly 30 years.

Being able to use those relationships to do it at – it’s big, but compared to Balwin, at a smaller scale, and really provide a really premium product at a competitive price, what you’re getting. And that’s the benefit of having the experience of the likes of Balwin in building this journey.

But at Legaro, we have a financial director, managing director, the agents and I’m there. And so really it’s individuals who put in the time and effort to apply that into those developments. But those are our two current developments.

We do have another development coming up in the Hyde Park area, which is Hyde Park Square, which is set to launch next year. But we’re trying to focus on residential. We’re tapering off a little bit of the commercial portfolio that we had. But what we do is we sell really good-looking homes and I’d love for people to come and look at them, thanks to Capitec. Really good-looking homes that thanks to density and price point are in good areas where people can realistically afford them.

The Finance Ghost: That’s what I wanted to say. So I’ve been looking now at The Emerald Hyde Park website here on my other screen, obviously, because I also actually really like property for what it’s worth. I don’t think I’d ever be an investor in it, I’ve got to tell you. But I think your environment around you will dictate your mood, the way you live your life, to a gigantic extent, it really will. So property is great. But if I look at your Emerald website, I mean it’s fascinating, right? So the one bed, one baths from just over R2 million, like R2.1 million. And then that penthouse was like R11 million.

It just shows how in one space you’ve built such an interesting development where there’s an accessible layer for young Joburg professionals or whatever the case may be. This reminds me a little bit of my old life in Joburg. It’s very cool. Maybe that’s why I like it. And then you’ve got those penthouses which by all accounts that’s a seriously big number for what is a really beautiful property for that Joburg lifestyle and kind of all in one place as this integrated living environment. So yeah, very cool. It’s really nice to see stuff like that.

Obaratile Semenya: It is, and like I said, it accommodates almost everybody, from families to individuals. And it allows an accessibility to happen that I say would have been impossible. I mean, I’m walking distance from the President, which is something that I don’t take for granted. Something that should be more the case as we start to open up traditionally gated areas without compromising surrounding property values, then that’s the trade-off, right?

And I think The Emerald, thanks to the wonderful design that Enrico Daffonchio put into this place, no expense was skimped in making sure that the traditional area is still respected whilst allowing for people to take their first steps into the mobility, into the property market. And these developments, I think, are important for the broader economy for people to be exposed to what property will look like.

So I feel incredibly grateful. I’ve gone in The Emerald from one bed to two bed, all the way up.

The Finance Ghost: I love that. And Hyde Park is such an aspirational area. I have the most wonderful memories when I was a kid – nowhere near Hyde Park, I definitely did not grow up in that segment of the property market – but I remember my dad and I used to go to Look and Listen to – that’s really aging me now – at the Hyde Park Shopping Centre to go and buy CDs, aging myself again, when I was in high school. And then my dad always used to take me on this drive through Hyde Park to be like here’s how the other half live. look at these homes. I remember driving through Houghton and those old Rand Lords kind of areas in Joburg, Westcliffe. you just see these beautiful, beautiful properties. That’s why I say, I’ve always had a great love for how these things look. They really are beautiful. It’s art. It’s just an art that is also something you can live in.

OB, let’s finish this up with the question that I ask all the guests that I’ve had thus far on this wonderful podcast series. And here it is: your biggest mistake on this journey. I know it’s the most cliché question in the world for an entrepreneur, but hopefully everything else we’ve talked about is not cliché, so I’ve got to get one in.

And that is, as I say, your biggest mistake in building everything you’ve built. What would you say that would be?

Obaratile Semenya: It’s going to sound soppy, but underestimating the value of a partner. I think I’ve been lucky to have a fantastic partner through the journey that is property. It’s a tumultuous hair-ripping-out experience. And it’s only in retrospect that I realised that there’s actually no ways I think that I would have navigated that if it wasn’t for a good support system. I’d say my biggest mistake is probably not appreciating that enough, which I do now.

My biggest mistake is not incorporating and including the people in your life as you go down an entrepreneurial journey. It can be a rabbit hole. It can be this tunnel that you go down and you do yourself no service by depriving yourself the people who are most there for you.

So to those people that have that, I hope that they don’t downplay. I’m lucky enough to have a best friend who’s been there for me from the beginning in it. So that would have been my biggest mistake, but it’s not one that I would make now. In retrospect, don’t do it alone would be the best way to answer that question.

The Finance Ghost: Very cool. Very, very nice. I love that. OB, this has been a stunning conversation. Thank you. Really wishing you all the best with everything you’re doing. I’ve really enjoyed getting to know you through this process, and you’re doing some really, really cool stuff. So congrats. Well done. It’s a very inspiring story. Keep at it, man. It’s lovely to see.

Obaratile Semenya: Alright. Thank you so, so much. Have a great, great, great, great, great week.

The Finance Ghost: Thanks, OB. Ciao.

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