In an era where access to housing is limited to a privileged few, a property Stokvel may be the access card that the previously disadvantaged need, says Nicolas Manyike, founder of the newly formed Property Stokvel Investment Club.
Nicolas says that property is important in the economic emancipation of black people.
“There’s no freedom without financial freedom, ownership of land and properties. The majority of black communities are still suffering the effects of apartheid,” says Nicolas.
He says his own experience gave birth to the idea of a property Stokvel.
“When we relocated to the city of gold, we battled to find a place to stay,” he says.
“My business partner and I had to make use of the Ekhaya shelter for the homeless in Johannesburg,” he recalls.
How does the Stokvel work?
According to Nicolas, the club has two phases.
Phase 1:
- Members contribute R2100 monthly.
- R100 is deducted from the monthly contribution for administration and legal fees.
- The target for phase 1 is 100 members.
- As soon as phase 1 members reach the targeted amount, a property/franchise will be brought to generate a stable source of income for all members.
- The profit that will be generated from those assets will equally be shared amongst the members. They will receive the profit amount annually for a lifetime.
Phase 2:
- Members will be grouped into 30 members per group, where each member will monthly contribute R15 000 which will make a monthly total of R450 000.00
- That amount will be used to buy or build a house for a member each month which will be bought or registered under the Stokvel as security for other members.
In case of job loss, Nicolas says the club will give the affected member a chance to recover or refund them if the need arises.
“We will give a member a grieving period of three months to sort out their finances, then come and pay back all the missed months,” says Nicolas.
“If a member fails to do so for more than 3 months, he will be refunded 30% of his initial contribution and 70% will stay in the Stokvel,” he adds.
Nicholas says it will take a minimum of three to five years for all members to receive their houses.
According to John Manyike, head of financial education at Old Mutual, a property Stokvel is a good wealth creation vehicle.
“Property Stokvels represent an excellent opportunity to revolutionise Stokvels savings from short-term savings vehicles to more long-term investments,” says John.
He says members need to understand and agree with the founding principles, potential risks and constitution of the Stokvel.
"As with all Stokvel, the purpose, potential risks, membership and constitution of the Stokvel need to be clearly laid out from the very beginning to avoid ambiguity, misuse of funds and undue risk,” he adds.