Take Quintin Groenewald, who at the age of 21 decided to become a property entrepreneur. He took to the library of the North-West University where he was a student and read as much as he could about the industry.
He also dropped out of law school and started two small businesses which in a single year made so much money that he bought three properties in Honeydew, two of which he still owns today. “I also had some fun with my student friends,” he says of the seminal year in which he told his father that he wanted to take a break from studying law. Although he found later that his legal background is useful for the contracts he enters, he simply could not see himself spending his life in the courts.
His father, a successful property developer himself, agreed on the idea of taking a break from his studies on condition that his son pays his own way and repays him the university fees. Groenewald did both, and more. He sold nutritional supplements and also started a typing service which employed several people and netted him R15000 per month.
After a year of the high life, Groenewald suddenly found himself at the opposite end of the income spectrum. Determined to become a property entrepreneur, he joined his father’s business in Krugersdorp and started at “rock bottom”, he says, mixing cement, working on site and “earning the respect of the construction workers”. It was a hard year which gave him an invaluable perspective of the property industry from the ground up.
Having earned his stripes, he worked in the family business as a project manager on the construction of a 32-apartment block. He also registered as a real estate agent and sold several of the units he built, learning the marketing side of the property industry at the same time.
At the end of the project, his father turned down a contract for the development of another block of flats, and Groenewald decided to do it himself.
He registered his own company, GQ Construction, tendered for the job, and found himself at the age of 23 with a R20m construction project. It was successfully completed, but his steep learning curve in the property industry continued.
The developer for whom he built the apartment block declared bankruptcy just before Groenewald was to receive his last payment for the project – no less than R6m. Because the last payment consists mainly of the surplus that the builder makes on such a project, Groenewald did not lose much money, but he didn’t make any either.
Many would turn their back on an industry that dealt them a blow like that, but Groenewald, now 33, takes a philosophical view of the experience. First, it taught him about the financial and legal risks involved in property projects. Second, he believes a 23-year-old with R6m would probably have done something irresponsible.
As it turned out, he had to start building his business again from scratch, and at a less frenetic pace. He soon won another building contract, the first of many, and he was able to use the properties he bought after his gap year to raise the finance he needed to get going again.
Today, Groenewald’s business has about 500 workers at various construction sites at any one time, sub-contractors included. GQ Construction’s head office in Potchefstroom is staffed by Groenewald and three colleagues, one of whom is his wife, a qualified chartered accountant.
Groenewald says that scarcity of finance has always been the most challenging obstacle in growing his business. His constant search for working capital has brought him into contact with Business Partners Limited (BUSINESS/PARTNERS) who has agreed to finance his latest development of 23 houses. He says banks are currently too risk-averse to finance new property developments.
GQ Construction has also just finished paying off the BUSINESS/PARTNERS loan for the completion of the first seven houses of the development, with two further phases in the pipeline.
While it is possible to go the cheaper route of self-financing the growth of his business, Groenewald says the availability of BUSINESS/PARTNERS’ finance speeds up the completion of his projects and the growth of his business. For example, the 23-house development would have taken three times as long to complete were it not for the BUSINESS/PARTNERS loan.
Groenewald’s next step in his expansion is to employ a quantity surveyor and in the foreseeable future GQ Construction will most likely be busy with student accommodation projects. At the age of 33, there is still no end in sight for the growth of his business, nor for his life-long learning.