Whether you’re exercising, working on a new project or taking a trip somewhere – team work always makes the experience so much better. Saving money with a group of people is also a great example of the advantage of doing a community-based activity. As a result, the stokvel market has become more popular in South Africa.

Living in uncertain times with the current economic instability has escalated unemployment and poverty. This is why South Africans are now testing out unconventional ways of creating wealth and building financial freedom. There are 800 000 plus active stokvel groups in the country, and each one collects approximately R50 000 per annum, as said by the National Stokvel Association of South Africa. This said, it’s easier to understand why this concept has also effortlessly moved to property investment.

“This type of investment keeps you accountable.”

Does a property stokvel make a good investment?

Being part of a group investment fosters accountability. Stokvels or societies start because of different reasons – money saving, events, group vacation, etc. It is obvious that South Africans are finding it harder to save. Through a savings group, you’ll likely practice good saving habits and not spend your money unnecessarily. Stokvels are also a great way for first time property investors to enter the market.

“These groups usually include fewer members because it’s less of a hassle to manage.”

How does a property stokvel operate?

Based on your individual property investment goal, you are required to make specific monthly contributions as a member. Failure to pay your contribution will results in being banned from the group and forfeiting benefits. Often, there’s at least 12 members in each group but the number can be finalised by the founder of the group. Most times, stokvel groups are made up of fewer members because then they are easier to manage. But there are other groups that have 100 or more members. So, how can you ensure the success and smooth operation of your property stokvel? For one, set clear guidelines for all members: “find members who are reliable.”

Know and select specific people for your group

Stokvel groups are well-known which is why families and friends also join them. However, because of our close relations with these members, we accommodate bad habits. This means that, if you’re gravely serious about property investing, you need to ensure that all members in your stokvel share the same goal. You need to lovingly acknowledge that it’s pointless to include a friend or family member who:

  1. becomes excited briefly and then either loses interest or stops contributing
  2. may be struggling financially and won’t make monthly contributions

You can also consider starting a stokvel with people you meet at a networking event, you don’t have to include friends or family. The key is to constantly evaluate those who want to join with regards to their goals, dependability and expectations.

Form an agreed decision on how to collect money

Whether big or smaller amounts, monthly contributions need to be saved somewhere and members must decide where. Will monies be debited into one savings account every month? Will one person be responsible to collect money from individual members before transferring it to a main account? These are the types of questions that have to be answered before the stokvel starts.

“Create a contract and have each member sign it.”

What are the conditions if a member fails to contribute?

This point refers back to the first rule – find and recruit reliable members. Yet, there may be a case where a member fails to make a payment or two due to an unforeseen emergency of some sort – medical bills, additional funeral costs etc. Stokvel members need to talk about what will occur in such a situation. They must decide whether the profit share for that particular member will be less, or if other members will pay more fees for that month.

Put your rules in writing

Lastly, make your decisions official and write all your rules down. Before you start, create a contract and ensure every member signs it. Remember to provide every member with a signed contract, because you might need to refer back to it in case there is a dispute.

Get started with your property stokvel

Through a property stokvel, you can possibly invest in larger residential units or commercial property – based on how many members are in your group and how much your monthly contributions are. In addition to combining your resources, you all need to work together as a team to achieve your financial goals and reach new frontiers.

Are you looking for stokvel members? Maybe you can meet your stokvel members at out FREE online property investment webinar. Join us and become part of our tribe of wealth creators. Our experts have a successful guideline on the South African property market that’s applicable to everyone – from first-time property investors to those who want to scale their property businesses. Secure your spot and register for the webinar today.