"Buy when they cry, sell when they yell"

The distressed property market has seen big business over the last couple of years, at least for banks, auction houses, real estate companies and investors. RICS, one of the world's leading professional bodies for qualifications and standards in land, property and construction defines "distressed property" as one that is "under a foreclosure order or is advertised for sale by its mortgagee". South Africa has been particularly hard hit in this department. According to research conducted by Rics last year South Africa has actually seen a bigger pick up in distressed commercial property sales than other major real estate market.

One person who has made a living from dealing in this field of distressed real estate is Alon Kowen, 34, of Pure Capital. A co-founding member of Auction Alliance, his early years in the real estate game revolved primarily around the selling of distressed real estate. He was MD of the company from inception until selling his shares in 2008 and now he runs his own property investment company. Having being around the real estate block a good few times, he has some good advice for those looking to get in.

Kowen (pictured here with South Africa's President Jacob Zuma, from his Facebook page) left Alliance "with a limited skill set" but one of his skills was real estate, understanding real estate and more specifically distressed real estate.

As he describes it, he went from being on the one side of the podium, where he was a "deal maker", facilitating deals between financial institutions and the investment market, to still being a deal maker but facilitating those deals for himself.

He says 2008 and 2009 were great years for the acquisition of distressed real estate. There was much good quality distressed real estate residential stock, but they were gloomy years and very few people were buying.

Pure Capital has a portfolio of about 100 properties; some Kowen bought on his own, some with partners. He keeps his entire model simple and for the most part buys middle market properties in the southern suburbs of Cape Town.

Says Kowen: "The principal of dealing in real estate; be it agricultural, residential, commercial or industrial is to follow the cash flow. ‘Value follows cash and cash is what determines value - not emotion'."

When buying these properties what investors should look out for is good value, good quality and ultimately at the time of acquisition you should already be planning how you are going to exit the deal.

When asked if he has access to properties that most people don't, he replied "without a solitary doubt. Nothing covert buts it's all about intelligence - knowing the right people".

For a young man, Kowen certainly seems to know a lot of people and the right people at that. "This is all I know, this is all I've done, it's a relationship business and I have very strong relationships with key role players in the business and that helps greatly."

He says auctions are the best and easiest mechanism to procure stock but the real estate agencies also run quick sell programs for the banks' distressed clients.

I asked if the sellers of distressed sale properties get a raw deal when their properties are sold without going on the open market. "Any seller who is in distress has the option of communicating a plan with their bankers. A foreclosure does not happen overnight, it can take up to six months to reach auction stage. There are lots of remedies the banks will use in consultation with the sellers, before going to auction. At auction you do risk the possibility of the property being sold at a discount."

When asked about managing his large portfolio, Kowen has some sage advice. "Your key as a residential landlord is the ability to isolate yourself as far as possible from your tenants."

He uses professional managing agents.

Kowen runs what he calls his property trading arm, "to pay the school fees" and a holding arm where the minimum hold is three years - "unless there is a stellar set of circumstances we don't sell."

His office that he runs is a modern, electronic and highly efficient one. He runs a home office and has a full time PA, a working mom who works from her home; no one could tell they weren't in the same office. This is for Kowen more of a story then his property acquisitions.

"I run an outsourced model, I work completely electronically and we run a sizeable business this way. We run the most efficient business without premises. That's the future of business."

He meets once a week with his PA at a coffee shop.

His advice to property investors or would be investors is simple. "Stick to what you know - if you understand real estate buy direct i.e. buy real estate. If you don't understand real estate then buy stocks, there are many excellent property funds which are doing very well."

He likes to work in line with one of Warren Buffett's mottos, which goes something like this: "Buy when they cry and sell when they yell." But these last words are his: "I'm not a risk taker; I only do what I know."