Real people doing unreal things
"This is a wonderful adventure," says Mike Molyneux. "And I don't know where the business is taking me."
In 2005, the 46-year-old, British-born chartered surveyor and frustrated developer rented a few flats in Westpoint, one of Sandton CBD's new-generation high-rise blocks of flats, furnished them and rented them out. "I was hoping as a result to be able to stay in one unit free."
Two years later he has 53 flats in the building. It amounts to a corporate hotel and it's popular with overseas business people, usually in SA on contract. The units are rarely empty, he says, and companies pay between R740 and R990 a day, excluding Vat, for the two-bed units, depending on how long their staff stay.
That gives him a sizeable business with a gross income of R1m/month. He won't say what his profit is, but it's easy to guess that he is sitting on a niche business with a net income of a few million a year and growing.
Molyneux was brought to SA in 1991 by Durban-based property company Russell Marriott & Boyd Trust. A few years later he joined AECI's new property division, Heartland. "But I wanted to get out of the corporate world and to be a developer," he says. "So in the early 2000s I tried to put together a development in White River. But it was very difficult to get approvals."
Molyneux's niche is between the full-service Sandton CBD hotels, which are more expensive, and foodless accommodation like the Don Group. His furnishings are more luxurious and he provides a higher level of service. This includes fresh flowers in the rooms, broadband Internet connection and constant attention and advice.
One of his success secrets is service, he says. That is why he concentrates his business in one building. Westpoint is ideal because 80% of the 220 flats are investor-owned. "I or my 17 staff are on site 24 hours a day to help our clients," he says. " I have yet to satisfy myself that I'll be able to maintain my current standards in another building."
At first Molyneux found he was struggling to rent units. "I had difficulty getting owners to sign leases with me because I had no track record."
He signs a three-year lease, currently at R6 000/month for a two-bed unit, with 8% escalations. "I haven't missed a payment yet."
Expansion at four units a month is as fast as Molyneux wants to go. "What I don't like is vacancies," he says.
Article by: Ian Fife - http://secure.financialmail.co.za