Rasagee Pillay | 27 November 2020
In May 2006 I, along with a group of investors, purchased the 377 Lower Main Road building at an auction. We intended to convert it into a call centre as part of a consulting project we had been awarded. Sadly, that contract was cancelled, and we were suddenly committed to a property for which we had no use. We had to take personal loans to pay for the property, and it officially became ours in 2007. To add insult to injury, the property (which we had bought without viewing) turned out to be a slum. When we purchased it, there were 63 rooms with one working toilet and one working shower for the entire building. There were 3-6 people living in each room, which added up to approximately 250 residents in the building. There was no electricity and no hot water. Furthermore, the building was notorious with the Woodstock police for drugs and other criminal activity.
We cleaned up the property and gave some thought as to how to proceed. We knew nothing about property investment (obviously!), so we were fumbling in the dark. Over the next few months, we applied to every major bank in South Africa for a loan to fund a proper renovation. When they came out to the property and saw the condition it was in, none of them would approve a loan. So, not only were we in debt to friends and family for the purchase of the property, but we also could not get further funding to renovate and convert it to a viable business. And every time we invested some money in the property, there would be a burglary and it would all be stolen! The stress of the experience started to tell on us, and the partners were soon fighting amongst themselves. I think the lesson is that if ever there was a way to NOT purchase a property, this was it!
In 2009, my personal circumstances changed, and I had to close my consulting business and give up my income, a frightening prospect with 377 Lower Main Road still hanging over us like an albatross. I did some research and approached my business partners with a proposal. I would take a loan on our family home and use those funds to renovate 377 Lower Main Road, converting it to a student accommodation. There were no tertiary institutions in the area at that time, so no students. No one was investing in the Salt River area in 2009. So this was both an act of desperation, and an act of faith. I knew that I could not be a slumlord, but I was confident that I could be a good landlord. I was also confident that investment and development would come to the general Salt River area in the next few years, and even if we did not get student tenants, we would be able to get other tenants to fill the building and bring in much-needed revenue. I also knew that there was a gap in the market for decent, affordable and ethically managed student accommodation which embraced students from all economic, racial, cultural and gender/ sexual backgrounds and orientations.
We started the renovation in January 2010 and opened the ground floor to students in July of that year. By February 2011, we were able to open the rest of the building. The property had been called “Kinsley Lodge” before we owned it, and we had intended to name it “LMR Lodge” for Lower Main Road, but very fortuitously, I had a change of heart, and opted for the more evocative The Baobab Student Accommodation. The baobab tree is native to Africa, and our African heritage is very important to us. The Baobab also represents strength and comfort – it has connotations of home, and that made it a more suitable name for a business accommodating students. Changing the name was a good choice, because The Baobab was a name that could grow with our business. By 2014, we had grown to 5 student properties, and were established in this new market. By 2019, we had built a team of 7 permanent staff, along with 5 casual staff members. We had also acquired two properties for long term rentals and were busy converting a third into a guest house. Before Covid, it felt to me like while we may have fallen into the student accommodation business by a series of mistakes, we had turned it into a viable business with a combination of determination, stubbornness and sheer luck.
The Original Property We Bought in 2006
