KAMPALA, UGANDA: City Businessman Dr. Sudhir Ruparelia who personally built Ruparelia Group brick by brick recently shared his wealth of business wisdom warning against excessive borrowing to invest in real estate sector.
Sudhir says potential developers should not to rush into borrowing until they are able to finance their loans. “Do not expand very quickly, outside your means,” he cautions on wise use of capital. “Allow some form of organic growth,” added.
“Your success in real estate will only come if you don’t borrow money. It is good business but if you make a mistake and overstretch yourself, it will bring your downfall,” he said.
One might imagine, since Sudhir made his fortune, partly because of his investment in financial institutions, he would advise business people to borrow to start their businesses.
No. He doesn’t.
“Avoid borrowing if you can,” he wisely, points out. Instead, the billionaire, says, “First, try and grow according to the cash flow you have and are creating. It is probably the best option. Because the truth is said, opportunities come all the time, especially when you have good cash flow. Take those opportunities.”
“Work hard, create your own cash flow and build without any borrowing. Do not borrow till you own a minimum of four properties. Then you can borrow to expand knowing you can service the loan,” he added.
The advice from the property mogul is worth paying attention to, for anyone who wants to build a solid business empire spanning Uganda, Rwanda, UAE, India, United Kingdom, among other countries, like Sudhir has done.
Three decades ago, Sudhir was a normal businessman in Kampala city.
He had used his savings as a taxi driver in the United Kingdom to start a business in Uganda, according to Forbes Magazine.
Today, the billionaire’s thoughts drawn from the experience of steadily growing his empire is priceless.
Sudhir and his family have business interests in hospitality, education, real estate, finance, insurance, labor export, and agriculture, among others.
He told a much publicized event that any economy is determined by demand and supply.
“You don’t plan for things like a pandemic. When the economy is in a recession, one of the biggest hit sectors is real estate. If you are in debt, that is double jeopardy,” he said.
However, Sudhir advised that those who must take mortgages from banks should borrow with a payment plan equivalent to the rent they pay every month. They can then convert what they were paying in rent into a journey to property acquisition.
Sudhir advised people to take up condominium properties instead of investing in homes that are way out of town.
“I think condos are the future because land in cities is getting expensive. We have a traditional view of every Ugandan wanting to own a house and garden. But you can only expand outwards so people are starting to build far out of town. It takes people two hours to get home and two ours to return. That is time you can use for developing your business,” he said.
Sudhir added that condominiums come with more advantages apart from proximity including security.
“A condominium also secure. You are not exposed. Anybody who wants to come and rob you will think twice. Insecurity in the suburbs in a big issue. That will push people into condos,” he added.
He said uptake of condominiums requires mind-set change.
“Traditionally our mentality in Uganda is to buy land and we keep building slowly. It takes four to five years to build. In the meantime you are paying rent. This is the group I advise to take up loans and acquire condos so that they convert their rental payments to servicing loans,” he said.
Despite the little flaws, he says Real Estate is the safest investment.
“Inflation will eat your money if you are keeping it in the bank, but real estate is inflation proof.
Building will always be there, but plan it right,” he said.
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