Investment Properties That Aren't

Excellent Property Investment - Asking price R870 000, current rental R4000.

Down Payment	Monthly Cash Flow	ROI
R100000	R-4212	-51%
R200000	R-3145	-19%
R300000	R-2079	-8%
R400000	R-1012	-3%
R500000	R54	0%
R600000	R1121	2%
R700000	R2187	4%
R800000	R3253	5%

Fantastic investment opportunity - Asking price R657 000, expected rental R3000 (rental subsidy offered for first year)

Down Payment	Monthly Cash Flow	ROI
R100000	R-3132	-38%
R200000	R-2066	-12%
R300000	R-999	-4%
R400000	R67	0%
R500000	R1134	3%
R600000	R2200	4%

4% and 5% max ROI before maintenance, insurance and rates? Just tell me where to sign!

Western Cape IOL Index

Western Cape IOL Index

Investment Properties That Aren't

Here's a two bedroomed flat right on Stellenbosch university campus. It's earns a rent of R5000 per month. And seeing that it's asking price is R1 500 000 that means you'll only lose R10 000 a month on it. You'll only break even if you put a whopping R1 100 000 down as deposit. What an investment! I'll take two!

Distressed Sellers Emerge!

I guess Tito's 50bp rate hike (and the expected 50bp hike in December) is finally putting the strain on some speculators:

A beautiful bachelor flat across from the gardens in Cape Town.
Secure complex with a pool and a lovely spacious garden.
The flat has a large separate kitchen, with wooden floors.
Lots of cupboard space and a balcony with a view of Lions head.
Approx. R65 000 under market value. Urgent sale

Thanks to reader SG for this gem!

Western Cape IOL Index

50bp Repo Rate Hike

Reserve Bank Governor Tito Mboweni hiked the repo rate 50bp (0.5%) today. It's expected to go up another 50bp in December. Tito is still sweating over high debt levels:

Mboweni warned that the inflation outlook remained under threat, with record levels of credit demand and household debt fuelling domestic demand.

Rent Vs. Rent: Gardens Vs. Clifton

Another hallmark of speculative bubbles is amateur investors trying desperately to cover their massive mortages with outlandish rents. Consider the following two properties without clicking on the links: A two bedroom apartment in Clifton or a 3 bedroom duplex apartment in Gardens. Which one do you think has the higer asking rent? Which one do you think was bought in the last two years?

Western Cape IOL Index

Badly Worded Ads

Here's this week's winner of the badly worded ad of the month award (emphasis mine):

Seperate kitchen & bathroom. Balcony with views over Long str, Harbour and Signal Hill. Double BICs & linen cupboard, dark wood lamanated floors, newly painted etc etc.Building newly renovated,security & not as dodgy as everyone seems to think! Cars are safe on the street as lots of movement 24hours with OrangeKloof Security & CPT Police doing the rounds!

I promise the crimes not bad! The police are everywhere!

Another low for house price growth

Another low for house price growth

House prices in September grew at the slowest rate since December 2002, according to Standard Bank’s residential property gauge.

The bank reported that last month, house prices were only 2,9% higher than a year earlier. The five-month moving average growth rate slowed nearly 23% from 8,7% y/y in August to 6,7% y/y in September.

Woodstock Asking Rents Still Dropping

Waaaaay back in May we talked about a new block of apartments in Woodstock called Harbour Views, particularly we talked about an 'investor' who had picked probably the worst view possible to advertise the place and was trying to rent it for R3500 a month. Well it seems the apartment is still available except rent has dropped R200 a month. I thought rent was supposed to go up in an environment with increasing interest rates?

Investment Properties That Aren't

We return once again to De Waterkant. Here's a one bedroomed loft apartment for sale for R1 400 000. It's described as a "a fantastic investment opportunity". That's got to mean a yield of like 20% a year right? Well here's a one bedroomed loft in De Waterkant for rent for R4500 a month. In fact from the description and the fact that the same agency posted both listings it sounds like it's in the same block. So how fantastic of an investment is it?

Down Payment	Monthly Cash Flow	ROI
R100000	R-8918	-107%
R300000	R-6854	-27%
R500000	R-4790	-11%
R700000	R-2725	-5%
R900000	R-661	-1%
R1100000	R1403	2%
R1300000	R3468	3%

3% yield with close to a 100% deposit? Fantastic indeed.