17 October 2006
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!
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2 comments:
This is clear evidence that investors have lost perspective.
Investment is a relative game. This translates into a (pre cost yield) of just 4%, roughly half what cash offers and pretty much inline with the dividend yield on better quality shares.
And people say the stock market is mad with investors expecting neverending capital growth!
This is something I have never understood about the buy-to-let property market in SA - you buy an investment rental property, with say a 15 or 20% deposit and then for years you have to pay in lots of money every month to cover the difference between rental and bond...! Rentals often seem to only cover half the bond payments or less.
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