What do you do if you can't sell your 'investment property' for R1.45 million? Why you rent it out for R5000/month. Now let's assume that our seller wants to make 25% profit since he bought it during pre-construction. That means he probably bought it for around R1.1 million. So what's his ROI?| Down Payment | Monthly Cash Flow | ROI |
|---|---|---|
| R100000 | R-5873 | -70% |
| R300000 | R-3671 | -15% |
| R500000 | R-1469 | -4% |
| R700000 | R733 | 1% |
| R900000 | R2935 | 4% |
A whopping 4% return for paying nearly the entire price in cash. With inflation about to hit 6% you're only losing 2% a year in real terms.
And unless you've got more than R350 000 as a down payment you can kiss your 10% deposit goodbye by the end of next year.
1 comment:
Then deduct rates,levies,buying costs,selling costs, insurance,rental agent fees,maintenance,loses from tenants that don't pay, legal fees to kick them out, not to mention all those painful months of zero income before a tenant can be found, plus medical costs from the stress of wondering if those guys on CapeTownBubble actually do know what they are talking about and the selling price is about to dive ... don't know about you but cash in the bank looks kinda good during these uncertain times ...
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