| Down Payment | Monthly Payment | Cash flow | ROI |
|---|---|---|---|
| R0 | R5453.47 | R-2653.47 | |
| R48000 | R4908.13 | R-2108.13 | -52.70% |
| R96000 | R4362.78 | R-1562.78 | -19.53% |
| R144000 | R3817.43 | R-1017.43 | -8.48% |
| R192000 | R3272.08 | R-472.08 | -2.95% |
| R240000 | R2726.74 | R73.26 | 0.37% |
| R288000 | R2181.39 | R618.61 | 2.58% |
| R336000 | R1636.04 | R1163.96 | 4.16% |
| R384000 | R1090.69 | R1709.31 | 5.34% |
| R432000 | R545.35 | R2254.65 | 6.26% |
| R480000 | R0.00 | R2800.00 | 7.00% |
You would have to put down more than a 50% downpayment to just break even. If you gear up fully you would have lost R31 836 a year, meaning you need 7% appreciation in capital appreciation just to break even. And these rental numbers are before deductions for rates, maintenance and vacancy.
2 comments:
These "investors" are so reliant on property prices that keep going up - when prices persistently drop for 3 or 4 years, they are going to start squealing so loud ...
5 years of the biggest property bubble in history and these property investors think they are invincible and have discovered a way to print easy money - like all get rich quick schemes it all ends in tears - 4 simple words they have over looked "House prices Go Down"
I rented a 2 bedroom duplex in Parklands for a year and two months starting the 1st of January, 2006.
The rental was R2700 per month. The levies were R500 odd per month. The rental agent took 15% (yes, fifteen percent) commission leaving the landlord a nett amount of R1795 per month.
The return on this propert valued at R500 000 property is therefore about 4.5 % which is even worse than what you would get from a multimillion rand property.
When I moved in this complex, there was another duplex for sale for R549 000. It was for sale for over 8 months and then got taken off the market. Seems like there were no takers.
Towards the Oct 2006 another duplex went for sale at R529 000. That was sold in Feb 2007 and I would love to know what selling price was achieved. The owner must have netted below R500 if you take off the agents commission.
In effect, these duplexes are seeing absolutely no capital growth and very low return on investments. And they are situated in a suburb that is offering the best value for money in Cape Town.
When I moved out, the new tenant carried on paying a rental of R2700 per month. So its a year later and the rental has not been increased.
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