Four bedroomed house in Sun Valley, tenanted with a rent of R3500. On sale for R735 000. If you bought it as an investment your return would be:| Down Payment | Monthly Payment | Cash flow | ROI |
|---|---|---|---|
| R73500 | R7515.57 | R-4015.57 | -65.56% |
| R147000 | R6680.51 | R-3180.51 | -25.96% |
| R220500 | R5845.44 | R-2345.44 | -12.76% |
| R294000 | R5010.38 | R-1510.38 | -6.16% |
| R367500 | R4175.32 | R-675.32 | -2.21% |
| R441000 | R3340.25 | R159.75 | 0.43% |
| R514500 | R2505.19 | R994.81 | 2.32% |
| R588000 | R1670.13 | R1829.87 | 3.73% |
| R661500 | R835.06 | R2664.94 | 4.83% |
| R735000 | R0.00 | R3500.00 | 5.71% |
Paying upfront in cash that's not even as much as a fixed deposit and don't forget to take off for rates, maintenance and vacancy. Unless you put down R400 000 you're not even making any money. If you gear up totally not even capital apprecation will help you (6-8% at this price level).
7 comments:
maybe the return isnt great, and maybe capital growth wont help immediately. but 6 - 8% pa compounded for a few years will start to show dividends soon enough...
surely?
Sure it might, but why go through all the bother of chasing after tenants, doing maintenance, possibly losing money when the property is vacanct when you can just plonk your money in a 12 month fixed deposit and get 8.9% a year without any work.
because...
most people dont have 750k lying around
if you use the banks money you get alot more leverage!
or, forget the local market, go for the emerging international markets
www.internationalestates.co.za
If you use the banks money you're still paying a bond every month. And unless your rent is covering bond costs (which in Cape Town's case it's not if you're fully geared) then you're losing money every month. Especially in property in Cape Town priced over R900 000 where capital appreciation has slowed to 3.3% a year.
ya ok, i mean i guess that makes sense in some way or another, but i am making money from property, and boom, bust or bubble, im going to continue making money...
"ya ok, i mean i guess that makes sense in some way or another"
htb, don't try and confuse the oke with like um facts, you know! He's convinced himself he's making money so don't be a bloody spoil sport and come and talk nonsense about return on investment and all that nonsense!
;-)
From CJ
Some people just don't know when to go home after the party has finished - even the UK press are starting to see the danger signs - headline this week "possible £450 billion house crash imminent".
18 months ago the press named one UK women "queen of the buy to let" - she had 70 houses - 7 months later she was in the papers again ... she had gone bankrupt ... when the market turns, property is going to be a very dangerous place to have your wealth invested ... our anonymous "investor" who has trouble doing maths should think about buying himself a calculator pronto ...
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