The De Waterkant has some of the worst price:rent ratios in Cape Town. Anyone who has bought an 'investment' property there in the last two years has speculated purely on capital appreciation not on rental yield to make money. For instance here's a two bedroomed duplex on sale for R1 950 000. An equivalent duplex in the same block, also two bedrooms but 18m^2 smaller though, rents for R6 500 a month. That's a big disconnect between price and the underlying rental fundamentals.I don't even have to run the numbers to tell you the ROI will be horrendous if you bought that apartment to rent out at the asking rental. But here goes:
| Down Payment | Monthly Payment | Cash flow | Annual Income | ROI |
|---|---|---|---|---|
| R0 | R24248.66 | R-17748.66 | R-212983.87 | |
| R195000 | R21823.79 | R-15323.79 | R-183885.48 | -94.30% |
| R390000 | R19398.92 | R-12898.92 | R-154787.10 | -39.69% |
| R585000 | R16974.06 | R-10474.06 | R-125688.71 | -21.49% |
| R780000 | R14549.19 | R-8049.19 | R-96590.32 | -12.38% |
| R975000 | R12124.33 | R-5624.33 | R-67491.93 | -6.92% |
| R1170000 | R9699.46 | R-3199.46 | R-38393.55 | -3.28% |
| R1365000 | R7274.60 | R-774.60 | R-9295.16 | -0.68% |
| R1560000 | R4849.73 | R1650.27 | R19803.23 | 1.27% |
| R1755000 | R2424.87 | R4075.13 | R48901.61 | 2.79% |
| R1950000 | R0.00 | R6500.00 | R78000.00 | 4.00% |
4% ROI if you pay for the whole thing in cash. What's that 3% less than inflation? 6% than a good fixed deposit? And just to break even you need to put down a whopping R1.4 million. Eina!
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