Usually one would expect a bachelor flat to have a decent rental returns.Here's a ground floor bachelor in Hout Bay, selling for R695 000 with a rental of R3 000/month. Here's the ROI before rates, maintenance and vacancy costs are taken out:
| Down Payment | Monthly Payment | Cash flow | Annual Income | ROI |
|---|---|---|---|---|
| R0 | R8895.98 | R-5895.98 | R-70751.81 | |
| R69500 | R8006.39 | R-5006.39 | R-60076.63 | -86.44% |
| R139000 | R7116.79 | R-4116.79 | R-49401.45 | -35.54% |
| R208500 | R6227.19 | R-3227.19 | R-38726.27 | -18.57% |
| R278000 | R5337.59 | R-2337.59 | R-28051.09 | -10.09% |
| R347500 | R4447.99 | R-1447.99 | R-17375.91 | -5.00% |
| R417000 | R3558.39 | R-558.39 | R-6700.73 | -1.61% |
| R486500 | R2668.80 | R331.20 | R3974.46 | 0.82% |
| R556000 | R1779.20 | R1220.80 | R14649.64 | 2.63% |
| R625500 | R889.60 | R2110.40 | R25324.82 | 4.05% |
| R695000 | R0.00 | R3000.00 | R36000.00 | 5.18% |
You need to put over 50% downpayment to break even and buying the place for cash gets you a 5.18% annual ROI. Which is less than inflation. Take out the various ownership costs and the return is even worse.
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