Here's an ad for three 'investment' properties in Disa Park in Vredehoek. I suspect they are the same apartments we've reported on before but these have rentals specified so we can do some ROI calculations.As always these ROI's are all calculated before rates, maintenance and vacancy are included, meaning that the actual rate of return is probably lower than specified here.
The first apartment is a 50m^2 1 bed selling for R795 000 and which rents out for R4 000:
| Down Payment | Monthly Payment | Cash flow | Annual Income | ROI |
|---|---|---|---|---|
| R0 | R10175.98 | R-6175.98 | R-74111.79 | |
| R79500 | R9158.38 | R-5158.38 | R-61900.61 | -77.86% |
| R159000 | R8140.79 | R-4140.79 | R-49689.43 | -31.25% |
| R238500 | R7123.19 | R-3123.19 | R-37478.25 | -15.71% |
| R318000 | R6105.59 | R-2105.59 | R-25267.07 | -7.95% |
| R397500 | R5087.99 | R-1087.99 | R-13055.89 | -3.28% |
| R477000 | R4070.39 | R-70.39 | R-844.71 | -0.18% |
| R556500 | R3052.79 | R947.21 | R11366.46 | 2.04% |
| R636000 | R2035.20 | R1964.80 | R23577.64 | 3.71% |
| R715500 | R1017.60 | R2982.40 | R35788.82 | 5.00% |
| R795000 | R0.00 | R4000.00 | R48000.00 | 6.04% |
The second apartment is a 75m^2 selling for R1 050 000 and renting for R5 000:
| Down Payment | Monthly Payment | Cash flow | Annual Income | ROI |
|---|---|---|---|---|
| R0 | R13439.98 | R-8439.98 | R-101279.72 | |
| R105000 | R12095.98 | R-7095.98 | R-85151.75 | -81.10% |
| R210000 | R10751.98 | R-5751.98 | R-69023.77 | -32.87% |
| R315000 | R9407.98 | R-4407.98 | R-52895.80 | -16.79% |
| R420000 | R8063.99 | R-3063.99 | R-36767.83 | -8.75% |
| R525000 | R6719.99 | R-1719.99 | R-20639.86 | -3.93% |
| R630000 | R5375.99 | R-375.99 | R-4511.89 | -0.72% |
| R735000 | R4031.99 | R968.01 | R11616.08 | 1.58% |
| R840000 | R2688.00 | R2312.00 | R27744.06 | 3.30% |
| R945000 | R1344.00 | R3656.00 | R43872.03 | 4.64% |
| R1050000 | R0.00 | R5000.00 | R60000.00 | 5.71% |
The final apartment is a 3 bed 105m^2 apartment selling for R1 600 000 and renting for R8 500:
| Down Payment | Monthly Payment | Cash flow | Annual Income | ROI |
|---|---|---|---|---|
| R0 | R20479.96 | R-11979.96 | R-143759.57 | |
| R160000 | R18431.97 | R-9931.97 | R-119183.61 | -74.49% |
| R320000 | R16383.97 | R-7883.97 | R-94607.66 | -29.56% |
| R480000 | R14335.97 | R-5835.97 | R-70031.70 | -14.59% |
| R640000 | R12287.98 | R-3787.98 | R-45455.74 | -7.10% |
| R800000 | R10239.98 | R-1739.98 | R-20879.79 | -2.61% |
| R960000 | R8191.99 | R308.01 | R3696.17 | 0.39% |
| R1120000 | R6143.99 | R2356.01 | R28272.13 | 2.52% |
| R1280000 | R4095.99 | R4404.01 | R52848.09 | 4.13% |
| R1440000 | R2048.00 | R6452.00 | R77424.04 | 5.38% |
| R1600000 | R0.00 | R8500.00 | R102000.00 | 6.38% |
All three have pretty bad ROI's with a maximum ROI spread from 5.71% to 6.38%. The suprising thing is the second apartment has the worst yield despite being the cheapest per m^2 at R14 000/m^2.
Considering that property prices are stagnant (0% price growth year on year according to Standard Bank) and that a decent fixed deposit or money market account gets you 9% interest you're better off just plonking your money in the bank. And it's a helluva lot easier than running after tenants all the time.
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