A Reader's Request: Rent Vs. Buy

Reader IS asked me to do an ROI calculation of a property he is tracking. It's asking price is R740 000 and it rents for R4 700 with a monthly levy of R1 128 resulting in a net rental income of R3 572. With interest rates at 14.5% payments and returns will be as follows:

Down Payment	Monthly Payment	Cash flow	Annual Income	ROI
R0	R9471.98	R-5899.98	R-70799.80
R74000	R8524.79	R-4952.79	R-59433.42	-80.32%
R148000	R7577.59	R-4005.59	R-48067.04	-32.48%
R222000	R6630.39	R-3058.39	R-36700.66	-16.53%
R296000	R5683.19	R-2111.19	R-25334.28	-8.56%
R370000	R4735.99	R-1163.99	R-13967.90	-3.78%
R444000	R3788.79	R-216.79	R-2601.52	-0.59%
R518000	R2841.60	R730.40	R8764.86	1.69%
R592000	R1894.40	R1677.60	R20131.24	3.40%
R666000	R947.20	R2624.80	R31497.62	4.73%
R740000	R0.00	R3572.00	R42864.00	5.79%

A 70% downpayment required to break even on rental income and sub 6% ROI when you pay in cash. Not the best. The levies are also quite high eating up a whopping 24% of the rental income. Take maintenance costs off and vacancy costs and the returns could be even less.