De Waterkant has to be the worst suburb in the country when it comes to price/rent ratios. Anyone who has bought there in the last two-three years has been banking on nothing but capital appreciation, because the rentals, when compared to the purchasing price, are abysmal.And here is possibly one of the worst examples I think I've seen. It's a 2 bed/2 bath 87m^2 apartment on sale for R2 195 000 and renting out for R6 000 a month. Yes you read that right, R6 000. To put that in perspective the monthly bond repayments will be R28 095 a month. And yet the ad still calls this an "Excellent investment". I wish I was kidding here folks.
So here is the (shockingly bad) return on investment you can expect. And remember this is the return before levies, maintenance and vacancy costs.
| Down Payment | Monthly Payment | Cash flow | Annual Income | ROI |
|---|---|---|---|---|
| R0 | R28095.95 | R-22095.95 | R-265151.41 | |
| R219500 | R25286.36 | R-19286.36 | R-231436.27 | -105.44% |
| R439000 | R22476.76 | R-16476.76 | R-197721.13 | -45.04% |
| R658500 | R19667.17 | R-13667.17 | R-164005.99 | -24.91% |
| R878000 | R16857.57 | R-10857.57 | R-130290.85 | -14.84% |
| R1097500 | R14047.98 | R-8047.98 | R-96575.71 | -8.80% |
| R1317000 | R11238.38 | R-5238.38 | R-62860.56 | -4.77% |
| R1536500 | R8428.79 | R-2428.79 | R-29145.42 | -1.90% |
| R1756000 | R5619.19 | R380.81 | R4569.72 | 0.26% |
| R1975500 | R2809.60 | R3190.40 | R38284.86 | 1.94% |
| R2195000 | R0.00 | R6000.00 | R72000.00 | 3.28% |
If you plonk down R2 195 000 in cash for this you can expect at best (that is if your other costs come to zero which is impossible) a return of 3.28%. That is about 4% below inflation and a whopping 6.5% what your money could earn if you just left it in a fixed deposit in the bank. You only break even on with a whopping 80% down payment.
4 comments:
have you visited this flat? Well i have and when it is really a 1 bedroom apartment as the
second bedroom is a box! the rooms are tiny and you feel you cant breathe in that place. The flat is very overpriced, R800000 should be the correct price. and there is no storage.
Thanks for the in person report Anonymous! You don't have to tell me the flat's overpriced, at the current asking price the cost per m^2 is R25 229!!
Prices in De Waterkant are totally disconnected from the underlying fundamentals, such as rent.
at de waterkant piazza, in loader street, the rent is high and the tenants often cant use the pool because it is often green and unhygienic, the maintenance is very poor. furthermore some of the tenants (holiday tenants) are very loud, coming home drunk in the early hours etc...this is not a nice place at all. Some of the flats for holiday rent are dirty and coakroaches crawling around
That sounds pretty bad. I would expect a block like that in De Waterkant would have an extremely strict body corporate.
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