Here's a 4 bed house in Durbanville on sale for R2 400 000 but it pulls in a rent of R11 500. The rent might look impressive but compared to the payments on the bond and the return you can expect is actually not great.| Down Payment | Monthly Payment | Cash flow | Annual Income | ROI |
|---|---|---|---|---|
| R0 | R30719.95 | R-19219.95 | R-230639.36 | |
| R240000 | R27647.95 | R-16147.95 | R-193775.42 | -80.74% |
| R480000 | R24575.96 | R-13075.96 | R-156911.49 | -32.69% |
| R720000 | R21503.96 | R-10003.96 | R-120047.55 | -16.67% |
| R960000 | R18431.97 | R-6931.97 | R-83183.61 | -8.66% |
| R1200000 | R15359.97 | R-3859.97 | R-46319.68 | -3.86% |
| R1440000 | R12287.98 | R-787.98 | R-9455.74 | -0.66% |
| R1680000 | R9215.98 | R2284.02 | R27408.19 | 1.63% |
| R1920000 | R6143.99 | R5356.01 | R64272.13 | 3.35% |
| R2160000 | R3071.99 | R8428.01 | R101136.06 | 4.68% |
| R2400000 | R0.00 | R11500.00 | R138000.00 | 5.75% |
So a sub 6% ROI with R1 440 000 needed just to break even on cash flow and that's before rates and maintenance.
Another thing to contemplate here is that the tenant has signed a 12 month lease already. One of the golden rules for investing in property is tenant selection but here the new owner doesn't have that option.
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