Here's a 3 bedroomed cottage in Tamboerskloof for sale for R2 425 000 which has a net rental income of R7 370 a month (R8 200 rental - R830 rates). The payment on a 100% bond is a whopping R31 309 a month, R23 000 more than what you can expect to pay to rent the place! You can already tell the return on investment is going to be terrible so here goes:| Down Payment | Monthly Payment | Cash flow | Annual Income | ROI |
|---|---|---|---|---|
| R0 | R31039.95 | R-23669.95 | R-284039.35 | |
| R242500 | R27935.95 | R-20565.95 | R-246791.42 | -101.77% |
| R485000 | R24831.96 | R-17461.96 | R-209543.48 | -43.20% |
| R727500 | R21727.96 | R-14357.96 | R-172295.55 | -23.68% |
| R970000 | R18623.97 | R-11253.97 | R-135047.61 | -13.92% |
| R1212500 | R15519.97 | R-8149.97 | R-97799.68 | -8.07% |
| R1455000 | R12415.98 | R-5045.98 | R-60551.74 | -4.16% |
| R1697500 | R9311.98 | R-1941.98 | R-23303.81 | -1.37% |
| R1940000 | R6207.99 | R1162.01 | R13944.13 | 0.72% |
| R2182500 | R3103.99 | R4266.01 | R51192.06 | 2.35% |
| R2425000 | R0.00 | R7370.00 | R88440.00 | 3.65% |
You can expect to earn 3.65% return on investment if you buy the place for cash, nearly 6% less than what you'd earn if you just left your money in the bank. To just break even on cashflow from the rental you need to put down a massive 80% deposit, nearly R2 000 000! The actual yield is probably less once maintenance and vacancy costs are taken into account as well.
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