A 5.79% max return on investment, and that's before rates, maintenance and vacancy costs, isn't great. With a 50% downpayment you need 1.9% capital appreciation to not lose any money and break even on cash flow is at 62% downpayment.
07 April 2008
Rent Vs Buy: Belville - The Low End Doesn't Produce High Yields
Bank economists and real estate agents continue to claim that despite the slowdown in the market the low end of the market is where all the money is being made. Here's a 2 bed flat in Belville, an 'Excellent investment' on sale for R580 000 which rents for R2 800 a month. With a 100% bond the difference between the rent and the bond (R4623) is about 1.65 times the rent, which while not great is one of the better numbers we've seen. Here's the yield and payment graph:
A 5.79% max return on investment, and that's before rates, maintenance and vacancy costs, isn't great. With a 50% downpayment you need 1.9% capital appreciation to not lose any money and break even on cash flow is at 62% downpayment.
A 5.79% max return on investment, and that's before rates, maintenance and vacancy costs, isn't great. With a 50% downpayment you need 1.9% capital appreciation to not lose any money and break even on cash flow is at 62% downpayment.
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