Here's an apartment in the Cape Town CBD on sale for a cool R1 000 000. I'm not sure how many bedrooms it has but when you consider it rents for R3 800 a month I guess it only has one. If you took out a 100% bond the difference between the rent and the monthly bond repayment is 2.36 times the rent itself. Here's the yield and payment graph (RIP Tables. You served us well but we're moving into the 21st century here and the future is visual!)
So a 70% downpayment is required to break even on cashflow, and with a 50% downpayment you still need 3.12% capital appreciation to not lose any money at all. If you do plonk down a bar to buy the place outright you can look forward to a 4.56% annual return on investment. That's only 4% below inflation (well the official numbers at least). And of course there's the tiny fact that this excludes rates, levies, maintenance and vacancy costs.
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