Rent Vs Buy: Rosebank

This "cute" victorian cottage in Rosebank is on sale for R849 000 with a gross rental of R4 000 a month. With a 100% bond the difference between the rent and the bond payments is just under twice the cost of the rent itself. Here's the payment and yield graph.

Paying for it in cash gives you a 5.65% return on investment, with 64% required just to break even on cash flow. Even with a 50% downpayment you need 2.25% capital appreciation just to not lose any money. The actual returns will be lower once levies, rates, maintenance and vacancy costs are taken into account. But you do "save" R17 000 because the transfer duty is included in the price, which is barely 2 1/2 months shortfall if you buy it with no money down.