Here's a one bedroomed apartment in Gardens on sale for R1 100 000. How much rent does it pull in? R4 000 a month. With a 100% bond your monthly repayments will be R14 484, which means that the difference between the bond repayments and the rent (R10 484) is over 2.5 times more than the rental income itself! Here's the payment and yield graph:
Paying for it in cash gets you a retun on investment of 4.36%, only 6% less than inflation. You need a 72% downpayment (R800 000) to break even on cash flow and even if you put down a 50% downpayment you still need 3.54% capital appreciation not to lose any money at all. Considering that the tenant is in till December and prices are not moving, if you bought today then you'll have lost R60 000 by then.
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