So buying the place in cash gets you a 5.75% ROI, 5% below inflation. A 63% downpayment is required to break even on cash flow and even with a 50% downpayment 2.16% capital appreciation is required to not lose any money at all.
29 May 2008
Rent Vs Buy: Tokai - Cute Cottage, Crap Investment
Here's a 2 bedroomed cottage in Tokai on the market for R795 000 and currently tenanted at R3 800 a month. With a 100% bond the difference between the monthly bond payment (R10 468) and the rent is R6 668 a month, 1.75 X the rent. Here's the payment and yield graph:
So buying the place in cash gets you a 5.75% ROI, 5% below inflation. A 63% downpayment is required to break even on cash flow and even with a 50% downpayment 2.16% capital appreciation is required to not lose any money at all.
So buying the place in cash gets you a 5.75% ROI, 5% below inflation. A 63% downpayment is required to break even on cash flow and even with a 50% downpayment 2.16% capital appreciation is required to not lose any money at all.
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