Following on from our previous post, the same seller is also selling this 1 bedroomed apartment also somewhere on the Tyger Waterfront for R680 000. This one is tenanted at R3 300 a month with rates and levies costing R1 020. That means rates and levies are eating almosta third of your monthly rental income, leaving a net rental income of R2 280 a month. Taking out a 100% bond means that the difference between the monthly bond payment (R8 954) and the net rental income is R6 674, 2.9 times the monthly rental income itself. That's approaching De Waterkant numbers! Here's the payment and yield graph:
This has worse numbers than the previous apartment. If you buy in cash you can look forward to a return on investment of a hair's breadth over 4%, as opposed to leaving your money in the bank where you can get anywhere from 9%-11%. Putting down 50% still requires 3.88% capital appreciation to not lose any money at all and to break even on cashflow requires a 74.5% downpayment (over a half a million rand). Rates and levies are taken into account but vacancy and maintenance are not. 4% a year ROI? I'll take two!!