Here's a bachelor flat in Green Point on the market for R750 000 with a rental income of R3 500 a month. With a 100% bond the difference between the montly bond payment of R9 875 and the rental income is R6 375, over 1.8 times the rental itself.
Buying the place for cash gets you a 5.6% return on investment, about 5% below inflation. You're only cashflow positive with a 64.5% downpayment and with a 50% downpayment you still need 2.3% capital appreciation to not lose any money at all. In reality yields will be less once rates, levies, maintenance and vacancy are taken into account.
2 comments:
Hi,
I suspect that this property and others are been advertised as "investor properties" when in fact they are not. Yields and IRR are way off what investors can achieve currently in SA.
Currently is a great time to buy investment property given its a buyers market. That does however not mean that every property is a investors type property.
I agree I would not buy this deal or anything like that, far better to rent. I think that a common mistake is that when people look for investor property they look at places where they would like to live. Thats a major error.
Hi
It makes me sick how much property agents make!! Did you read in the last moneyweb article about how much this estate agent made? Millions! We worked hard to get a qualification, but will NEVER be able to make money like that. That’s why estate agents are so full of them selves ... they are rich and had to do very little to achieve it. I think we must create an online property broking system which bypass all agents!
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