Here's a 3 bed duplex apartment in Parklands on the market for R1 185 000. This unit has a tenant paying R4 900 a month in rent, which means that with a 100% bond the monthly bond payment is R14 900 a month and so the difference between the bond and the rent is R11 143 a month, 2.3 times the rent itself! Here's the payment and yield graph:
So buying the place in cash gets you a 4.96 return on investment, almost 6% below inflation. To break even on cash flow (that is to have a return on investment of 0%) requires over R820 000 downpayment. With a 50% downpayment you still need 3.16% capital appreciation to not lose any money at all! And once other costs are factored in - rates, levies, maintenance and vacancy - the returns will be even worse.
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