Rent Vs Buy: De Waterkant - Opportunity is Calling You... To Lose A Lot Of Cash

And speaking of the De Waterkant, this ad describes a dual level apartment/house (I can't tell) in De Waterkant on the market for a modest R9 250 000. If you wanted to you could sectionalise it into four units (which sounds like a helluva tight squeeze) and then rent then out for what the agent estimates could be +- R40 000/month. That means on a 100% bond you would be paying a killer R125 233 a month, and the difference between that and the rental income is R85 233 a month, over two times the total rental income. We've seen worse for De Waterkant though. Here's the income and yield graphs:

Paying the full asking price of R9.25 million will net you a pretty dismal 5.19% return on investment. To just break even on cash flow, that is to make no money at all, requires a deposit of 68%, over R6.2 million!!! Even with a 50% deposit of over R4 500 000 you still need just under 3.3% capital appreciation to not lose money at all.

And after costs such as rates, levies, maintenance and vacancy are taken into account, returns will be even less.