This 2 bedroomed apartment in Gardens (Thanks to reader GH for the link) is on the market for R1 100 000 and is rented out till the end of August for R4 200/month. Once you take off R389 for rates and R454 for levies then the net rental income is reduced to R3 357/month. Which means that on a 100% bond you'll be paying R14 892 a month and the difference between that and the rental income is a whopping R11 535/month, 3.4 times the rental itself! That's approaching De Waterkant levels of moneylosingness (see I just made up a new word). Here's the income and yield graph, and believe me it ain't pretty:
It's hard to read off the graph but if you bought the place in cash you can expect a handsome return on investment of 3.66%, which is about 7% below the current levels of inflation and about 8-10% below of what you could expect your money to earn in a decent fixed deposit. Even worse to just break even on cash flow you need to plonk down a massive 77.46% deposit, over R850 000! Putting down a 50% downpayment still requires 4.46% capital appreciation to still be able to sell this turkey at break even.
But folks the ad says "Affordable" so you know it's good deal. Why rent when you can buy at four times the monthly cost?
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