Here's a 2 bed apartment in Milnerton that needs a "new landlord". It's priced at R830 000 and has a gross rental of R4 200, but once rates and levies are taken into account (R234 and R789) the net rental is R3 227. Which means that with a 100% bond you'll be paying R11 237 a month for a bond and the difference between that and the net rental is a hair over R8 000 a month; nearly 2.5 times the rental itself! Here's the income and yield graph:
Putting down the entire asking price nets you a 4.67% ROI. I think I've seen checking accounts with competitive returns on investment. A 71.28% deposit is required to break even on cashflow alone.
2 comments:
A savings account can get you 13% returns nowadays.Beats anything you will get in property over the next few years.
What's the lowest percentage of interest home buyers can get on their bonds nowadays? One boasted recently of getting 12.5% on a 300,000 bond - is this possible ?
On a smaller bond of R300 000 I guess the interest rate will be lower. Less money borrowed = less chance of default = less interest rate.
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