Rent Vs Buy - Gardens Commercial Property

Here's a house in Gardens that has been turned into a small office. It's on sale for R3 400 000 and is tenanted on a two year lease at R18 000. Now before we do anything we need to remember a few things. Firstly this is a commercial property which means that a 33% downpayment is almost certainly mandatory. Secondly because this is commercial property, cash flow is king! Capital appreciation shouldn't even enter the equation.

So what's the yield and payment graph on this place. Let's check it out:


So putting down the minimum required downpayment nets us -13% return on investment, as every month you'll be paying in over R10 000 to cover the bond. Paying for the place in cash gets you 6.35% ROI, about 5%-7% below inflation.