So if you bought the place at R1 300 000 only to find your rental income isn't quite what the owner promised what can you expect? Well if you consider that with a 100% bond the difference between the bond payment and the rent is 3.2 times the monthly rental (R13 400/month) then you know it's going to be pretty bad.
Plonking down R1.3 million gets you a ROI of 3.88% which is about 8% below inflation. To be cash flow positive you have to put down just under R990 000 (a 76.14% downpayment).
4 comments:
I can't believe people expect to sell houses without even putting pictures up. why even bother?
This is def for a person with more money than brains.
The only problem is that there are no more people like that left in the market...they all went bankrupt!!!
Yeah right - R10,000 rent for a 1.3m house in Cape town ! My last house was R5000 rent for a R2m house. Presently it is R 11000 for R3.2m house
Beware of sellers telling you fake rents.
An interesting exercise is to take the present rent, add a 10% increase per year for say 3 years, then multiply that annual rent by 11 to get a normal looking rent / house price ratio - in this case it comes to R738,000.
That should be the price of this apartment in about 3 years time. Almost half. Makes you realise that the crash still has a long, long way to go.
I love your site!!!! I am based in Hong Kong and was thinking about taking advantage of the weak Rand to purchase some flats in Capetown, but it seems as though the money would be safer in the bank in ZAR. Also you have Great rental analysis. Can you share the name of the software that you used? Thanks
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