FNB Jump On The Auction Alliance Bandwagon

Following ABSA and it's Rapid Auction Programme(RAP), FNB is now partnering with Auction Alliance in the FNB Quick Sell Programme to get repossessed homes (or if they're following ABSAs lead, forcing sellers into auction before repossession) off their books.

Thanks to reader HG for the link.

Saturday Open Thread

Sorry for the lack of articles, the boss only unchains me from the desk on weekends now. Here's the weekly Saturday open thread

Saturday Open Thread

It's been a light posting week due to looming deadlines, but here's the Saturday open thread.

Vredehoek/Devils Peak On Fire - Residents Evacuating

Photo by Coda. More photos here.

Saturday Open Thread

Another hot Saturday, and another open thread.

Mouille Point: How You Know The Seller Has No Clue

Folks sometimes an advertisement comes along which just perfectly illustrates that there are sellers out there that have no clue what the hell they are doing. Let's take a look at this gem:

STUNNING SEA FRONT APARTMENT IN MOUILLE POINT. 3 BEDS, 2 BATHS. FITTED KITCHEN WITH ALL APPLIANCES. LOCK-UP GARAGE AND SECURE PARKING BAY. PRICE R5,000,000 OR RENTAL R15,000 PER MONTH.

So let's analyse this ad. If you were to take out a 100% bond on this apartment you would be paying R62 176/month, which means that the difference between the rental (R15 000/month) and the bond payments is R47 176/month, over three time the rental itself! The owner is either selling it for way too much, or the rent is way too low.

Let's take a look at the (awful) payment and yield graph:

I'm not going to even comment, it pretty much speaks for itself.

Rent Vs Buy: Somerset West - Endless Options To Lose Money

This double story house in Fernwood (in Somerset West, not Newlands) is on the market for a cool R2 400 000 and described as a 'wonderful investment opportunity'. It rents out for R9 000/month which means with a 100% bond monthly payments are R29844/month and the difference between rental and bond payment is a whopping R-20844. You'd lose close to R250 000 holding onto this while praying for +10% capital appreciation! Here's the payment and yield graph:

So paying in cash gets you a dismal 4.5% return on investment, less than half you'd get if you just left your money in the bank. You need R1.67 million (a hair under a 70% deposit) just to break even on cash flow and with a 50% downpayment you still need 2.96% capital appreciation to not lose any money. Take off rate, levies (sure to be huge for a house this size in an estate), maintenance and vacancy and that 4.5% ROI starts sliding down

Saturday Open Thread

It's hot.. it's Saturday.. it's the open thread.

The Logic Is Impeccable

Observe the following snippet from this listing selling a loft apartment in Port Elizabeth. PE is usually outside of my interest area but his just perfectly illustrates the completely idiotic ideas that were rampant, and probably still are, during the bubble.

This loft is already tenanted at +/- R2500 pcm, bond monthly installments +/- R4500 - you can therefore own the apartment and only have to pay in R2000 per month!!! Great Investment.

If you're paying in R2 000/month for an asset that is not increasing in value (and probably dropping in todays market), that dear readers, is not an investment; it is the very definition of liability.

Big Price Drops In Strand

Reader Bean Counter writes:

This house was R6.9 million in Feb and is now priced R4.9 million. That's 29 percent in one fell swoop, but perhaps still not enough - interesting to see if this place moves even at this "cheap" price. I doubt it, as this looks like one of those classic Old SA hellholes, a sort of central hotel thing on a busy road in the sandblasted misery of the Strand.