If you're one of the suckers out there who bought an 'investment flat' in the past 2 or 3 years to cash in on the World Cup then I really feel sorry for you. The World Cup is doing absolutely nothing for the property market. Let's take a look at this example. Here we have a 2 bedroomed flat in Green Point literally across the road from the Green Point World Cup soccer stadium. It's on the market for R795 000 and attains a rental to the princely sum of R3000/month. Take off the monthly rates and levies of R312 and R598, which comes to a comes to R910/month, meaning that the net rental income is R2090/month. On a 100% bond your monthly bank payment is R9985/month and the difference between that and your rental income is R7795/month, a whopping 3.7 times the net rental itself! Let's take a look a the dismal yield graphs.
Ugh.. so paying in cash you can expect a maximum return on investment of 3.5%, about 7%-8% below just leaving your money in the bank. To break even on cashflow requires a 75% downpayment, over R590 000, and with a 50% downpayment you need 4.31% capital appreciation to not lose any money at all.
When 'investments' literally across the road from the World Cup stadium are doing as dismal as this then you have to laugh at the idiots advertising properties in Parklands and (I swear I'm not making this up) Gordons Bay as places to invest to cash in on 2010.
19 comments:
The rental for this flat is way too low. It should be at least R5000.
So at that rental, the return is not so bad if you add in a 10% deduction in the price as the seller is probably desperate.
This property is more the exemption than the norm with such a low rental.
And dont forget, the tax rate on money in the bank is 50% whereas if you collect your rent in cash, the tax is a big fat zero.
Talking about tax... How difficult is it to look up people with multiple properties, see if they declaring any income from it and if not you have a fairly large of likely tax dodgers. I estimate a minimum success rate of 50%.
Sure in fantasy land the rent is could be R5 000.
Here in the real world the place rents for R3 000.
Considering this place is administered by Trafalgar, one of the largest property management agencies in the country, if that's what they set the rental at that's probably what it will achieve.
And the 'tax free' status of rental income is probably one of the biggest myths. SARS even put a neat little box on their income tax return forms asking for 'Investment Income' and it lists 'rental income' as an option. That most specuvestors don't fill it in doesn't make the income tax-free, it just makes them crooks.
Anonymous, dude, seriously. When you post on a blog your IP address is registered. I know for a fact that SARS has people whose only job it is to track down and nail people who are overheard boasting about being tax frauds. If they don't have your IP address already they soon will. Have fun explaining about all that cash.
Mr G, it's very easy to check, and trust me, SARS are on it. They've got a very good idea of who's not paying tax, but following them up is expensive and time-consuming. But as they need more tax revenue they'll start squeezing people further down the food chain.
Bean counter pleeeeez, you must just as dumb as the person who told you SARS checks IP addresses. Thats why there are millions of informal traders running out in the open raking in big bucks run under their noses!!!
As for the buffoon called CJ who thinks that a two bedroom goes for R3000 per month in Green Point, please show me proof (as in a website like Gumtree or the Cape Ads) where exactly do you pay so little.
I have 5 properties of which 4 are two bedroom flats. They are all in the Southern suburbs of Cape Town with two in the coloured areas and I dont get less than R3700 each. So why the heck would somebody pay R3000 in Green Point?
Really CJ, your rantings and ravings are becoming the moans and groans of a man who is bitter as hell that he cannot buy property. All we have is your word. We have no proof that you actually have money in the bank that you so often mention and is collecting interest which is beating the returns on property.
Nobody but nobody will never want to buy property in their lifetime. By the sounds of it, you have never bought property even in the pre-2004 boom times. Why? Is it because you have a deadbeat job which pays peanuts and which allows you unlimited access to the internet so you can post stupid comments about the virtues of buying property and seeing thy ass?
As for this blog, its a sorry excuse for a attempt to bring down the property market. Sure prices are down but they will rise in 5 years time making all your prophecies of doom and gloom disappear.
So blow it out your asses, catch a wake up and get a job...a real one!
Err ... Anonymous ... easy boy ... take a deep breath. Ok. first it was CT Bubble who responded to you - I am CJ - see that second letter, that's the secret to telling us apart. Also, he is the one that runs this blog ... I am not.
Glad we sorted that out.
As for the R3000 rent ... you want him to show a link to Gum tree proving that ... ummmm ... check out the original article I think you will find that the link has been there all along.
Bet you feel really really stupid now ? Don't worry, we are used to Buy to leters ... not the brightest of chaps so we do tend to make allowances for them.
Hey Anonymous
I'm one of those losers with the peanut paying jobs that pay off your bubble inflating speculative mortgages. You sound like the landlord I cought sneaking into my flat and rubbing his knob against my used underwear while i he thought I was at work. The CTPB guys might be wrong, but I sure hope they are right. It will be such a sweet pleasure passing you as you beg by the trafficlights or reading in the papers how dogs were found eating your partially decomposed, Negative Equity corpse in the bushes.
If CTPB is so wrong then you should start buying property in a big way.
QUICK MAN!! There are bargains out there you can bag before the 'inevitable upswing'!!!
Oh, and 2010!! Don't forget how rich that's going to make you! JUST DO IT!
Does anyone else get the feeling anonymous is a 12 year old boy playing on his computer or (even worse) a first year BCom student.
Sorry dude, all the name calling has just got me thinking "How old is this guy?"
LOL @Anonymous:
He is still at the anger phase. At least he is over denial.
It's time for acceptance. Your southern suburbs fleapits will be renting for a lot less in a year’s time. Who wants to stay in a southern burbs 'coloured' area when you can live in greenpoint for 20% less?
Don't know why you guys all jumped on him, when all you had to do was type in 'green point' and try find another property at a similiar rate. Not so easy, eh?
of course the personal attacks from both sides are just childish. foei tog!
click here and see:
http://capetown.gumtree.co.za/f-green-point-Flat-House-Real-Estate-houses-flats-for-rent-W0QQCatIdZ9071QQKeywordZgreenQ20pointQQisSearchFormZtrue
Steve's right. It doesn't help doing the same... My bad.
I would also like to see another example of a two bedroom apartment in Green Point thats for rent at R3000. I have seen countless batchelors / hovels going forthis rental but no 2 bedroom for under R4500.
Lets be fair and admit that the rental of R3000 for the two bedroom in question is a rare find.
Sakkie here boys. Take it easy!!!
1. 2 bedrooms in Greenpoint going for R3,000. As we can see the proof, its possible but what % of rentals in that place (same beds) go for R3,000. The rental market is vicious... especially city bowl!
2. Beanie, SARS is advanced but not that advanced! LOL Kom nou broer... jy moet wakker word! :) I had not stated rent in my tax returns for last year **awaiting SARS phone call** LOL LOL LOL
Sakkie, there's a big difference between not declaring and openly bragging. Do you know how most tax frauds are nailed? They sound off in public about how they're beating the system. Sars knows Mr S van der Tshabalala isn't declaring everything - standard of living not computing with declared income, etc etc etc, - but as I've already explained it's not worth their while to go after you. But for some reason they don't dig bigmouths boasting about beating the system. And now that you've just gone and done exactly that, let's talk again in a year, broer, and see which one of us is wakker and which one is audited!
Food for thought. Recently bought a 1 bedroom flat in Wynberg opposite Wynberg High School for R490 000 and achieiving a rental of R3 600 increasing to R3 800 in 6 months. Happy with the return and certainly more than the flat in GP.
From my overseas experience (in conservative Germany) I can only say one thing:
If the income does not rise accordingly, nobody is going to pay the "rent".
A 30% rise in value is out of the question, if the income of a potential buyer or tenant does not rise.
I have a flat there in a good area, which dropped in price by 30% since I bought it in 1994!
And I couldn't rise the rent ever since.
Typically you bought there putting 20% deposit and then the monthly installment was the same as the rent (inflation is about 3%)
Did your and your friend's income rise 30% every year? Yes? Good for you...
Beanie my broer,
Ek wag... tick tock!
SARS, I am FRAUDING you and did NOT declare my rental income for 2007/2008!!! Ek wag vir julle!
Beanie, you must get joker of the year, seriously! LMFAO!!!
**yyyaaaawwwwwnnnnn**
I have rented at the flats in question (Taronga Mansions) when Green Point was full of cheap whores and dodgy neighbours (I think it still is)and definately did not pay such low rentals.
I rented a one bedroom and paid R2750 per month. I know rent further down the Main Road near the Giovannis Deli and share with a flatmate a large two bedroom for R5500 per month.
So to publish such a article on a property with such a low rental and expect it to be the average in Green Point is just plain stupid.
Look like you oaks are a bunch of racist pigs. looks like apparheid still in your blood, shame tog. whats wrong with living in a coloured area? what wrong with being a coloured? whats kwaai about being a white anyway?
look around you, whos driving the new mercs, bmws etc etc an dliving in fncy areas? not whites.
get a life and becareful of your comments, other races are reading as well.
and oh, you gota start by first year bcom to become a CA or whatever profession in the bcom field you want to go in.
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