Rent Vs Buy: Tamboerskloof - An 'Asset' Shouldn't Cost You R9K/Month

So you're thinking of buying an investment property? How about this 3 bed apartment in sunny Tamboerskloof on the market for a mere R1 690 000 and luckily it's renting for R7 000/month till November 2011. Or rather it's renting for R7 000/month gross, take away rates and levies of R1100/month the net rental income is R5 900/month.

Now with a purchase price R1 690 000 your monthly payment on a 100% bond is R15 205/month (and that's with 30 year record low interest rates) and the difference between rental and bond payment is R9305/month, over 1.5 times the net rental. Added to that the transfer costs are R120 000, nearly 2 years (20 months to be exact) of net rental income!!!

Here's the yield and cash flow graphs:

Right so if you put down the entire R1.69 million you can look forward to a max ROI of 4.19%, a ROI you'd get if you dumped all your money into a transmission account. To break even on cashflow a deposit of over a R1 000 000 is needed. Even putting down a hefty 50% deposit still requires 1.21% capital appreciation to not lose any money.

Christmas Open Thread

It's Christmas and time for the Saturday Open Thread.

Dear Agents: Please Try Harder - Claremont

If you're selling a house with a pool, please make sure the picture you post of said pool actually looks like a pool and not a mosquito ridden swamp:

Stunning!

Camps Bay: Nothing Says Class Like a Chrome Pole

So I'm busy trawling through the latest property releases on the market and come across this stately Cape Dutch style mansion in Camps Bay (asking price only 25 bar).

That's it on the left, looks pretty classy eh? It looks refined, stately. Dare I say it looks decidedly old money in the middle of noveau riche Camps Bay. Any minute you expect a dude with a monocle to come sauntering out in a tweed jacket saying things like 'Pip pip cheerio' and 'Good help are so hard to find these days'.

And then I came across this picture:



Now unless my eyes are deceiving me in my old age, that is a stripper pole mounted on a fully mirrored base, conveniently placed in front of another massive mirror...

What the Frikkadel!?!?

Here's a tip to any potential buyers: take a portable UV lamp with you when you check out the place because it suddenly doesn't seem so classy anymore...

Dear Agents: Please Try Harder

Here's an ad for a 2 bed apartment somewhere in the City Bowl on sale for R699 000. Now the place looks pretty crap but that's besides the point. Let's look at the ad copy:

2 bedrooms, both with parquet floors and built-in-cupboards. Living room opens onto balcony with wonderful city, harbour views. Tiled kitchen, bathroom and living room. Currently tenanted until end of Dec 09. Perfect for 2010 rentals!

Notice that last two sentences that I highlighted? This place has been on Gumtree for at least a year but the ad has not changed. Is the flat still tenanted? Who knows! Who cares! That attention to detail on the agents part plus the fantastic photos in the ad just compels me to make an offer!

Saturday Open Thread: Kinders Van Die Wind..

It's the Saturday Open Thread! This weeks topic: Windiest suburb in Cape Town?

Milnerton? Vredehoek? Grassy Park?

Sea Point: 2 Years = R40 000 Appreciation

In Feb 2009 this 2 bed/90m2 apartment was asking R1 150 000. Just under 2 years later a 2/3 bed/110m2 apartment in the same block has an asking price of R1 195 000. That 1.5%/year capital appreciation is about what you'd earn with your money in a transmission account (and no levies!).

Saturday Open Thread

Like sands through the hourglass these are the Saturday Open Threads of our lives.

Bad Architecture: Sea Point

Regular Sea Point reader JP sent in a link to this monstrosity:


JP writes:

This... thing... is on the market for a cool 5 mil. And nothing says Espana (or is it Italia... I don't even think the building knows) than that sheet metal automated gate.

Remember folks: Bad architecture is a crime against your eyes.

Saturday Open Thread

It's the Saturday Open thread!

Protea North Wharf: You Just Lost A Lot Of Money

Are you in the market to lose R400 000 in capital value over two years? Are you interested in buying into a resale market that is so small it might as well not exist? Do you enjoy having 'administrative' fees chop 20% off your rental 'income'?

Then buying a room in a hotel is for you!

Take, for instance, the Protea North Wharf situated in sunny Cape Town. In 2008 a room was on the market for R2.2 million, today they're going for a steal at R1.8 million. And with an estimated R10 000 income (in 2008, before fees) you'll only be losing R6 000/month unless you put down at least a R700 000 deposit and that's at today's rock bottom interest rate.

FNB: Prices Are Still Weakening

The Times reports:

Average house price growth has continued to slow, according to the November FNB House Price Index released on Wednesday.

"The average house price growth slowdown continues, with the November FNB House Price Index recording a year-on-year rate of increase of 3.8 percent," said John Loos, FNB Home Loans strategist, in a statement.

Here's a lovely little snippet from later on

Loos warned that long term, a high household debt-to-disposable income ratio would hold back the residential housing market. In the second quarter of 2010, this ratio was 78 percent.

Payment on debt still accounts for nearly 80% of disposable income. That is horrendous.