Sunday Open Thread

Too much sport, too many beers, too little time to post an open thread.

Saturday Open Thread - Stormers Vs Bulls

It's the Saturday Open thread. Here We Go Stormers!

Saturday Open Thread: SA Vs Inida Edition

It's the Saturday Open thread, but instead you should really be watching the cricket.

Rent Vs Buy: City Bowl - R1 000 000 Invested = 0% Return

Here's a 3 bedroomed 119m2 apartment in the City Bowl on sale for R2 100 000. That means with a 100% bond you can expect to pay R18 884/month.

It also rents for R9 500/month which also means you can expect to lose at least R9 394/month covering the difference between the rent and the bond payment. Take into account rates, levies and maintenance and you're probably losing well over R10 000 a month.

Let's take a look at the yield and payment graph and table:

Down Payment	Monthly Payment	Cash Flow	Annual Income	ROI	Cap. Appr. Required
R0	R18894.25	R-9394.25	R-112730.94		5.37%
R210000	R17004.82	R-7504.82	R-90057.85	-42.88%	4.29%
R420000	R15115.40	R-5615.40	R-67384.75	-16.04%	3.21%
R630000	R13225.97	R-3725.97	R-44711.66	-7.10%	2.13%
R840000	R11336.55	R-1836.55	R-22038.56	-2.62%	1.05%
R1050000	R9447.12	R52.88	R634.53	0.06%	-0.03%
R1260000	R7557.70	R1942.30	R23307.62	1.85%	-1.11%
R1470000	R5668.27	R3831.73	R45980.72	3.13%	-2.19%
R1680000	R3778.85	R5721.15	R68653.81	4.09%	-3.27%
R1890000	R1889.42	R7610.58	R91326.91	4.83%	-4.35%
R2100000	R-0.00	R9500.00	R114000.00	5.43%	-5.43%

Unless you put down at least a cool million you aren't breaking even on cash flow and paying in cash gets you 5.43% ROI. And that's before expenses are taken into account.

House Price Bubbles: Reality & Theory

Picture from House Price South Africa.

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Saturday Open Thread

It's the Saturday Open Thread. This week's topic (not that you people ever follow it) is the 'renovation premium'.

Given a renovation that cost X how much more than X should you be expected to pay when buying a property that has been renovated by the previous owner.

Dear Agents: Please Try Harder - Show Houses

Reader KS writes:

Agents want to know why things aren't selling? Perhaps they should look at the effort they put into show houses. Supposedly it's the best way to sell a house but of the 4 show houses I went to on Sunday, 3 were staffed by house "sitters" who had no knowledge about the place. This was a typical conversation:

Me: How many metres under the roof
Sitter: Shoo... not sure... going to have to ask the agent cos he said the pamphlet was wrong...
Me: When was the kitchen renovated?
Sitter: Ja I don't know...
Me: How long has this been on the market?
Sitter: Can't say..
Me: Is there plumbing for a downstairs bathroom?
Sitter: *silence*

Agents, if you want to sell, then get off your asses and start sitting in show houses or at least put knowledgeable people in there not brain dead idiots. I don't have the time to come back during the week just to get answers. To quote Glengarryglenross: First prize is a cadillac, second prize is a set of steak knives, third prize is you're fired.

KS sent me a link to where that quote is from. Estate Agents should be watching it every day to pump themselves up.