Here's a 1 bedroom apartment in Rondebosch Oaks (I assume that's in Rondebosch) for R900 000, tenanted until December 2008 with a rental income of R4 200 a month. With a 100% bond the difference between the monthly bond payment (R11 851) and the rent is R7 651 a month, 1.8 times larger than the rental income itself. The payment and yield graph is:
Paying for the place in cash gets you a 5.6% return on investment. To break even on cash flow requires a 64.5% downpayment (over R580 000) and even with a 50% downpayment 2.3% capital appreciation is required to not lose any money at all.
Purchase price: R680 000. 100% bond: R9 206/month.
