An anonymous user on this post sent us a link to this listing for a 2 bedroomed apartment in Mutual Heights on the market for R 1 395 000. Rates and levies are R2 520/month, transfer costs are approximately R50 000.And it's tenanted at R4 000/month. Till April 2012. Which means after expenses (but excluding maintenance) you'll be making R1 480/month. As the submitter said "I feel like I am taking crazy pills!". The difference between the rental and the bond is R11 000/month!! You're going to need a whopping 88% downpayment to have positive cashflow!
Do you even need to see the cashflow yield graph?
| Down Payment | Monthly Payment | Cash Flow | Annual Income | ROI | Cap. Appr. Required |
|---|---|---|---|---|---|
| R0 | R12551.18 | R-11071.18 | R-132854.13 | 9.52% | |
| R139500 | R11296.06 | R-9816.06 | R-117792.71 | -84.44% | 8.44% |
| R279000 | R10040.94 | R-8560.94 | R-102731.30 | -36.82% | 7.36% |
| R418500 | R8785.82 | R-7305.82 | R-87669.89 | -20.95% | 6.28% |
| R558000 | R7530.71 | R-6050.71 | R-72608.48 | -13.01% | 5.20% |
| R697500 | R6275.59 | R-4795.59 | R-57547.06 | -8.25% | 4.13% |
| R837000 | R5020.47 | R-3540.47 | R-42485.65 | -5.08% | 3.05% |
| R976500 | R3765.35 | R-2285.35 | R-27424.24 | -2.81% | 1.97% |
| R1116000 | R2510.24 | R-1030.24 | R-12362.83 | -1.11% | 0.89% |
| R1255500 | R1255.12 | R224.88 | R2698.59 | 0.21% | -0.19% |
| R1395000 | R-0.00 | R1480.00 | R17760.00 | 1.27% | -1.27% |
7 comments:
You've left off a couple of zeros in your calculation reporting there. Diff between 100% bond and rental is R11k not R1100
Oops!
I love the copy in the Pam Golding ad:
"TWO WORDS.... SEE IT"
See it what? Suck the life out of 1.4m rands? Make that 1.45m including transfer costs. Also,
"No renovations needed".
One would hope so considering that it was only built a few years ago...
Go on to gumtree. You can't even find a 1 bed in this building for R4000 per month. The going rate for a 2 bed is around R8000. When the lease expires the rent will be doubled.
Agree with Anon - either the ad is a bare-faced lie, or they'll (at least) double the rent. You cannot get a renovated 2-bed in the City Bowl for under R7k per month.
I know a oke who sells leg cream to high-end salons and makes over R100k per month, and he would NEVER buy this property, so neither should you
I believe the cash flow graphic is very important for the tenant to know how much money he or she will be paying. I actually tried it a few times in my trips to Argentina. I used to get buenos aires apartments at very low prices and it always ended up being convenient!
Kirsten
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