Here’s a 3 bedroomed 199m2 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.
Original Post on Cape Town Property Bubble: Rent Vs Buy: City Bowl – R1 000 000 Invested = 0% Return