Here’s a 2 bedroomed apartment in the Cape Town CBD on sale for R1 400 000 (hat tip to reader AS for the link), with a current rental income of R6 000/month. This sale is listed as “urgent” but when you consider the terrible rental yields you can expect I don’t think they quite mean it. Here’s the payment and yield graph:
So with a 100% bond the difference between rental and bond payment is R-12435, over twice the rental itself. You only break even on cash flow if you put down over 2/3 depost (R944 346) and even with a 50% deposit you still need 2.76% capital appreciation to not lose any money. And this is with the gross rental, deduct maintenance, rates, levies and vacancy costs and the numbers get worse.
Original Post on Cape Town Property Bubble: Rent Vs Buy: Cape Town CBD – You Say Urgent But I Don’t Think You Mean It
