Staying in the Helderberg-ish area let’s have a look at this 2 bed flat in Gordon’s Bay. It’s on the market for R629 000 and has a current gross rental of R2 400/month. Taking into account the levy of R432/month leaves you with a net rental income of R1 968. So on a purchase price of R629000 with monthly payment on a 100% bond of R8051/month the difference between rental and bond payment is R-6083, over three times the net rental income! Let’s take a look at the no doubt terrible yield graph:
Ouch. A 3.95% ROI if you pay in cash and a whopping 75% downpayment required to be cash flow positive. Even with a 50% deposit you still need 4% capital appreciation to not lose any money at all. Take away other costs like taxes, maintenance and vacancy and the results get even worse
Original Post on Cape Town Property Bubble: Rent Vs Buy: Gordon’s Bay Never Disappoints
