Here’s a 3 bedroomed flat in Stellenbosch on the market for R1 500 000, with a monthly rent of R6000/month. According to the ad it’s the ‘best investment’. Considering it’s in Stellenbosch I would assume it’s a student flat which means one thing: high maintenance costs! Let’s look at the yield/payment graph.
Paying for the place in cash gets you a 4.8% ROI with a downpayment over 67% required (over a R1 000 000) to just break even on cash flow. With a 50% downpayment you need a 2.66% capital appreciatin return to not lose any money at all. Take off rates, levies and maintenance and the returns drop even more.
Original Post on Cape Town Property Bubble: Rent Vs Buy: Stellenbosch
