Real Estate case studies in South Africa

  • Case Study #1: Pretoria house used as college rental

Purchase Price:$100k

Renovations:$40k- Expanded from 4 to 10 rooms

Monthly income: $3500= 10 rooms X $350 each

Monthly expenses: $650 total = $350 (maid) +$100 (wifi) +$200 (all other utilities)

TMI- Taxes/Mortgage (20 yr @ 10.5% fixed )/Insurance= $2000 ($250+$1500+$250)

Positive cash flow= $1350 p/month after all improvements

Notes: The buyer was able to borrow 100% of the mortgage and construction amount, but the interest rate is much higher in South Africa. These returns would not be nearly as good in Joburg and in Cape Town you might even have to operate at a loss for the first couple years after improvements, much like coastal  California.

  • Case Study #2: Engineering firm’s office as an add value investment

Numbers coming soon

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