,

Oak Tree Village Returns on Investment

We based our 5 year case study on a 2B1B Unit @ R829 000. (Bond & Transfer fees of R40 000 included)

 

Capital Growth:

Determined by area. Up-and-coming areas will see a higher yearly growth during the developing stages. Predictions for average growth on Oak Tree Village is approximately 6%, as the development is situated in Clubview – an area experiencing an upward trajectory of growth and new developments. Your investment will reach new heights over the next few years as the area becomes more popular & land becomes less obtainable.

Rental Yield:

(Rental Income x 12) / purchase price). Oak Tree expects a rental return of R6500 pm & a rental increase of 8% p.a (Based on rental income at a similar rental estate in the area.  Although it is often cheaper to rent in the beginning, because of rental escalations it soon exceeds the bond repayments in a steady interest rate environment. (renting in the long-term is the most costly way of living)

Rental return is expected to increase by 8%p.a.  Bond repayments remain constant if no rate changes.

The return on your property investment:

After 5 years, the value of the property versus the mortgage balance gives you real equity potential profit of R394 445 – (Forced savings). Renting gives no future value growth.**

  • Divide the annual return by the original out-of-pocket expenses
  • ROI: (Rental Yield + Capital Growth)

Conclusion

Early Investment: As units have been launched at special rates, early take-up will secure your investment sees growth before your first bond repayment, as the last phases will be selling at market related values.

Bond Repayment: ±R8000 (based on min R10 000 deposit & at prime lending rates of 10.5%)

Early Take-up Prices
 On Transfer
 End Year 1
 End Year2
 End Year 3
 End Year 4
 End Year 5
Unit Value
R829 000
  R 849 000
R899 940
R953 936
R1 011 173
R1 071 843
R1 136 154
Rental Income
 R6 400
R6 400
R6 912
R7 465
R8 062
R9 404
Bond Payment
R 8 177
R 8 167
R 8 166
R 8 165
R 8 163
R 8 162
Rental Yield
7,09%
7,83%
8,6%
9,4%
10,4%
11,4%
Annual ROI
13,09%
13,83%
14,63%
15,50%
16,43%
17,44%

 

Interested to explore more options? Book a viewing

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *