Is a two bedroom duplex a worthy investment?
If you’re trying to figure out whether or not a two bedroom duplex is a worthy investment to make, here is a breakdown of what you can expect. From location and lease types, to levies and rental income, there are numerous factors to consider when looking at this investment.
The global investment sphere has been on an unpredictable path over the past two years. Even experienced investors are not sure if the best investment in this erratic market is shares, unit trusts, property or cash. Is it still worthwhile to buy a two bedroom duplex? Will the rental income cover your bond installments?
Location has a big impact on property prices. You can expect to pay more for a duplex in Sandton, Johannesburg than for a similar property in Bellville, Cape Town, for example. However, location also has an impact on rental prices. And while your rental income may cover your bond, levies and electricity bills also have to be considered when calculating your profit.
For example, if you compare a duplex for sale in Brackenfell, Cape Town as well as a similar property for sale in Germiston, Johannesburg, prices are going to differ. While both have two bedrooms, two parking spaces and are around 65m2, the purchase price for the property in Brackenfell will cost around R375 000, while the property in Germiston will cost around R350 000. On the rental side, you can expect an income of around R2700 in Brackenfell, and an income of R3500 in Germiston. If levies are an extra R500 per month for both properties, the Brackenfell property works out more expensive, and it is expected to take longer to reach the point of profit.
Another consideration to make is whether there may be periods when your property is unoccupied or your tenants are unable to pay on time. These should be planned for, so that you have enough cash flow to cover these months. You can also consider a reliable rental agent – this person will usually check a prospective tenant’s credit record. It might be worth your while if an expert can supply you with all the relevant information. Each case should be considered on its own merit.
