How much money do you earn? And how do you spend it?

Jeruanamo said:
Okay, I think. Not great capital appreciation and not yet generating positive cash flow but the tenants are more than paying the bond right now.
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Would be interested in the metrics if you have them - cap rate or net rental %? Been looking for some time but haven't found ones where those have been enough about the interest rate to feel comfortable. In SA it seems most use capital appreciation and inflation to make up for it, but in Joburg it's been quite poor, Cape Town has at least had historical growth. Are the yields/cap rate decent?
 
hj007 said:
Would be interested in the metrics if you have them - cap rate or net rental %? Been looking for some time but haven't found ones where those have been enough about the interest rate to feel comfortable. In SA it seems most use capital appreciation and inflation to make up for it, but in Joburg it's been quite poor, Cape Town has at least had historical growth. Are the yields/cap rate decent?
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Joburg has much higher rental yields than Cape Town. Sweet spot for market seems to be rental of 6 to 12k a month.
 
Jeruanamo said:
Joburg has much higher rental yields than Cape Town. Sweet spot for market seems to be rental of 6 to 12k a month.
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Sure, but wondering whether the net yield is higher than the prime interest rate? Otherwise need to rely on inflation or capital growth to make up for the negative cash flow?
 
hj007 said:
Sure, but wondering whether the net yield is higher than the prime interest rate? Otherwise need to rely on inflation or capital growth to make up for the negative cash flow?
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So the model I looked at when deciding whether to buy an investment property worked out that for the first 5 years, I would need to chip in a couple thousand a month to cover bond and complex levy - but it's a game of gearing and when you get to a certain point in the model, the rentals do start covering.

The aspect to take into account is that while you have to chip in each month, you're effectively buying say a R1mil apartment, and only payment R250k for it (over the lifetime of the bond) as the rentals cover the majority of the costs.

Really kept the above simple, just to explain my findings - but there are A LOT of variables and metrics to the above
 
TheJman said:
So the model I looked at when deciding whether to buy an investment property worked out that for the first 5 years, I would need to chip in a couple thousand a month to cover bond and complex levy - but it's a game of gearing and when you get to a certain point in the model, the rentals do start covering.

The aspect to take into account is that while you have to chip in each month, you're effectively buying say a R1mil apartment, and only payment R250k for it (over the lifetime of the bond) as the rentals cover the majority of the costs.

Really kept the above simple, just to explain my findings - but there are A LOT of variables and metrics to the above
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Sure especially if you include all the usual of principal pay-down, size of deposit, and various fees etc.

I always thought the easiest is to focus on 2 calculations:
1. cap.rate > interest rate ( only interest matters cause the principal part of the bond is part of your return) and if this is positive you're making money. Difficult in residential real estate/buy-to-let in SA, and
2. to calculate the cash-on-cash return relative to how much you've put in, which needs to exceed your own investment hurdle rate.

Since all comparisons are relative investments, these numbers need to make sense on a returns basis rather than investing in SA equities, international, other private investments, listed REITs relative to the risk you're taking.

Since SA has high interest rates you generally make money on the geared appreciation and inflation (except when you don't... hence cash-flow metrics like 1 and 2 above are important).
 
Lukcydog said:
Measuring yourself on your title is a waste of time... What's the definition of failure? And what is the definition of big shot CEO?
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Agreed — but I’m quite competitive and he’s the first to become a CEO so it hurts. I’ll get over it :)
 
Jeruanamo said:
Not very, to be honest. Working from home. Gym during lunch. A few deadlines now and then.
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Why type of skillset is required in that finance sector and qualifications? Would like a WFH finance gig that pays well. Sounds like you've got a good setup.

pity that my M&A work seems to require me to be in front of people...:ROFL:
 
hj007 said:
Why type of skillset is required in that finance sector and qualifications? Would like a WFH finance gig that pays well. Sounds like you've got a good setup.

pity that my M&A work seems to require me to be in front of people...:ROFL:
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I also want to know , need to change careers.
 
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