Property adverts quote the yield: a year’s rent as a share of the price. A R2 million flat that rents for R19 500 a month has a gross yield of about 12%. It sounds good. But yield does not pay the bond — and in South Africa, with prime where it is, many bonded rental properties cost their owner money every month for the first few years.
What comes out of the rent
- The bond repayment — by far the biggest cost.
- The levy (in a complex or estate) and municipal rates.
- Insurance and maintenance.
- The letting agent’s fee, usually 7–10% of the rent plus VAT.
- Empty months between tenants, and tenants who pay late.
What is left is your monthly cashflow. If it is negative, you top it up from your salary.
An example, at today’s prime
R1 990 000, rented at R19 500 a month (a gross yield of about 12%), with a 20% deposit and a 20-year bond:
| Rent, less an allowance for empty months | R18 720 |
|---|---|
| Bond repayment | R16 162 |
| Levy, rates, insurance and maintenance | R3 250 |
| Letting agent | R1 722 |
| What is left each month | R2 415 out |
| T-rating | T4 |
Calculated at prime 10.75%, effective 25 Sep 2026. Saved analyses record the rate they were run at, so reopening one shows what you were shown.
It changes over time — both ways
Rent usually goes up every year, and your bond repayment does not (unless the rate moves). So a property that costs you money today can pay for itself in a few years. IQprop measures exactly that: the T-rating is the number of years until the rent covers everything. T0 pays from day one. NV means not within four years.
But the levy and rates go up too — in recent years, often faster than rent. A calculation that grows the rent and keeps costs flat makes every deal look better than it is. IQprop grows the rent by 5% and the costs by 6% a year by default, and allows for empty months.
So is it worth it?
A property that costs you money every month can still be a good investment — the tenant is paying off most of your bond, and the property may grow in value. The question is whether you can afford the top-ups, and for how long. Know that number before you sign. And if the deal does not work at the asking price, there is usually a lower price at which it does.