Educational Case Studies
Hypothetical scenarios illustrating how different factors affect rental yields in South African residential property. These are educational examples using made-up numbers.
Sectional Title Levy Impact
This made-up scenario explores a two-bedroom apartment with monthly levies of R2,800. The property cost R1,200,000 and rents for R9,500 per month. Gross yield appears to be 9.5%, but after deducting levies, rates, insurance, and average vacancy, net yield drops to approximately 4.8%.
The example illustrates how sectional title levies significantly reduce actual returns. Even though gross yield looks attractive, the monthly levy alone consumes nearly 30% of rental income before considering other costs.
9.5%
Gross Yield
4.8%
Net Yield
Freehold Maintenance Reality
This fictional scenario examines a freehold house purchased for R1,800,000 and renting for R13,000 monthly. Without sectional title levies, gross yield is 8.7%. However, the owner budgets R3,500 monthly for maintenance reserves, municipal rates, insurance, and management fees.
After accounting for these costs plus two months of vacancy over three years, net yield averages 5.2%. The example shows that freehold properties avoid levies but require substantial maintenance budgets.
8.7%
Gross Yield
5.2%
Net Yield
Location Premium Trade-off
This made-up example compares two similar apartments. Property A in a prime area costs R1,500,000 and rents for R10,500 (gross yield 8.4%). Property B in a less central location costs R950,000 and rents for R7,200 (gross yield 9.1%).
Property A experiences shorter vacancy periods and attracts higher-quality tenants, while Property B has longer vacancy gaps. After accounting for actual occupancy rates and costs, both properties deliver similar net yields around 5%, illustrating how location premiums affect different yield components.
Similar
Net Returns
Different
Risk Profiles
Important Disclaimers
These case studies are educational tools using hypothetical scenarios.
Made-Up Examples
All scenarios use fictional properties with invented numbers. They illustrate concepts rather than representing actual properties or market conditions.
Educational Purpose
These examples help understand how different factors interact. They are not predictions, valuations, or recommendations about specific properties.
Not Investment Advice
These case studies do not constitute investment advice or recommendations. They explain concepts without suggesting what anyone should do.