Should I keep or sell my rental property?
Today, I saw a client who wanted some advice in keeping or selling her rental property and investing the proceeds. The property is worth R830k, the outstanding bond is R300k, she has spent R20k this year maintaining the property and the rental income is R4000 p/m.
She has problems with the tenants and often needs to pay in to cover the outstanding bond which she cannot afford.
If the property was sold she would have +/-R500k to invest. A well structured invested could easily outperform the yield of this rental property and she would be free of all the headaches of this property.
Rental properties yield around 3-6%.
In my opinion buying your own home is a good investment but buying to let is not a good investment in South Africa. The cost of capital, problems with tenants, agency commissions and high taxes all make the "buy to let" investment very unattractive.
What do you think?
