Muizenberg rental properties giving a 7-8% return

These are no longer the casual investors that we saw in the boom era of 2005 to 2007, when people with spare cash poured it into property and especially new developments, without much thought about how good or bad the return might be.

Today, with capital growth still likely to be below 10 percent, the return has to be good and a run through of most of the major rental agencies serving the southern suburbs will show that it is always the lower priced houses that give the best returns.

In Muizenberg, some 80 percent of the homes sold are priced below R1.2 million and this suits buy-to-let investors very well indeed, because investing, particularly in the R600 000 to R900 000 bracket, is usually capable of giving the investor a 7 to 8 percent return from day one. The expenses common to all landlords might knock 20 percent off these returns, but they are still very satisfactory.

Higher returns than traditional suburbs

Such returns are higher than it is possible to achieve in the more traditional suburbs in the Cape Peninsula - and that is why buy-to-let investors are coming to Muizenberg these days.

The whole key to success in this field is to have a truly "clued-up" agent who is capable of, and willing to carry out, credit, employer and previous landlord checks; and is prepared to visit the premises regularly to ensure that they are being properly maintained. Agents must, too, be able to act immediately when rent payments are even two or three days late.

Agencies like Rawson Properties Muizenberg, which work in the right way, have been able to expand their portfolios continually and are usually operating with less than 5 percent of their tenants running behind on rental payments.