Real estate is not only about providing a roof over your head, or a place for you
and your loved ones to prosper and share memorable moments.

It is also one of the most powerful investment vehicles - tried and tested over many decades and truly standing the test of time, creating vast amounts of wealth.
“90% of all millionaires become so through owning real estate. More money has been
made in real estate than in all industrial investments combined. The wise young man
or wage earner of today invests his money in real estate.” – Andrew Carnegie
MOVE
SMART

ROI (Return on investment)


ROI is used to estimate and evaluate the performance of an investment. To
calculate ROI, the net profit of an investment is divided by the amount of
money invested, and the results are expressed as either a percentage or
ratio.

Gross Yield


The gross yield is the yield on an investment before the deductions of taxes
and expenses (levies, etc.). Gross yield is expressed in percentage terms;
and is calculated as the annual return on an investment prior to taxes and
expenses, divided by the current price of the investment.

Net Yield


The net yield is the yield on an investment after the deductions of taxes and
expenses (levies, etc.). Net yield is expressed in percentage terms, and is
calculated as the annual return on an investment after the deductions of
taxes and expenses, divided by the current price of the investment.

RVR (RENTAL TO VALUE RATIO)


The RVR is the monthly rental of a property divided by the value (price) of that specific property.

Although a very simple calculation, RVR provides important information about the property.

A RVR of 1% would mean that a property with a monthly rental of R7 500 would have a value of R750 000.

RVR = Monthly Rental
Value of property

Using the calculation methods above, one can quickly estimate the value of the property once you have obtained the rental. If you hear of a property with a monthly rental of R8 000, one would be looking at a price of around R800 000 for a good value of 1% RVR.

However, the market RVR is not always 1%, and can sometimes dip below 0.5%. It is important to remember that a RVR of 1% is a very good RVR in our current market conditions. If the RVR dips below 1%, then the area should yield great capital appreciation to recover your monthly shortfalls (difference between monthly rental income and monthly bond repayment) on the bond. If the RVR is higher than 1.2%, then this should be an excellent investment opportunity given the location. However, in such instances, the properties might be coupled with low capital appreciation and situated in deteriorating neighbourhoods. As with any form of investment, it is imperative to do extensive research before entering the exciting world of property investing. Finally, it is essential that you partner with a trusted and reputable companion for this rewarding journey.