INVEST IN A RETIREMENT VILLAGE PROPERTY
Rentals in retirement villages and senior living estates are always in demand, and buy-to-rent investments in such properties can generate significant returns.
The April 2015 TPN Property Barometer revealed that when gross yields were estimated by title deed and room number, sectional title properties generally looked to be the most attractive, and “smaller generally appears to be better”.
Topping the list was 1-bedroom sectional title properties with a 9.53% yield, followed by 2-bedroom sectional title with 9.28% and 2+ bedroom sectional title with 8.92%.
A snapshot of this specific market in Gauteng reveals:
- Many properties are being purchased solely to be let out
- Quality homes offered at the right rental prices in good areas are being snapped up fairly quickly
- There is a shortage of affordable, upmarket housing options that also have all the associated facilities this sector requires
- There is strong demand for such properties in the rental market and as such, a shortage of these properties to rent
- There is a sustained demand for housing in Gauteng, and as a result both the purchase and rental markets are rapidly increasing
- Rentals remain a popular option for those who are not able to obtain bonds due to their age, for those who are feeling inflationary pressures, and those who simply prefer renting instead of owning their own home
One of the advantages of purchasing property in retirement villages for rental is that these homes offer investors the opportunity to generate a sustainable rental income as well as capital appreciation returns (i.e. the value of the home increases over time, allowing investors to make additional profits when they sell the home).
These are the annual rental returns investors can expect to achieve from investments in the mature lifestyle property market (including capital growth for years 1 to 5):
*Please note these calculations have been based on estimated unit prices for example purposes and are subject to the selling price at the time.
|Unit Descriptions Year 1||Square Meters||Estimate Unit Prices||Monthly Expected Minimum Rentals||Monthly Costs Including - Levies, Rates & Agents Commission||Year 1 Annual Cash Yield On Investment %||Year 1 Capital Growth On Investment %||Year 1 Total Growth On Investment %||5 Year Average Growth On Investment %|
|1A||1 Bed, 1 Bath, Single Carport||88||R995 000||R7 000||R3 264||5%||8%||12%||14%|
|2A||2 Bed, 1 Bath, Single Carport||102||R1 240 000||R7 500||R3 791||4%||7%||11%||13%|
|2B||2 Bed, 2 Bath, Single Carport||120||R1 700 000||R9 000||R4 477||3%||6%||9%||12%|
|2C||2 Bed, 2 Bath, Double Garage||140||R1 850 000||R11 000||R5 273||4%||7%||10%||12%|
|3A||3 Bed, 2 Bath, Single Garage||129||R1 880 000||R10 000||R4 845||3%||6%||10%||12%|
|3B||3 Bed, 2 Bath, Double Garage||157||R2 120 000||R11 500||R5 830||3%||6%||9%||12%|
|3C||3 Bed, 2 Bath, Double Garage||165||R2 240 000||R12 500||R6 169||3%||6%||10%||12%|