How the return is worked out
Money in = deposit + transfer duty + attorney costs + renovations + bond repayments + running costs Money out = rent received + (sale price − agent commission incl. VAT − bond still owing) Profit = money out − money in ROI = profit ÷ upfront cash × 100
The bond is simulated month by month, rent and running costs rise once a year, and the property value grows at your assumed rate. The annualised return is an approximation based on all the cash you put in, including any monthly shortfall when rent does not cover the bond and costs.
Worked example
R1.2 million buy-to-let held for 7 years
The calculator adds up every rand in (deposit, costs, bond repayments, running costs) and every rand out (rent and the net sale proceeds) to show the profit before tax.
Money in
- Deposit, transfer duty, costs and renovationsIncludes transfer duty of R0
- R295 000
- Bond repaymentsR9 746 a month
- R818 681
- Running costs
- R312 653
- Total invested (upfront + any monthly shortfall)
- R449 293
Frequently asked questions
How is ROI calculated here?
Profit is everything you receive (rent plus net sale proceeds) minus everything you pay (deposit, transfer duty, attorney costs, renovations, bond repayments and running costs). ROI divides that profit by your upfront cash.
Is the profit taxed?
Yes. Net rental income is taxed at your marginal rate each year, and the gain on sale is subject to capital gains tax. Neither is included here.
Do renovations increase the sale price?
Sometimes. To stay conservative, the calculator does not assume that renovations add value beyond your growth rate.