Buying Cape Town Property For Short Term Rental Income
The rental research we have done shows many homeowners who do a great job of marketing and management get 30% occupancy, most get 50% and those who do an exceptional job get 75% and more. If you actively market your home you can get a great return.
Cape Town is not the number one destination in the world for no reason.
This can change but that’s what this world is all about.
We invested in a two bedroom flat in Green Point this week. We paid R1 500 000. If you know the market you’ll know how lucky we were as bachelors can be sold for this much.
SHORT TERM RENTALS
Camps Bay and Clifton get more than R3000 per room per night if you have an average place. And the minimum rate over peak equals two weeks.
Other popular areas like Green Point get between R1000 and R2000 per room per night. Average places get R1000 per room.
The problem potential homeowners have is that they look at daily rates and not at the income per year. When you rent out a home you need a host and a marketer. It’s easy to market if you know what you do but management (including hosting) is grinding work.
Note: No one rents rooms I am just sharing the rate to make calculations easy.
Will I recommend people to buy?
Yes. But make it available for short-term rentals to tap into Cape Town’s popularity.
If you want to buy a flat consider the Waterfront, Green Point, Mouille Point and Camps Bay. Basically the Atlantic Seaboard. The CBD and city center can work too.
Criteria for a flat: parking, view, balcony, two bedroom before one bedroom and try to avoid too many stairs.
We live in Simonstown and do a lot of short term rentals in the area (Southern Peninsula).
We also rent out many places in the southern suburb (SS) during peak time when homeowners go away and tap into the popularity of Cape Town. SS has good bargains but its not the best for short term rentals.
As I mentioned Kommetjie, Simonstown, Kalk Bay are popular places, where the rates aren’t sky-high!
With these homes you need to really work hard but some run at 70% occupancy.
If you give me R1.5m to R2m and want to maximise income then I would look at the Atlantic Seaboard. Bear in mind you may need to exclude Clifton where you’d probably only get a parking space for that price 😉
More than R2m and you can try get something small in Camps Bay. Remember here you will get double the rate per day than everywhere else.
If you have a million try and get a bachelor close to CTICC. Very popular with all the events that take place there; Jazz Festival, Mining Indaba, it even attracts the runners and cyclists.
The other bargain area near the coast is Muizenberg. This place is getting a major revamp.