Having worked in the affordable housing space for over a decade I have seen investors make huge returns. With a littler planning and careful application of the correct funding model a savvy investor could make decent returns. The trick is the correct mix of properties that will offer a market related rental yield over time. The additional benefit is the commensurate capital appreciation of the portfolio over the medium to long term.
The shortage of affordable housing in the bondable sector is around 800 000 units, however the figure is even higher in the gap market space, that is the space above the RDP and subsidised band but below the bondable band of around R250 000 to R280 000 range, this figure is reputed to be over 1 million units. This offers comfort to anyone who is interested in the market size and its future sustainability.
Another major benefit is that the initial purchase price can to negotiated to secure a sizable discount to market price, this immediately leaves adequate equity in the transaction to satisfy the conservative investor. By sourcing the correct tenant a landlord could make the acquisition cash flow positive from the early stage and the lead time to real inflows are readily shortened.
In my opinion, this class of property asset is the ideal vehicle for individuals, investors clubs alike. I would gladly show interested parties how to get started.