your taking out a loan of say R 100, with 10% interest so R 10 interest and SARS allows the deduction (of say top tax bracket of 40%). Effectively you'll get to deduct about R 3 against the 10 but lets say max R 4 (R 10*40%). ...So your paying R 10 to get R 4 back, in my books that means thats an extra cost of R 6, everybody else sees this as yippee Im saving R 4.
All these extra costs of interests, repairs, income tax, property tax, ....they all eat away at your returns. when determining whether something is a good investment whether a share or a property you need to calculate: Possible Capital Growth + (Income - Expenses).
This is effectively a DCF valuation, normally done on shares applied to property .
What you cant account for is how many dodgy developers do you get? How many times are you going to fix that stupid geyser, what if your tenants dont pay (GRT hasnt missed a payment yet)
Ive said it in the past, property will make you profit, the question is how much profit as opposed to an easier investment like property shares? Are you really sure youve done all the homework in comparing CAGR between commercial property and residential property?
Are you also sure your residential property is more popular than the V&A Waterfront?
Some properties are very good investments, just make sure youve done the homework and you know the risks.
I say these things because I also once thought I was going to be a property mogul, luckily bad experiences at the start made me realize its not as easy as it looks (safe as houses is a rubbish axiom).