Investment4 min

Buy-to-Let: Is It Still Worth It in 2025?

With high interest rates and property prices, many people wonder if buying a rental property is still a good investment. Here's an honest look at the numbers.

Key Takeaways

Buy-to-let can still work — but you need to buy right
High interest rates mean you need higher yields to be cash-flow positive
The real money is in long-term capital growth + tenant paying your bond
Location matters more than ever — buy where demand is strong
Don't buy emotionally — run the numbers first with our calculator

The current situation

Interest rates in South Africa are around 11-11.5% (prime rate). This means bond repayments are high. For buy-to-let to work, your rental income needs to cover (or nearly cover) your bond payment plus expenses.

R1 million bond at 11.5% over 20 years = R10,800/month
You need rent of at least R12,000-R14,000 to break even after expenses
That means you need a gross yield of at least 8-9% to be cash-flow neutral

When buy-to-let still works

Despite high rates, rental property can still be a good investment if:

You buy below market value (distressed sales, auctions)
You buy in high-demand rental areas (near universities, business parks)
You put down a 20%+ deposit to reduce your bond payment
You buy a property that needs cosmetic work (add value cheaply)
You're thinking long-term (10+ years) — not quick profit

The real wealth-building strategy

Most successful property investors don't make money from monthly cash flow alone. The real wealth comes from three things working together:

1. Tenant pays your bond — after 20 years you own the property outright
2. Capital growth — property values typically grow 5-8% per year long-term
3. Rental increases — rents go up with inflation (8-10% per year)
After 10 years, your rent has doubled but your bond payment stays the same

When to avoid buy-to-let

Don't buy a rental property if:

You can't afford to cover the bond if the property is empty for 2-3 months
You're buying in an area with high vacancy rates
The numbers only work if you assume unrealistic rent increases
You haven't budgeted for maintenance, rates, and agent fees
You're using your emergency fund for the deposit

Ready to see your own numbers?

Use the Rental Yield Calculator