When it comes to long-term wealth building, property investment remains one of the most reliable and accessible strategies—especially in South Africa where demand for rental housing continues to grow. One powerful approach to property investment is using rental income to cover your bond and related costs, a model that, if planned carefully, can generate wealth through both cash flow and capital appreciation.

Using Rental Income to Cover a Bond

At its core, this strategy involves purchasing a property using a mortgage (bond), then renting it out so the rental income covers all (or most) of the monthly costs. These typically include:

• Bond repayment
• Rates and taxes
• Levies (if sectional title)
• Maintenance and insurance
• Property management fees (if applicable)

In some cases, the rent may not fully cover all costs—this is called negative gearing. While it means you’re subsidising the property each month, it also allows you to own an appreciating asset, build equity, and potentially benefit from tax deductions (depending on the jurisdiction and your local laws).

Example:

Let’s say you purchase an apartment in Johannesburg for R900,000 with a 10% deposit (R90,000). Your bond on the remaining R810,000 at 11% interest over 20 years will cost roughly R8,400/month.

• Rental income: R7,800/month
• Shortfall (subsidised by you): R600/month

Over time, as you increase the rent annually, the rental income could eventually exceed your bond repayments, flipping the property into a positively geared investment—where it puts money in your pocket each month.

Long-Term Gains: Capital Appreciation

Beyond rental income, the real wealth lies in capital growth—the increase in property value over time. If your R900,000 apartment appreciates at just 6% per year, it could be worth over R1.6 million in 10 years. Combine that with the fact your tenant has been paying off your bond, and you’ve built significant net worth.

Comparing to a Fixed-Term Savings Account

What if, instead of using your R90,000 deposit for a property, you put it in a fixed-term savings account at 9% interest?

After 10 years:

• Your R90,000 grows to around R213,000, assuming interest is reinvested and compounded annually.

With property:

• Assuming a modest 6% annual property appreciation, your R900,000 property could be worth R1.6 million in 10 years; and
• Meanwhile, your tenant has paid off a large portion of your bond, and the equity you own could be well over R500,000 to R700,000, depending on loan repayments and property costs.

While savings accounts are safer and offer guaranteed returns, property provides leverage—you use borrowed money (the bond) to control a much larger asset. That’s the key difference. You can’t borrow R810,000 to invest in a fixed deposit—but you can with property.

Tips for Success

1. Do your numbers: Ensure you understand your bond repayments, all monthly costs, and realistic rental income;
2. Choose the right area: Invest in areas with strong rental demand, good infrastructure, and growth potential;
3. Plan for vacancies and maintenance: Keep reserves to cover unexpected costs or months without tenants;
4. Reinvest gains: Once your property is cash-flow positive, use the surplus to buy your next property; and
5. Use a broker to get competitive rates on your mortgage loans.

Final Conclusion

While putting money in a fixed-term deposit might feel safer, using property as a wealth-building tool offers far greater upside. With careful planning, you can build a portfolio of appreciating assets that others pay off for you—turning rental income into long-term financial freedom.

In property, the power of leverage, inflation-hedging, and tenant-funded growth make it one of the most effective paths to generational wealth.

Use a reputable mortgage broker

By using a broker, you can access multiple offers simultaneously and negotiate on fees and interest rates so you can have the confidence knowing you received the best deal in the market at the time.

Phoenix Bonds is a premium mortgage broker in South Africa, with a proven track record (check out the reviews on Google).  For expert advice and personalised service, fill in your details HERE and one of our experienced Consultants will be in touch.