Real Estate Investor Magazine South Africa June 2014 | Page 26

FINANCE

BY KOOS DU DOIT

Financial Perspectives
Understanding the rental factor

T

he term ‘rental factor’ (RF) is widely used
in the property industry to express the
monthly rental income as a percentage of
the purchase price.
It is also referred to as the rent value ratio or RVR.
A property with the purchase price of R500 000 and

a rental income of R5 000 per month, for example,
would have a rental factor of 1% (R5 000/R500 000 x
100 = 1%).
A rental factor of 1% is commonly found in property
sales contracts as the ba