When is a rental property no longer a good investment?

Strong rental growth doesn’t automatically make a rental property a good investment.  

Even when average rents are increasing, rising costs, weakening tenant demand or poor capital growth can steadily eat into a landlord’s returns. Fortunately, the right checks can help agents advise landlords when a property is underperforming, and how they can turn it around.

National rental growth accelerated to 5.2% in the second quarter of 2026, pushing rents to a record R9 715.  

But seven out of nine provinces recorded rental growth below the national average, and without the Western Cape, national growth would have been just 4.3% – below inflation.

For landlords, this highlights the importance of looking beyond national market performance when assessing whether an individual rental property is delivering an adequate return.

Michelle Dickens, Commercial Director at PayProp, says a successful rental investment requires ongoing review of the property, its location, rental income and expenses.

"Property investment provides two opportunities to realise a return: the rental yield and the capital growth when the property is sold," says Dickens. "But simply having a tenant in place and collecting rent doesn't necessarily mean a property is performing as well as it should."

Rental yield can be affected by rising rates and taxes, levies, maintenance and other expenses, while changes in tenant demand, affordability and the surrounding area can affect both achievable rent and the property's longer-term prospects.

"The property, the rental model and the market all need to work together," says Dickens. "Landlords need to keep their finger on the pulse and understand whether the investment is still performing."

Here are five warning signs to reassess your rental investment.

1. Your costs are rising faster than your rental income

Rising rents don't necessarily mean a better-performing investment. Rates and taxes, levies, insurance, maintenance and other property expenses all affect the income a landlord ultimately receives.

"Landlords need to understand what their property is actually earning after expenses," says Dickens. "Rental income should be reviewed alongside the costs of owning and maintaining the property to understand whether the investment is still meeting its purpose."

2. Your rent is out of step with similar properties

Setting the right rent is a balancing act. Underpricing a property limits income, while setting the rent above what the local market can support can make it harder to attract and retain suitable tenants.

"Rental prices need to be reviewed against what tenants are actually paying for comparable properties in that market," says Dickens. "Rental agents can help here, using trusted market data to help landlords to benchmark rents."

3. The property no longer fits the tenant market

A property can be well maintained and correctly priced but still underperform if it no longer fits the tenant market it is intended to serve.

Student accommodation, family homes, inner-city apartments and short-term coastal rentals can all be great investments, but they are better suited to some markets than others. Location, transport links, security, infrastructure and amenities all influence demand and affect landlords’ returns. A family home in an area dominated by student demand could see lower demand, for example.

"The right property needs to be matched with the right rental model and the right tenant market," says Dickens. "If a landlord is consistently struggling to attract suitable tenants, they need to understand why rather than simply reducing the rent or accepting the first application."

4. Tenant payment performance is deteriorating

Rental income depends on more than placing a tenant. The tenant has to be able to pay reliably for the length of the tenancy.  

"An empty property costs money, but placing a tenant who cannot afford the rent can ultimately cost considerably more," says Dickens. "Tenant affordability and previous payment behaviour shouldn't be overlooked in an attempt to avoid a vacancy."

Tenant payment performance remains strong nationally, with 16.9% of tenants in arrears in Q2 2026, up slightly from the record low recorded in Q1. However, PayProp says the May interest rate increase could put additional pressure on tenants, with the effects likely to be felt towards the end of the year.

5. Maintenance issues and local conditions are making your property less appealing

The performance of a rental investment can change for reasons that have little to do with the rent itself.

Deferred maintenance can affect tenant relationships, lower the achievable rent and cause long-term damage to the property. At the same time, changes in municipal services, infrastructure, security and the surrounding neighbourhood can affect tenant demand and ultimately property values.

"Landlords need to keep an eye on both the property and its location," says Dickens. "Regular inspections help identify maintenance requirements, while ongoing review of the local market helps landlords understand whether external changes are affecting their investment."

Review the investment, not just the rent

Dickens recommends reviewing a rental property at least annually, considering the rent achieved, property expenses, tenant payment performance, maintenance requirements and changes in the local rental market.

Underperformance doesn't automatically mean it is time to sell. Reviewing the rental model, adjusting the rent in line with market levels, solving maintenance issues or improving the management of the property can all help to turn around an underperforming property.

"Property investment is often described as passive income, but it still needs attention," says Dickens. "Having the right information allows landlords and their property practitioners to identify problems early and make better decisions about the investment."