Bengaluru studios at ₹87.68m: can they cash-flow at 8.36%?

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writesAndLedger

Landlord
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I’ve modelled several Bengaluru studio listings around ₹87,680,000. Once I include vacancy, management, maintenance reserves, insurance and financing at 8.36%, every version produces negative net cash flow. I still need to make sure property tax and tenant turnover are treated properly.

Are buyers accepting weak current returns, contributing substantially more equity, or waiting for prices or borrowing costs to change? I’m looking for honest operating assumptions rather than headline gross yield.
 
At those inputs, the direct answer may simply be that they are not income deals. Some buyers may expect appreciation or use little debt, but that doesn’t make the rent stronger relative to the purchase price. First calculate net operating income before financing. If that return is unattractive, adding equity only makes the monthly cash flow look better.
 
What monthly rent are you using, and is ₹87,680,000 the asking price for one studio rather than a group of units? Without those two details nobody can test the conclusion. Also clarify whether management and maintenance are separate from any building charges, and whether property tax is based on an actual figure or an estimate.
 
I’d build one annual schedule per listing: contracted rent, less vacancy and collection loss, then management, recurring maintenance, insurance, property tax and building-related owner costs. Keep tenant turnover as a separate line for cleaning, repairs and reletting downtime. That gives NOI; financing comes afterward.

Then run the same schedule at the asking price, your required break-even price and a higher-vacancy case. If only the most optimistic version works, it isn’t really cash-flowing.
 
I partly disagree that more equity merely makes the result “look better.” If the objective is dependable monthly income, lower debt genuinely reduces financing risk and cash outflow. The caveat is opportunity cost: a large equity contribution can produce positive cash flow while still delivering a poor return on the money tied up.
 
Studios can be especially sensitive to turnover assumptions because even a modest reletting cost matters when the rent margin is already thin. Be careful not to count the same empty period twice—once in the general vacancy allowance and again in turnover downtime. I’d model normal vacancy plus a separate turnover event, with the overlap removed.
 
The 8.36% financing input needs its own sensitivity table. What loan amount, tenure and repayment structure are you assuming, and can the rate change? Test several equity levels, but show both annual cash flow and return on equity. Otherwise the lowest-leverage case will appear safest without showing how much capital it consumes.
 
Before deciding to wait, ask for the actual recurring owner charges and any available rent history for each listing, then replace every percentage estimate you can with a property-specific amount. I would also set a minimum acceptable unlevered return before considering finance. If the studio fails that test, neither optimistic vacancy nor extra equity fixes the purchase-price problem.
 
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