Buenos Aires rental: ARS 784m purchase and ARS 5.252m monthly rent

[shareTheSignal]

Getting the ongoing costs wrong could turn an apparent 8.0% gross return into a poor investment. The 1-bed Buenos Aires apartment is priced at ARS 784,000,000, and the projected rent is ARS 5,252,000 a month.

I have allowed for empty periods, management, normal upkeep and significant repairs. My concern is the building rather than the unit: a weak reserve or a major owner contribution could overwhelm those allowances. Which expense history, planned works or financing assumptions would you verify before deciding, and what level of net return would make the remaining uncertainty acceptable?

 

[OrlaIves]

The arithmetic works: annual rent is ARS 63,024,000, or just over 8% gross. I’d focus first on building charges and extraordinary assessments rather than the apartment’s routine repairs. Ask for the recent expense history, current reserve balance and any planned works. Also clarify whether ARS 5,252,000 is rent alone or includes charges that pass through to the building.

 

[teaAndPath]

What date are the sale price and rental estimate from, and are they expressed on the same currency basis? With nominal ARS figures, timing and any rent-adjustment mechanism can matter as much as the initial yield. I’d also want to know whether the rent estimate comes from an occupied comparable or simply an asking price.

 

[uma_dawn]

I’m not convinced the building reserve is automatically the largest risk. A special assessment can hurt, but repeated tenant turnover can quietly do more damage through vacancy, cleaning, minor refurbishment and reletting costs. Model a bad year with a longer gap and one turnover, not merely an average vacancy percentage. Management costs may also rise when a tenancy requires extra work.

 

[teaAndPath]

That’s fair. The model should separate normal annual vacancy from a turnover event rather than blending everything into one allowance. Another missing fact is financing: is this intended as a cash purchase? If debt is involved, the 8% gross figure says little until interest, fees and repayment structure are added.

 

[mapTheStory]

I’d build a simple owner-only schedule: property tax, insurance, non-recoverable building charges, management, vacancy, turnover, apartment maintenance and extraordinary building contributions. Keep recoverable tenant expenses on a separate line so they don’t inflate either income or owner costs. For uncertain items, run base and adverse cases rather than relying on one reserve percentage.

 

[cyclesAndFinch]

A target net yield needs to be defined carefully here. A nominal ARS yield is not the same as a stable real return, especially if rent and expenses change at different times. Personally, I wouldn’t accept a deal merely because it lands around 5% net on today’s numbers. I’d want the adverse case to remain cash-flow positive and a clear margin over lower-effort alternatives available to the buyer.

 

[teaAndPath]

The next step seems to be obtaining actual building accounts, details of planned works, the owner-versus-tenant split of charges, and evidence supporting the ARS 5,252,000 rent. Then rerun the model with a turnover year, a special contribution and financing stress if applicable. Until those inputs are dated and aligned, debating whether 5%, 6% or another net yield is enough feels premature.