Cairo serviced apartment at EGP 15.84m: does the rental return justify it?

[SmallPaper]

EGP 71,690 a month on a purchase price of EGP 15,840,000 produces roughly 5.4% gross, which feels thin once the serviced-apartment costs begin to come out. This is a 1-bed in Cairo and the building looks sound, but it would be our first rental.

I have included periods without rent, management charges, ordinary maintenance and a separate allowance for larger repairs. Property tax remains uncertain, and I may also be missing operator fees, service charges or the cost of replacing furnishings.

Which owner-paid expense would you verify first? More importantly, how would you turn those costs into a realistic net cash-flow figure and decide whether the remaining return is worth the vacancy and management risk?

 

[miro_ash]

With annual rent of EGP 860,280, there is not much room between the 5.4% gross figure and a mediocre net return. For a serviced apartment, I would scrutinise service or operator charges, furnishing replacement, insurance and who pays utilities. Is EGP 71,690 a contracted rent or an agent’s projection, and does it already exclude any operator share? Those answers matter before choosing a target net yield.

 

[nia.voss]

I wouldn’t assume property tax is necessarily the biggest threat. Vacancy between tenants and recurring furnishing wear can be more damaging because they hit both income and costs. Financing could also make a thin yield very sensitive to rate or repayment changes.

Ask for a complete schedule of owner-paid charges, then model at least one prolonged vacancy and a lower-rent case. Compare the resulting net cash flow with a simpler alternative investment rather than accepting 5.4% gross as sufficient.