I’m comparing a Dublin villa with higher-yield alternatives in cheaper markets. The villa’s current yield is modest, but Dublin appears to have stronger employment and transport fundamentals; the cheaper options generate more cash now but may be less liquid.
My concern is letting a plausible appreciation story excuse weak numbers. I’m considering setting a minimum cash-return threshold before assigning any value to future growth. For the comparison, I plan to calculate net cash flow after a vacancy allowance, management costs, maintenance reserves, insurance, property tax and financing, then stress-test interest costs and tenant turnover.
Would you require the villa to remain cash-flow positive under that stress case, or accept a small shortfall if the location case is strong? I’d especially welcome views on which assumptions tend to be underestimated with a similar villa.
My concern is letting a plausible appreciation story excuse weak numbers. I’m considering setting a minimum cash-return threshold before assigning any value to future growth. For the comparison, I plan to calculate net cash flow after a vacancy allowance, management costs, maintenance reserves, insurance, property tax and financing, then stress-test interest costs and tenant turnover.
Would you require the villa to remain cash-flow positive under that stress case, or accept a small shortfall if the location case is strong? I’d especially welcome views on which assumptions tend to be underestimated with a similar villa.