writeTheCedar
Landlord
I may be too close to this Lisbon studio to judge it clearly. At €418,600, the current yield looks modest, but the employment and transport fundamentals seem stronger than in the cheaper, higher-yield markets I am comparing it with. Those alternatives generate more cash now, though they also feel less liquid.
My concern is that “future appreciation” can easily become an excuse for accepting weak numbers today. I am considering setting a minimum net cash return and assigning no value to future price growth unless the property clears it.
For anyone assessing this trade-off, what would you include before deciding that minimum has been met? I am accounting for vacancy, management, maintenance reserves, insurance, property tax, financing sensitivity and tenant turnover. Would you require positive cash flow under a higher-rate or longer-vacancy scenario, or accept a small shortfall for the location?
Please distinguish any actual legal requirements in Portugal from personal risk tolerance or investing preference.
My concern is that “future appreciation” can easily become an excuse for accepting weak numbers today. I am considering setting a minimum net cash return and assigning no value to future price growth unless the property clears it.
For anyone assessing this trade-off, what would you include before deciding that minimum has been met? I am accounting for vacancy, management, maintenance reserves, insurance, property tax, financing sensitivity and tenant turnover. Would you require positive cash flow under a higher-rate or longer-vacancy scenario, or accept a small shortfall for the location?
Please distinguish any actual legal requirements in Portugal from personal risk tolerance or investing preference.