Delhi 5-bed at ₹65,960,000 and ₹286,000/month: does the yield survive real costs?

R

route.fresh

Landlord
Established
I cannot make the cash-flow case work until I know whether ₹286,000 is supported by completed lettings rather than an optimistic asking rent. I’ve been assessing this Delhi 5-bed for 90 days; at ₹65,960,000, that rent produces a gross yield of about 5.2%.

The house appears sound, but the margin could disappear through tenant turnover, management, regular upkeep or one major repair. I also need to establish the actual property-tax position, insurance cost and whether the owner would cover landscaping, security, utilities or equipment servicing. Any financing would need its own rate and repayment sensitivity rather than being folded into the headline yield.

Which records or comparable lettings would you verify first, and what net monthly cash flow would make the remaining risk acceptable?
 
Tenant turnover may be the bigger leak than routine management. A vacant month is only part of it; reletting, preparation and any brokerage cost can arrive together. I would also verify the property-tax position and whether there are arrears rather than relying on a generic allowance. At 5.2% gross, there isn’t much room for surprises.
 
Is ₹286,000 supported by comparable completed lettings, or is it an asking-rent estimate? Also, does your model assume the owner pays for utilities, landscaping, security or major equipment servicing? Those details matter more for a large detached home than a broad maintenance percentage. Financing terms are another missing fact if you are judging cash flow rather than unlevered yield.
 
I disagree slightly with choosing a target net yield first. A higher yield does not compensate for a tenancy structure or regulatory exposure you haven’t modelled properly. Run a downside case with lower achieved rent, a longer void and a repair in the same year. If that produces uncomfortable cash flow, the headline yield is already answering the question.
 
A quick way to see the thin margin: annual gross rent is ₹3,432,000. Every 10% of rent lost to operating expenses reduces the property-level yield by about 0.52 percentage points. At 25% total operating leakage, the yield is around 3.9% before financing and income tax. I’d calculate it both on the purchase price and on the full cash committed, including acquisition costs.
 
The distinction between asking rent and achieved rent is the gap I need to close. I’ll get evidence for comparable lettings and itemise turnover rather than burying it in management. I’ll also confirm the property-tax record, obtain property-specific insurance figures and model cash purchase and financed cases separately. The combined downside scenario suggested above should be more revealing than my current single repair reserve.
 
That sounds sensible. I would add one timing test: place the large repair during the vacancy period, when no rent is arriving, rather than averaging both smoothly across the year. Then compare the resulting net cash flow with a less management-intensive alternative. Rental regulation and tenancy terms are jurisdiction-specific, so have the proposed arrangement checked locally before treating ₹286,000 as dependable income.
 
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