Melbourne 4-bed condo at A$1.786m and A$10,190 monthly rent — what am I missing?

[round_stone]

If the A$10,190 monthly rent proves optimistic, the apparent return changes quickly enough to make the purchase unattractive. I am reviewing a 4-bed Melbourne condo at A$1,786,000, which produces a headline gross yield of about 6.8% at that rent.

The figure is appealing, but I do not want a generic maintenance allowance to hide the costs that actually drive the result. My model includes vacancy, management, routine work and a reserve for a larger repair. I still need to test tenant turnover, owners corporation charges, insurance and any property tax that applies.

Would you put more weight on verifying the rent against an existing tenancy, or on stress-testing shared-building expenses first? I would also be interested in how others account for reletting and management costs before deciding what net return is adequate.

 

[bakesAndBeam]

I’d focus first on owners corporation costs rather than ordinary maintenance. The current annual fee matters, but so does the possibility of major shared-building work or a special levy. Check what insurance is included there and what landlord cover you would still need separately. I’d calculate net yield before financing after every recurring charge, then stress it with a larger building expense rather than relying on one generic repair reserve.

 

[SimpleWall]

Is A$10,190 based on an existing tenancy or an asking-rent estimate? That distinction is crucial. A 4-bed property can also have a narrower tenant pool, so turnover may cost more than a simple vacancy percentage suggests once reletting and preparation are included. I’d also want to know whether your target return is before or after financing, because rate sensitivity could overwhelm small differences in maintenance assumptions.

 

[brick.swift]

I wouldn’t assume the owners corporation is automatically the largest omission. Depending on the ownership structure and circumstances, land tax could materially change the annual cash flow, alongside council and water-related charges. Melbourne figures need to be checked against the actual property and owner rather than a generic percentage.

Instead of choosing a net-yield threshold first, run three cases: expected rent, a weaker rent with turnover, and the same weaker case plus a major levy. If the deal only works in the first case, 6.8% gross is not much comfort.

 

[round_stone]

That helps. I was treating the larger repair reserve as if it covered both internal work and shared-building surprises, which is probably too blunt. I’ll separate owners corporation fees, possible levies, insurance, council/water charges and any applicable land tax, then test the rent evidence and a longer turnover period. Financing will stay in a separate cash-flow scenario so I can compare the property’s net yield with the return on my actual equity.