compareTheHearth
Property investor
The headline return looked better than I expected: a 1-bed Cairo condo priced at EGP 12,960,000 with projected rent of EGP 78,740 a month produces EGP 944,880 a year, about 7.3% gross. The appeal fades once I start making less friendly assumptions.
I am allowing for empty periods, management, normal upkeep and occasional major work. Insurance, property tax, building charges and the cost of changing tenants are less certain, and any of those could materially reduce the result. I also want to see how the numbers respond to different financing costs, although I am judging the unlevered return first.
For owners familiar with Cairo condos, which expense tends to be missed or understated? I can accept that 7.3% is only a starting point, but I would like a realistic net-yield range before deciding whether the operating and regulatory risks are worthwhile.
I am allowing for empty periods, management, normal upkeep and occasional major work. Insurance, property tax, building charges and the cost of changing tenants are less certain, and any of those could materially reduce the result. I also want to see how the numbers respond to different financing costs, although I am judging the unlevered return first.
For owners familiar with Cairo condos, which expense tends to be missed or understated? I can accept that 7.3% is only a starting point, but I would like a realistic net-yield range before deciding whether the operating and regulatory risks are worthwhile.