Rental deal in Stockholm: SEK 3,952,000 purchase, SEK 21,410/month — sanity check?

[daan_reads]

Because this would be our first rental, I need the cash flow to remain workable through a vacancy or a financing shock rather than merely look attractive on the headline numbers. The property is a 4-bed new-build flat in Stockholm at SEK 3,952,000, with expected rent of SEK 21,410 per month. That produces a gross yield of roughly 6.5% before costs.

I have allowed for management, empty periods, routine upkeep and a reserve for larger work, but association charges and insurance could change the outcome materially. I also plan to test the figures under different borrowing costs. Which Stockholm ownership or letting expense should be verified first, and how would you judge whether the resulting net return is adequate for the risk?

 

[DirectCairn]

The first missing number I’d want is the monthly building or association charge and exactly what it includes. That can matter more than routine maintenance on a new-build flat. Also establish who carries the relevant insurance, utilities and any property-related tax or fee under this ownership structure. I wouldn’t rely on the 6.5% figure until all of those are deducted.

 

[jae.holt]

Are you buying with cash or financing it? A deal can show a reasonable property-level yield but still produce weak cash flow once interest and repayment are added. I’d run the loan at today’s cost and again at a meaningfully higher rate.

Also, has the SEK 21,410 rent been tested against comparable rentals, and is letting the flat permitted on the terms you expect? Those answers could matter more than choosing between two maintenance assumptions.

 

[CelineLinden]

I’d keep financing separate from the flat’s net yield, otherwise it becomes difficult to compare the property with other investments. Calculate the unlevered net yield first, then calculate the return and cash flow on your actual equity.

My bigger caveat is tenant turnover. One empty period plus cleaning, minor repairs and management work can make a smooth annual vacancy percentage look too optimistic.

 

[CelineLinden]

One more practical approach: build three versions rather than choosing a single acceptable net yield. Use a base case, a turnover year with vacancy and extra preparation costs, and a stressed case combining higher financing cost with increased building charges or insurance.

If the stressed version requires everything else to go perfectly, the 6.5% headline is not offering much protection. Before deciding, get the full schedule of recurring charges, written confirmation of the letting position, an insurance quote, and evidence supporting the projected rent.