Rome 5-bed condo at €565,800: does €3,521 monthly rent stack up?

T

travelsAndGrove

Property investor
Established
If I accept €3,521 a month as stable, the 5-bed condo looks attractive; if I make heavy deductions for turnover and building costs, the return may no longer justify €565,800. Neither version feels reliable without better evidence.

The basic gross yield is about 7.5%. My model includes empty periods, management, ordinary upkeep and a reserve for a significant repair, but I may be treating a large shared property too much like a simpler rental. Which owner costs, insurance issues or service-charge items deserve closer attention, and what return would you require after those deductions?
 
The gross calculation works: €3,521 × 12 is €42,252, or roughly 7.5% of the price. I’d focus first on how that rent is achieved. Is it one household renting the whole condo, or five separate occupants? Turnover, management and wear can look very different.

Also request the condo budgets and meeting records. Planned extraordinary building work could matter more than ordinary monthly charges.
 
The €3,521 is the expected total rent for the property; I’m not counting any upside beyond that. Good point about the occupancy arrangement, as my management allowance may be too generic for a 5-bed.

I have a headline service-charge amount, but not yet the split between costs borne by the owner and anything potentially passed through. I’ll ask for the budgets, meeting records and details of approved or proposed major works.
 
That split is essential. I would not choose a required net yield until you have two figures: recurring owner expenses and probable capital expenditure. Keep the repair reserve for work inside the condo separate from extraordinary building contributions. Otherwise one reserve can appear to cover both risks while being inadequate for either.
 
I’d add an all-in acquisition column rather than calculating only against €565,800. Purchase-related taxes and professional costs affect the capital actually committed, even though the advertised yield usually ignores them. The exact treatment depends on the buyer and transaction, so this is one for an Italian accountant or notary before relying on a net percentage.
 
I slightly disagree with starting from a target yield. First test whether €3,521 is durable. A rent estimate based on full occupancy can conceal weak months between tenants, especially if rooms effectively turn over separately. Run a second case with lower collected rent, extra cleaning or reletting costs, and more frequent minor repairs. If that case fails, a generous spreadsheet reserve won’t rescue the deal.
 
Insurance is another line that often gets entered as a token amount. Confirm what the building policy covers and what remains the owner’s responsibility inside the condo, including liability and loss-of-rent protection if available. Don’t assume the condo’s policy makes a separate landlord policy unnecessary.
 
How is the purchase being financed? At a 7.5% gross yield there looks to be room, but debt service can consume it quickly once service charges, tax, insurance and management are deducted. I’d model the actual loan terms, then a higher-rate or refinancing case, rather than comparing the mortgage rate directly with the gross yield.
 
For the building information, I’d want more than confirmation that it “looks sound.” Ask what major common elements have recently been repaired, what remains outstanding, and whether owners are already discussing future work. Cosmetic condition inside the condo tells you little about the chance of a large shared bill.
 
Another missing detail is whether management includes tenant replacement or only routine rent collection. With five bedrooms, one annual management percentage may not capture repeated advertising, viewings, inventories and move-outs. Price those activities separately in the downside case, even if the intended arrangement is a single lease.
 
Property tax deserves its own verified line rather than a percentage borrowed from another market. The applicable amount can depend on the property and ownership circumstances. Get an estimate based on this specific condo and buyer structure; otherwise your calculated net yield may be precise but wrong.
 
Putting the comments together, I’d run three returns: net yield on the €565,800 price, net yield on total cash invested, and cash-on-cash return after financing. Use recurring expenses in all three, but show extraordinary works separately as a stress event. That makes it obvious whether the deal is genuinely resilient or merely benefits from excluding acquisition and capital costs.
 
Don’t double-count conservatism, though. Vacancy, turnover and management overlap if the manager’s fee already includes reletting and is charged only on rent collected. Ask for a written breakdown, then model each cost once. A pessimistic model is useful; a muddled one can reject a workable property without explaining why.
 
Agreed. The next practical step is a simple reconciliation from €42,252 annual gross rent to owner cash before financing: vacancy, unrecovered condo charges, management, maintenance, insurance and property tax. Then compare that with total acquisition cost and stress it for a major building contribution and weaker rent. I’d set the yield hurdle only after those documents and the tenancy model are clear.
 
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