Santiago 5-bed condo at 3.8% gross — enough margin?

[lookTheRadar]

I keep changing my mind on this Santiago condo. Purchase price is CLP 357,200,000 and expected rent is CLP 1,140,000/month for a 5-bed, giving a headline gross yield of roughly 3.8%.

The building appears sound and demand looks credible, but competing local supply could change the result. My conservative model includes vacancy, management, routine maintenance and a larger-repair reserve. Insurance also looks significant.

Which Santiago cost am I most likely understating—property tax, building expenses, insurance or turnover? And what net yield would justify the risk for you?

 

[full_story]

At 3.8% gross, small omissions matter. I would first clarify whether the advertised rent is net of the condo’s common expenses and which charges remain with the owner. Also allow for extraordinary building assessments separately from routine maintenance; they are different risks.

Do you have the actual property-tax, insurance and building-expense figures, rather than estimates? Without those, I would not choose a target net yield yet.

 

[DirectDoor]

I agree those figures are needed, but vacancy may be the sharper sensitivity for a 5-bed. One empty month reduces annual collected rent from CLP 13,680,000 to CLP 12,540,000, or about 3.5% of the purchase price before any expenses.

I’d run scenarios for 10, 11 and 12 occupied months, including tenant-changeover work and any leasing cost. Then add confirmed tax, insurance and common charges. If financing is involved, test the payment separately—the unlevered yield already leaves limited room for surprises.