I have to choose shortly whether to fund the next round of checks. The São Paulo two-bedroom country home costs R$5,124,000 and has projected rent of R$20,450 a month, giving only about 4.8% gross. That leaves little protection if the rent proves optimistic or the property sits empty for longer than expected.
The house appears sound, but the insurance cost is not yet firm. My working figures include management, routine maintenance, vacancy and a repair reserve, while financing terms could make the cash flow much more sensitive. The hardest mistake to undo would be buying on a thin yield and then discovering that the tenant pool is narrower than assumed.
My next step is to verify the property tax, insurance, any shared-estate charges and evidence supporting the projected rent. I will then run a downside case with a longer vacancy, higher maintenance and financing costs. Is there another recurring ownership expense that should be added before judging the net return?
The house appears sound, but the insurance cost is not yet firm. My working figures include management, routine maintenance, vacancy and a repair reserve, while financing terms could make the cash flow much more sensitive. The hardest mistake to undo would be buying on a thin yield and then discovering that the tenant pool is narrower than assumed.
My next step is to verify the property tax, insurance, any shared-estate charges and evidence supporting the projected rent. I will then run a downside case with a longer vacancy, higher maintenance and financing costs. Is there another recurring ownership expense that should be added before judging the net return?