Sydney 5-bed apartment: A$600,400 price and A$1,660 monthly rent after 72 days

My latest cash-flow pass still looks thin. The property is a five-bedroom Sydney apartment priced at A$600,400, with expected rent of A$1,660 a month after 72 days of assessment. That produces a gross yield of about 3.3% before ownership costs.

I have allowed for vacancy, management, routine upkeep and one substantial repair, but those assumptions may not cover inadequate building reserves or a major contribution for future work. I also need to pin down recurring property-related taxes, levies, insurance and other charges before trusting the net figure.

Would you reject it if the building records show weak reserves, regardless of the current rent, or model a severe major-works case and proceed only if the net cash flow remains acceptable?

A$1,660 a month is A$19,920 annually, so the 3.3% gross figure is right. That is thin before strata levies, council and water charges, insurance and financing. The biggest danger is probably not ordinary maintenance but an unexpected building contribution if existing reserves are inadequate. I would not set a target net yield until you have the actual recurring levies and a severe major-works scenario.

Is A$1,660 the rent for the whole five-bedroom apartment, rather than per room? That distinction matters because a room-by-room model could have very different management, vacancy, insurance and turnover assumptions.

Also, “looks sound” cannot answer the reserve question. I would want to examine the building’s financial and maintenance records, planned work and recent levy history before treating the spreadsheet as meaningful.

One more concern: five bedrooms can mean more occupants and potentially more wear, but it does not automatically mean proportionally higher rent. If the expected rent comes from an advertisement rather than a current lease or strong comparable evidence, stress-test a lower figure as well. At this gross yield, even a modest rent miss or longer vacancy has an outsized effect.

I agree on verifying the rent, but I would keep financing separate from the property’s net operating yield. First subtract realistic operating costs from rent and see what the asset itself produces. Then apply the proposed loan, interest-rate scenarios and repayment structure. Otherwise cheap-looking finance can disguise a weak property, or a conservative loan assumption can obscure where the real problem lies.

Rather than asking what yield would compensate you after accepting this price, work backwards. Estimate annual rent less strata, management, vacancy, maintenance, insurance and owner-paid charges. Divide that net income by your required yield to find the maximum price you could justify, while allowing separately for purchase and finance costs. If that result is far below A$600,400, the answer is negotiation or walking away—not refining the spreadsheet.

Yes, A$1,660 is the expected monthly rent for the whole apartment. The replies have exposed the weakness: I allowed for generic repairs but did not model strata costs and a special building contribution as separate risks.

I’m going to pause rather than let the 72 days push me into a decision. Next steps are to verify the rent evidence, obtain the current levy and reserve information, identify planned building work, and rerun the deal with a harsher vacancy and financing case.

That pause makes sense. I would run three cases: ordinary year, tenant-change year, and building-expense year. Do not assume vacancy, extra management and major repairs happen neatly in different periods; combine them in the downside case.

Also confirm which council, water, insurance and tax-related costs actually fall on you, since circumstances and jurisdiction matter. If the deal only survives when every assumption is favourable, 3.3% gross is not providing much margin for error.