Buenos Aires 4-bed: does a 4.9% gross yield leave enough margin?

[shareTheSignal]

If the rent or vacancy assumption is wrong, there is very little yield here to absorb the mistake. The flat is a new-build 4-bed in Buenos Aires, priced at ARS 1,186,000,000, and the proposed ARS 4,888,000 monthly rent produces a gross return of roughly 4.9%.

I have allowed for empty periods, management and ordinary upkeep, with additional cash set aside for an expensive item. Competing supply is my main concern despite the building looking sound. Before proceeding, I want to test insurance, property tax, tenant replacement costs and building charges more carefully. Which of those is commonly missed, and how much net return would you require at this price?

 

[teaAndPath]

At those figures, annual gross rent is ARS 58,656,000 before any leakage. A 4.9% gross yield does not leave much room for several modest costs arriving together. I’d focus on building or common expenses, property tax and insurance, including who actually bears each item under the intended lease. I would also model a longer vacancy rather than only an average allowance.

 

[uma_dawn]

How is the ARS 4,888,000 rent supported: an existing tenant, comparable signed leases, or an asking-rent estimate? That matters more than fine-tuning the maintenance reserve. For a 4-bed, the tenant pool and turnover pattern may differ from smaller flats, so I’d want evidence that the unit can be re-let at that figure without a long gap.

 

[uma_dawn]

Also, is this an all-cash calculation? If financing is involved, the gross yield alone is almost beside the point. Run the loan cost and rent assumptions separately, then stress the timing of rent changes, vacancy and ownership expenses. A nominal ARS cash flow can look healthy while still failing the return target you actually care about.

 

[mapTheStory]

If a decision is due soon, I would not reject it solely because the gross figure is 4.9%, but I would make the rent evidence the deciding factor. A well-positioned 4-bed might hold tenants better than the headline yield suggests; an optimistic asking rent could erase that advantage.

Run the deal at ARS 4,888,000, then at a lower achieved rent, and finally with a delayed letting plus turnover costs. If it misses your return target in either stressed case, the price needs to change or the deal should stop.

 

[teaAndPath]

Yes, and obtain the recent expense history for the building rather than relying on a generic percentage for management and maintenance. New-build does not mean cost-free, and reserves can miss recurring shared-building charges. I’d calculate the required net yield from your own hurdle rate, then work backwards to the maximum purchase price. That is more useful than choosing an arbitrary ‘acceptable’ Buenos Aires yield.