I’m comparing a warehouse in Utrecht with higher-yield alternatives in cheaper markets. The Utrecht property offers only a modest current yield, but the local employment and transport fundamentals look stronger, while the cheaper markets feel less liquid.
Broad market averages have not helped, so I’m trying to set a disciplined rule: require a minimum net cash return before assigning any value to future appreciation. For the cash-flow calculation I would include a vacancy allowance, management costs, maintenance reserves, insurance, property tax and tenant turnover, then test how sensitive the result is to financing costs.
For experienced investors, which assumption gets priority? Do you reject a property if it misses your minimum cash return even when the location appears better positioned for long-term growth? And how do you estimate an appreciation case without simply using it to excuse weak numbers today?
If your answer depends on a market outside the Netherlands, please mention the country and what changes the calculation.
Broad market averages have not helped, so I’m trying to set a disciplined rule: require a minimum net cash return before assigning any value to future appreciation. For the cash-flow calculation I would include a vacancy allowance, management costs, maintenance reserves, insurance, property tax and tenant turnover, then test how sensitive the result is to financing costs.
For experienced investors, which assumption gets priority? Do you reject a property if it misses your minimum cash return even when the location appears better positioned for long-term growth? And how do you estimate an appreciation case without simply using it to excuse weak numbers today?
If your answer depends on a market outside the Netherlands, please mention the country and what changes the calculation.