Before deciding whether to pursue this Hong Kong 1-bed, I need to reconcile an attractive headline return with the costs the broker has omitted. The price is HK$6,786,000 and the proposed rent is HK$41,480 a month, which gives a gross yield of about 7.3%.
My cash-flow model includes empty periods, day-to-day upkeep, management charges and funds for a significant repair. Insurance, property tax, tenant replacement costs and the effect of different financing terms still need firmer numbers. The building seems sound from what I have seen, but the remaining lease term may also alter both value and exit prospects.
Which recurring Hong Kong ownership cost is easiest to miss here? I would also be interested in the net return others would want for this level of risk. My instinct is that the HK$41,480 rental estimate needs more testing than the purchase price, but I am open to a different view.
My cash-flow model includes empty periods, day-to-day upkeep, management charges and funds for a significant repair. Insurance, property tax, tenant replacement costs and the effect of different financing terms still need firmer numbers. The building seems sound from what I have seen, but the remaining lease term may also alter both value and exit prospects.
Which recurring Hong Kong ownership cost is easiest to miss here? I would also be interested in the net return others would want for this level of risk. My instinct is that the HK$41,480 rental estimate needs more testing than the purchase price, but I am open to a different view.