MX$23.49m 1-bed at MX$90,020/month: does the yield hold up?

[long_hill]

One detail has stopped me from taking the numbers at face value: the 1-bed is described as a “coastal home,” yet the listing places it in Mexico City. Until that is explained, I am not sure the rent estimate and the property are even being presented on the same basis.

The asking price is MX$23,490,000 and projected rent is MX$90,020 a month, which supports the broker’s headline figure of roughly 4.6% before costs. I have pencilled in gaps between tenants, management, ongoing upkeep and a separate contingency, but lease length and turnover could still move the net cash flow considerably. Which cost deserves the hardest evidence here—building charges, insurance, property tax or another recurring item—and how would financing sensitivity affect your required return?

 

[drawTheHarbor]

At MX$90,020 monthly, annual gross rent is MX$1,080,240, so the 4.6% arithmetic is reasonable before expenses. My first concern would be building charges and any irregular common-area assessments, because those can undermine a 1-bed’s cash flow without appearing in the broker’s yield. I’d request the full recurring charge history and planned building works before deciding whether the net return is acceptable.

 

[esme.snow]

Is MX$90,020 based on an existing signed lease, a long-term rental estimate, or short-term furnished income? The vacancy, management and turnover assumptions will be very different. Also, the “coastal home” label needs explaining if the property is actually in Mexico City. I wouldn’t refine the yield model until both the location and basis for the rent are confirmed.

 

[bright_blueprint]

I’d go further: even a complete expense list may not rescue this if the rent is merely optimistic. Stress-test a lower achieved rent, extra vacancy between tenants, a large repair and higher financing costs if debt is involved. Then compare the resulting cash flow with a cash purchase. Rather than choosing a target net yield first, identify how much downside the deal can absorb before it stops meeting your objective.