The headline return looks reasonable. My concern is how much survives normal ownership costs.
The apartment is a Hong Kong 1-bed priced at HK$9,321,000, with projected rent of HK$36,920 a month, so the gross yield is about 4.8%. I have modelled empty periods, management fees, routine upkeep and funds for a significant repair. Tenant demand seems credible and the building looks sound, but my estimates for insurance, property tax and changing tenants are much less certain. Borrowing costs could also shift the result quickly.
Which Hong Kong expense is most often missed or understated? I would initially judge the property on its net return before financing, then run a separate financed case, but I’m open to using a different threshold if local letting costs make that misleading.
The apartment is a Hong Kong 1-bed priced at HK$9,321,000, with projected rent of HK$36,920 a month, so the gross yield is about 4.8%. I have modelled empty periods, management fees, routine upkeep and funds for a significant repair. Tenant demand seems credible and the building looks sound, but my estimates for insurance, property tax and changing tenants are much less certain. Borrowing costs could also shift the result quickly.
Which Hong Kong expense is most often missed or understated? I would initially judge the property on its net return before financing, then run a separate financed case, but I’m open to using a different threshold if local letting costs make that misleading.