Rental deal in Lima: PEN 2,719,000 purchase, PEN 6,950/month — sanity check [condo]

K

KianZane

Landlord
The main constraint is how little room there is for error at a 3.1% gross yield. The property is a five-bedroom condo in Lima priced at PEN 2,719,000, with projected rent of PEN 6,950 a month.

I have allowed for empty periods, management, ordinary upkeep and a larger future repair, but this is our first rental and I may be missing an owner cost. Insurance, condo charges, special assessments and tenant turnover are the areas I am least certain about. Changes affecting rentals add another layer of uncertainty even though the building itself appears to be in sound condition.

The rent estimate may be the weakest assumption, particularly if a five-bedroom unit attracts a narrower tenant pool. Would you first verify it against signed comparable rentals, or price a longer vacancy and higher turnover costs into the model? What would you need the net return to show before proceeding?
 
At that starting yield, condo charges and special building assessments could do the most damage. Confirm exactly which recurring charges fall to the owner, whether the advertised rent assumes any are paid by the tenant, and what major common-area work may be approaching. I would also price insurance and property tax separately rather than burying them in maintenance. There is not much room here for an unpleasant surprise.
 
Is PEN 6,950 supported by comparable signed rentals, or is it the asking figure suggested for this particular unit? A 5-bed condo may have a narrower tenant pool, so turnover could involve both a longer vacancy and more work between occupants.

I’m less worried about choosing an arbitrary acceptable net yield than about testing whether the rent survives a realistic vacancy period. Is this an all-cash purchase or financed?
 
I agree on verifying the rent, but I wouldn’t automatically reject it just because the gross yield is low. The decision may look different if the buyer values the property for reasons beyond current income. As a rental deal alone, though, I’d run three versions: expected rent and costs, a longer vacancy plus turnover repairs, and a financing-rate or refinancing stress case if debt is involved. Then compare the resulting cash flow with a simpler alternative, rather than selecting a target yield in isolation.
 
Helpful points. The PEN 6,950 is still an expected rent, not evidence from a signed lease, so I need stronger comparable-rental support before treating it as dependable. I’ll request the full condo-charge history, details of any planned common-area work, and separate estimates for insurance and property tax. I’ll also model a longer vacancy and tenant-turnover work. If the net cash flow becomes marginal under that version, I won’t rely on future appreciation to rescue a first rental.
 
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