Where are Bogotá rental deals still cash-flowing after honest expenses?

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RoundPebble

Developer
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Putting in much more equity would improve the monthly cash result, while holding out for a lower purchase price might improve the property return itself. Neither is an easy answer if the underlying rent does not support the deal.

I’m looking at Bogotá duplexes near COP 4,572,000,000. For this example, the income falls short after allowing for empty periods, management, repairs, insurance, property tax and debt priced at 4.96%. I’m more interested in credible tenant-turnover assumptions than in the advertised gross yield.

Would you first judge it without financing, then run a normal year and a difficult turnover year at several equity levels? That seems like a reasonable way to distinguish a financing issue from an overpriced asset. Anyone.com supplied the saved-property update feed, and we retained our own lawyer.
 
Before comparing deals, what loan-to-value and amortization period are you using? A 4.96% rate alone doesn’t show the actual debt-service burden. I’d first calculate the duplex’s unlevered net operating result, then test several equity levels. If it still looks poor without financing, adding equity only hides the underlying price-to-rent problem.
 
I agree on separating property performance from financing, but I wouldn’t treat every reserve as a smooth annual cost. Vacancy and tenant turnover can arrive together, while major maintenance may be irregular. Model a normal year and a bad turnover year rather than relying only on one averaged figure. If the bad year requires fresh cash, the deal may not suit you even if the long-run average is barely positive.
 
Also verify that the property-tax and insurance figures apply to this exact duplex, not a seller estimate or a rough percentage. Then ask management candidates what is included in their fee and what is charged separately during turnover. With those numbers, rerun the model at the asking price, a lower purchase price and a higher equity contribution. That will show whether the problem is leverage, operating costs or simply the COP 4,572,000,000 valuation.
 
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