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Real yield from renting an apartment in Dubai: how to calculate

Getting from 10% of the net profit from renting real estate in Dubai?

It is real, but there are some nuances...

What are the costs incurred by the owner when renting an apartment:

Service charge - maintenance fee, including utility bills. With a short-term lease, the service charge is paid by the owner, with a long-term lease - by the tenant of the apartment. The approximate amount of payments is 2-5%.

The commission for a real estate agency that rents an apartment instead of you and solves all household issues (the so-called property management) is 20% of the rental amount.

How WRONG to calculate the income from renting an apartment:

Multiply income from one month by 12 for short-term rentals - since in Dubai its cost changes 1.5-2 times due to the season.

“My apartment costs $1 million, I want 10% per annum - they will rent it out for $100,000 a year” - it doesn’t work that way. The apartment will be rented at the market price.

How to quickly calculate the real yield from monthly rent?

  1. Look at the market value of apartment rentals on Bayut or Airbnb for similar parameters: area, size, and newness.
  2. Multiply the cost of 1 month of rent per season by 7 (not 12!). This will give you a rough estimate including the aforementioned fees.

This simplistic formula takes into account underutilization and the varying rental rates throughout the year, as well as all expenses.

And yes, getting from 10% of net profit is real, but for this you need to carefully choose the object and area.

 

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