I think this will be a very important aspect when you are investing for a return and there can be many costs that could incur in the beginning which might escape your mind when planning:
For instance, when buying an apartment
1. You have to add another 4% as stamp duty fee (Don't even think about undervaluing now - too risky)
2. Standard lawyer fee is 1% (if you have a friend who could do the job for less, that would be great)
3. Management fees are covered by the owner, so that is a cost for you.
4. Apartments in Colombo are mostly given with furniture. Not forgetting the designing of the interior if it’s a fairly old apartment that may require some touch ups.
Optional but worth considering
1. If you find a tenant through a real estate company, then there is a commission that you have to pay to the agent.
2. If the lease agreement is signed, then there is a legal fee (Small amount but again it’s a cost) which is split by you and the tenant.
So considering the above, I think the goal should be to get as close as you can to the 6% you are targeting as you might understand now that it requires meticulous planning in terms of the costing. There might be additional costs too which I might have missed.
That is a brief overview of the expertise and experience that I have gathered from this industry.
Hope the above information is helpful. Write to me if you are in need of property advice. info.mistert@gmail.com
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