A transparent worked example
Illustrative only: 9 suites at $350 per week equals $163,800 annual gross rent at 100% occupancy before operating costs.
9 suites × $350 × 52 weeks = $163,800
This is not a forecast or promised return. Actual rents, occupancy, expenses, finance costs and capital values vary.
What must be deducted?
- Vacancy and leasing costs
- Specialist property management
- Utilities, internet and common-area costs
- Cleaning, gardening and consumables
- Repairs, maintenance and replacement reserves
- Insurance, council and regulatory costs
- Interest, tax and acquisition or development costs
What are the key risks?
- Demand risk: achievable rent and occupancy may be lower than assumed.
- Operating risk: expenses and management intensity may be higher than expected.
- Regulatory risk: planning, building, registration or occupancy requirements may change.
- Liquidity and valuation risk: a specialised asset may have a narrower buyer or lender market.
- Development risk: approvals, construction cost, delays and defects can affect outcomes.