Adding to a property portfolio you already own
The second purchase is a different problem from the first. You are no longer asking whether property works; you are asking whether this unit beats the one you already own, what the rental index will let you charge, and whether the answer is to buy nothing and sell something.
Read these in this order
9 frameworks. Each one ends in a number rather than an opinion.
-
01Cash on cash return
Cash on cash return is the annual cash left after every running cost and every mortgage payment, divided by the cash you actually put in, and it is the only property return figure that answers what your own money earned.
-
02The capitalisation rate
A capitalisation rate is a property's net operating income divided by its price, which makes it a measure of what the building earns rather than what you earn, because it deliberately excludes your mortgage, your acquisition costs and your tax position.
-
03Dubai rent increase caps and the RERA rental index
How much a Dubai landlord may raise the rent, in five bands against the official index, and what it costs at the centre to refuse an increase over the cap.
-
04Break-even occupancy in Dubai
Break-even occupancy on a Dubai holiday home is 67.9% against the annual tenancy it replaced, not the 28.2% every page prints against zero.
-
05Short let versus long let in Dubai
A Dubai short let that grosses AED 86,250 more than the annual tenancy on the same one bedroom can end up netting AED 3,850 more, once the operator share, the cleaning, the utilities the law will not let you bill to the guest, the tourism dirham and the furnishing capital have come out.
-
06Price per square foot in Dubai
Dubai law lets a developer deliver a unit up to five percent smaller than the area you bought and owe you nothing for it, which on a AED 1,500,000 one bedroom is AED 75,000 of area paid for and not delivered, and raises the price per foot actually paid by 5.26%, so the denominator of this calculation carries a one-sided error band larger than the entire Land Department registration fee.
-
07Concentration limits
A concentration limit is a rule set in advance about how much of your net worth any single asset, building, tenant, employer or currency may represent, and its purpose is to make the decision while you are calm rather than while you are being persuaded.
-
08Off-plan payment plans in Dubai
Two off-plan payment plans quoted at the same headline price are not the same price, because money paid later costs less in present value, and the gap between a front loaded plan and a post handover plan is commonly five to fifteen percent of the headline figure, while the same plan also fixes, by statute, what a default costs you.
-
09The cost of selling property in Dubai
Coming out level on a mortgaged one bedroom bought at AED 1,500,000 in Dubai takes a resale at AED 1,648,915, a rise of 9.93%, which is more than the 9.72% the round trip costs because the agency commission and its VAT are charged on the price the property sells for rather than the price it was bought at.
Run your own numbers
Nothing is stored and nothing is sent anywhere. The arithmetic runs in your browser.
Gross yield is what the brochure shows you. This is what reaches your account.
What a landlord may lawfully raise the rent to on renewal, under Decree 43 of 2013.
Two plans with the same headline price are not the same price.
Terms you will meet
Each is one sentence, then the trap it hides.
Not quite you?
Investments Playbook publishes educational research and general information. Nothing on this site is personal investment advice, a solicitation, or a recommendation to buy or sell any asset. Property and securities can fall in value. Past performance does not predict future returns. Figures shown are indicative and may be delayed. Always take regulated professional advice before acting.