Net cash flow is the only income number that matters on a Dubai rental property. Everything else is a sales pitch.
Net cash flow is total income from the property minus every recurring expense: rent in, against service charge, chiller bills if separately metered, maintenance reserve, rental management fee (typically 5% of gross rent if you use an agency), Ejari renewal and admin, two weeks annual vacancy provision, insurance, and — for leveraged units — the full mortgage instalment (not just the interest).
On a AED 1.2M JVC 1BR rented at AED 80k annually, with a AED 840k mortgage at 5.2%, a sensible expense stack looks like: service charge AED 13k, maintenance reserve AED 3k, management fee AED 4k, vacancy provision AED 3k, insurance AED 1.2k, mortgage instalment AED 60k. Net cash flow lands around -AED 4k per year. The unit pays for itself on net rent alone, but it doesn’t generate positive cash until appreciation on exit.
That’s fine if the strategy is leveraged appreciation. It’s not fine if the client was told this was a “passive income” investment.
A client last year expected AED 5k/month of net income from a similar configuration. Actual: AED 200/month.
Model net before you sign, not after.
Related: Cash Flow, Net Yield, Holding Cost, Rental Yield.
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