How to Underwrite a Phnom Penh Rental in 30 Minutes

A one-bedroom advertised at a high single-digit gross yield can settle at roughly half that once three honest costs enter the model. That gap is where most first-time buyers of a rental lose money they never watch leave the account. Underwriting is simply finding the second number before you wire the first deposit, and it does not take a weekend.

A verdict, not a model

A disciplined buyer can reach a defensible decision on most units in about half an hour. Deals fail on a handful of inputs, not on the forty rows of a spreadsheet built to make them look finished. The aim of the first thirty minutes is not to prove a deal works. It is to retire the weak ones quickly and cheaply, because a unit you reject in half an hour costs you half an hour, while one you talk yourself into can cost you for years. The habit that matters is running the same inputs in the same order every time, so the weak deals expose themselves before emotion arrives.

Start with net, not gross

Gross yield is the figure on the listing. Net yield is the figure you keep, and converting one into the other is usually the only move a marginal deal survives. Subtract the costs that never appear in the headline: building management and sinking-fund contributions, an allowance for the weeks a unit sits empty between tenants, letting fees on each new tenancy, and routine maintenance. On a serviced condominium those items can remove several points of yield. A unit that looked like a strong gross return can underwrite to something far more ordinary. That is not automatically a reason to walk. It is a reason to know, because a modest net yield with real capital growth behind it is a different instrument from the same figure in a district with flat demand. Three costs in particular get rounded toward zero by optimistic buyers, and all three are real:

• Vacancy. No unit rents twelve months a year. Model eleven, sometimes fewer where new supply is heavy.
• Management. Whether you pay a company or pay with your own hours, budget it at a market rate, because the day you stop self-managing the deal still has to stand.
• The reserve. Furniture wears, air-conditioning fails, the sinking fund gets called. Set nothing aside and you have only postponed the invoice.

Stress the exit before you sign the entry

Ask what happens to cash flow if achievable rent comes in well below the listing assumption, if the unit sits empty through a soft season, and if comparable supply in the same building doubles over your hold. If the deal still clears your minimum return, it has a margin of safety. If it only works at full occupancy, top rent and a rising market, you are underwriting a best case the market rarely pays out on schedule. Pass those gates and the remaining hours move to verification: the title, the management accounts, the real rent roll, the developer's delivery record. That is due diligence, and we refuse to start it until the numbers have asked us to.