Property and rental investing, a locked flat is not an investment
Egypt has around twenty-five million homes, and millions of them are flats locked up as bare brick, bought by their owners "as savings" and forgotten. Every one of them froze a family's savings in something that earns nothing, can't be sold in a week, and asks for maintenance. This lesson separates the property you live in, the property you store value in, and the property that works for you; all three are called "property" and they aren't one thing.
What you'll have at the end
You'll know the three kinds of property, work out the rental yield on any unit in two minutes, and know how to get through this door with a small sum.
Step one: classify what you want before you look at listings
The home you live in is a large expense paid once instead of as rent every month, and it eats maintenance and puts nothing in your pocket. Buying it is a life decision, not an investment decision, and its test is that the price is within reach without freezing everything you own. The property that works is the one rent arrives from every month. And the locked unit "waiting to rise" is a silent asset: it rises sometimes and stalls sometimes, and either way it doesn't feed you.
Step two: work out the rental yield before anything else
The formula: annual rent divided by the full cost of purchase and finishing. A flat that costs you 1,200,000 AED finished and rents at 6,000 a month yields 72,000 on 1,200,000, which is 6 percent a year. In Egypt rental yields usually run between 5 and 7 percent at best; in the Gulf a little higher. That number is what you compare one property with another by, and property with everything else: if the yield is below your household's inflation from lesson 5.1, the property holds value and doesn't grow it.
Subtract one empty month a year, maintenance, and any property fees, then recalculate. The yield that's left is the real one.
Step three: buy with cash, even if it means smaller
At developers, a unit sold for ten million on a ten-year plan sells for about half that in cash. The other half is the price of deferral, and module three showed you what instalments do. The rule: buy what you can pay for in cash, even if that's a smaller flat in a further district, and wait to buy the second from the first one's rent plus your savings. The investor with two small rented flats is wealthier than the owner of a villa on a ten-year plan, and sleeps better.
Step four: turn the silent into the speaking
If you own a bare-brick flat, the most useful move is to finish it, furnish it and rent it. Companies running exactly this in Cairo find a furnished flat rents within days of the finishing being done. The money you put into finishing comes back from rent in a few years, and every rent after that is income. If you can't afford the finishing, sell it and buy something that works with the proceeds.
Step five: enter with a small sum if you can't afford a unit
You don't have to own a whole flat. Fractional property platforms sell stakes in rented units for small amounts and distribute the rent to the stakeholders. Check they're licensed, and that what you're buying is a real ownership stake in a real property under contract, never a promise of a return. And the return here obeys the same formula: rent over price.
Where most people trip
Buying the dream instead of the number. A flat in a beautiful project with an even better advert, at a 3 percent rental yield, on a payment plan. It gets bought because it looks like success. The number in step two is worked out before the site visit, never after, and the visit is cancelled if it doesn't pass.
Tonight's exercise
Take any property listing you see this week and work out its rental yield: the rent of comparable units in the area times twelve, over the full price. Write the percentage. Then ask: is that above my household's inflation?
Questions I get asked
I'm saving to buy a flat to live in, is that an investment?
It's a good decision because it stops a monthly rent, and it's judged the same way: the rent you'd save in a year over the flat's price. If that's close to the rental yield in your area, buying makes sense; if it's far below, renting is cheaper and the difference goes into something that earns.
Property here rises every year, why not buy and wait?
Because the rise doesn't feed you until you sell, and selling needs a buyer at a time when there may be none. Property that earns rises too, and feeds you along the way.
Land on the edge of the city?
A real asset that outruns inflation, as in lesson 5.1, bought with money you won't need for five years and a small share of your third container. Never the whole third.
Log each unit's rent as dated income in Fawatery and its maintenance as an expense under its name, and at year end you see each property's real yield, not the one in the advert
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Based on: "Is there a property bubble in Egypt?" from the Mal Show podcast, and "Financial freedom, wealth books summary".
You now have gold, cash in currencies, a stake in a company, and maybe a property. The next lesson brings all of it into one portfolio where you know how much of each you hold and why.