Strip away the renders and the brochure adjectives and a leveraged Dubai buy-to-let is one comparison: what the property earns versus what the borrowed money costs. When the first number is reliably bigger, the tenant amortises your mortgage and the asset compounds. When it isn't, you own a subsidised hobby. The entire skill is computing both numbers honestly.
Number one: net yield, not gross
Gross yield — annual rent over price — is the marketing number. Your number is net yield:
Net yield = (annual rent − service charges − management − maintenance − insurance − a vacancy allowance) ÷ total acquisition cost
The deductions are not rounding errors in Dubai. Service charges alone materially separate buildings that look identical on gross yield; management runs a mid-single-digit percentage of rent if you're hands-off; an allowance for vacancy (even a conservative 2–4 weeks a year) belongs in the math whether or not this year needs it; and the denominator is price plus the roughly 7% acquisition costs (itemised here) — you paid them, so they count. A property marketed at 7% gross routinely nets in the region of 5%. That is not a scandal; it is arithmetic the brochure skipped.
Number two: the true cost of the money
Your mortgage rate is the visible part. The honest borrowing cost includes the arrangement and registration fees amortised over your hold, the compulsory life insurance, and — the part that changes the decision — what the rate becomes after any fixed period ends (reversion, explained). An investment underwritten at a two-year teaser is underwritten for two years; the reversion margin is the rate your investment case actually lives on. Test the numbers there, not at the teaser — and remember the bank will stress your affordability at 6.25% regardless (how the stress test works).
The carry: where the two numbers meet
Positive carry — net yield above borrowing cost — means the tenant pays the interest with room to spare, and leverage works for you: your cash returns are amplified because the borrowed portion earns the spread.
Negative carry means you top up the difference monthly, and the case has silently become a pure capital-growth bet financed with paid interest. Sometimes people accept that knowingly; the failure mode is discovering it after reversion.
The Dubai investor's structural realities sharpen the math: investment purchases require 35–40% down (LTV capped at 60–65% for second/investment properties), so a meaningful slice of your return is always unleveraged; and banks will count your rental income toward future borrowing only with haircuts and evidence (how rental income counts) — so portfolio growth depends on each property carrying itself credibly on paper, not just in your spreadsheet.
A worked sketch
AED 1,000,000 apartment, AED 70,000 rent (7% gross). Deduct AED 12,000 service charges, AED 4,000 management, AED 3,000 maintenance/insurance allowance, AED 4,000 vacancy allowance → AED 47,000 net, on ~AED 1,070,000 all-in ≈ 4.4% net yield.
Borrow 60% (AED 600,000): at an illustrative 4.25%, first-year interest ≈ AED 25,000; the net rent covers it about 1.9 times — comfortable carry, and the surplus plus principal repayment builds equity every month. Re-test at a reversion-style rate a point higher: interest ≈ AED 31,000, coverage 1.5× — still standing, which is what a robust deal looks like. A deal that only survives at the teaser was never robust.
Note what drove the result: the building's service charges and the bought price mattered more than anything on the mortgage side. Cheap money cannot rescue an expensive, high-charge unit — but expensive money can ruin a decent one, which is why rate shopping is the investor's one free lunch.
Run your own deal
Our calculator gives the payment and interest split; this framework gives the rest. And if you want the borrowing side optimised — investment-property pricing differs between banks more than owner-occupier pricing does — send us the deal and we will run it across the market, carry math included. Start here.