TL;DR: Quoted gross 6.4% → real net-net 3.8% after vacancy, charges, IR. 10-year exit with +3%/yr appreciation and TPI: IRR 7.9%. Without leverage: 5.1%. Mortgage roughly doubles equity IRR.
The asset and the deal
| Property | T3 apartment, 95 m², 4th floor, lift, parking |
| District | Maarif, Casablanca (Bd Bir Anzarane) |
| Purchase price | 1,550,000 MAD (≈ 16,300 MAD/m²) |
| Acquisition fees | ~95,000 MAD (4% reg. + 1% notary + 1% conservation + 0.5% misc) |
| Entry refurb | 120,000 MAD (paint, kitchen, bathroom) |
| Total operation cost | 1,765,000 MAD |
| Financing | 1,085,000 MAD (70%) loan, 20 yr, fixed 5.3%, monthly ≈ 7,350 MAD |
| Equity | 680,000 MAD |
Step 1 — Rent & gross yield
Maarif observed monthly rent for refurbished T3 95 m²: 8,250 MAD/month. Annualised: 99,000 MAD.
Gross / purchase price: 99,000 / 1,550,000 = 6.39%
Gross / total operation cost: 99,000 / 1,765,000 = 5.61%
Always reason on total operation cost, not headline price.
Step 2 — Real annual charges
| Item | Annual amount |
|---|---|
| Vacancy (1 month / 12) | −8,250 MAD |
| Non-recoverable copro charges | −2,400 MAD |
| Owner habitation tax (TSC) | −1,850 MAD |
| Landlord insurance | −950 MAD |
| Property management (8% of rent) | −7,920 MAD |
| Capex provision (~1% of value) | −15,500 MAD |
| Total charges (excl. tax) | −36,870 MAD |
| Net operating rent | 62,130 MAD |
Net operating yield: 62,130 / 1,765,000 = 3.52%
Step 3 — IR taxation on rents
Morocco grants a 40% abatement, then progressive IR. For 99,000 MAD gross:
Taxable base = 99,000 × 60% = 59,400 MAD
IR (assumed 30% marginal bracket with other income) ≈ −13,800 MAD/yr
Without other income: IR near 0. High-income brackets: up to 38%.
Step 4 — Net-net & cash-flow
Net-net: 62,130 − 13,800 = 48,330 MAD/yr (= 48,330 / 1,765,000 = 2.74%)
Post-mortgage cash-flow: 48,330 − (7,350 × 12) = −39,870 MAD/yr. Monthly savings effort ≈ 3,320 MAD.
But ~60% of year-1 mortgage payment is principal repayment (= equity build-up), only 40% is interest. Year-1 ending: outstanding ≈ 1,050,000 MAD.
Step 5 — 10-year exit & IRR
Conservative assumptions: +3%/yr appreciation (consistent with BAM IPAI for Casa residential 2015-2025), rents indexed +2%/yr, vacancy held at 1 month/yr.
| Asset value at year 10 | 1,550,000 × 1.03¹⁰ ≈ 2,083,000 MAD |
| Outstanding loan at yr 10 | ≈ 700,000 MAD |
| TPI on exit (20% of gain) | (2,083K − 1,550K) × 20% ≈ −106,600 MAD |
| Net cash on exit | ≈ 1,276,000 MAD |
Equity IRR (680K invested, 1,276K exit, ~−400K cumulative cash-flow): 7.9%/yr net
Unlevered IRR (cash purchase 1,765K): ≈ 5.1%/yr net
Leverage adds ~280 bps but introduces vacancy/rent decline risk.
Sensitivity tests
- 2 months vacancy/yr instead of 1: IRR falls to 6.5%
- 0%/yr appreciation instead of 3%: IRR collapses to 1.8%
- Capex doubled (15K → 30K/yr): IRR 5.9%
- Exit at year 6 (no TPI exemption — buy-to-let): IRR ≈ 6.2%
- Rent indexed +3%/yr instead of 2%: IRR rises to 8.5%
Expert verdict
Solid but unspectacular. 7.9% net equity IRR is fair given the low risk profile of Maarif residential (high liquidity, very low vacancy). Better than many bond funds, less than European REITs/SCPI, but with a tangible asset and inflation hedge. Major sensitivity: appreciation. With 0% capital growth, IRR drops to 1.8% — the entire business case rests on capital appreciation, not net yield.
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