The Altamimi ROI Model:
Full Methodology

Section 01

Model Overview & Design Principles

The Altamimi ROI Model is a year-by-year discounted cashflow simulation for Dubai residential property investment. It covers two investment structures: ready secondary market (immediate rental income) and off-plan (construction period followed by rental and hold).

The model is built around four principles that distinguish it from simpler yield calculators:

1. 1.Full cost basis: All acquisition fees — DLD transfer, agent commission, registration, and mortgage fees — are included in the capital base. Yield calculated on purchase price alone overstates returns by 0.3–0.6 percentage points on a typical transaction.
2. 2.Construction dead-time: For off-plan investments, capital is deployed at launch but generates no income until handover. The model explicitly models this locked-capital period as a drag on total return, not an optimistic gap in the timeline.
3. 3.Unified cashflow: All metrics — net yield, cash-on-cash, DSCR, annualised return — are derived from the same time-series cashflow, not computed from separate formulas with different assumptions.
4. 4.Debt-stack modelling: When mortgage financing is used, the model computes a full amortisation schedule (principal + interest each year), insurance cost, and early settlement penalty at exit — not a simple interest approximation.

The model produces the following outputs: total capital deployed, annual net operating income (NOI), year-by-year equity schedule, projected sale proceeds, total profit, gross yield, net yield, cash-on-cash return, debt service coverage ratio (DSCR), monthly cash flow, annualised total return, and break-even appreciation rate.

Section 02

Capital Deployed — The True Cost Basis

The model begins by computing the total cash the investor must deploy at acquisition. This is the denominator for all return metrics, and it is where most simplified calculators introduce the largest error.

Off-Plan Pricing

For off-plan properties, the model separates the market price at handover (price) from the price actually paid at launch (pricePaid):

The offplanDiscountPct captures the typical discount developers offer at launch relative to expected handover market value. The default is 10%, reflecting Dubai market data from 2022–2026 across mid-market projects. This discount creates a launch gain that is realised at exit, not at purchase.

Acquisition Fees

Acquisition fees are calculated on pricePaid:

The default purchaseCostsPct of 6.5% reflects the full Dubai acquisition cost stack: DLD transfer fee 4.0%, real estate agent commission 2.0%, title deed and trustee fees approximately 0.5%. For mortgage buyers, mortgage registration (0.25% of loan + AED 290) is treated separately (see below).

Equity and Down Payment

For cash buyers, equityOut = pricePaid. For mortgage buyers, equityOut = down. The mortgage registration fee of 0.25% is added separately because it is a government fee payable to DLD, not included in the standard purchaseCostsPct.

Total Cash Deployed

This is the single capital figure used as the denominator in all return rate calculations. For a typical AED 1.5M mortgage purchase with 20% down, this resolves to approximately AED 397,500 — not the AED 300,000 down payment alone.

Section 03

Construction Dead-Time (Off-Plan Only)

For off-plan investments, the model converts the construction period in months to whole years:

During construction years (years 1 through constYrs), the model sets gross rent, net rent, and NOI to zero. The investment is live — capital is deployed, fees have been paid, opportunity cost is accruing — but no income flows.

The total model horizon is:

This means a project with 30 months construction (= 3 years) and a 5-year intended hold actually requires 8 years of total ownership to achieve the stated hold period. The annualised return is computed over totalYrs, not just holdingYears, which significantly reduces the apparent annual return for short planned holds.

Section 04

Annual Cash Flow Model

For each year y in the rental period (years constYrs + 1 through totalYrs), the model computes:

Gross Rent with Growth

Year 1 of the rental period uses annualRent directly. Each subsequent year applies compound growth. The default rent growth rate is 3% per year, reflecting RERA-tracked rental index growth across Dubai from 2018–2025 (excluding the 2022–2023 spike which is treated as non-recurring).

Effective Rent (Post-Vacancy)

Vacancy is expressed as a percentage of gross rent lost to void periods. The default of 6% equates to approximately 3 weeks per year between tenancies. This is below the Dubai secondary market average of 7–9% because properties purchased with investment intent typically have professional management that reduces voids.

Net Operating Income (NOI)

Management fees (default 7% of effective rent) cover the letting agent's collection and tenant management services. Service charges are entered as an annual AED amount and deducted in full, because they are fixed costs that accrue regardless of occupancy. The model does not apply a percentage of value for service charges — it uses the actual amount, which varies from AED 3,500/year (International City) to AED 65,000/year (DIFC) depending on community.

Year-by-Year Property Value

Capital appreciation compounds on the full market price (price), not the discounted launch price. This correctly models that the asset appreciates from its market value, while the investor's cost basis was lower (capturing the launch gain separately at exit).

Section 05

Mortgage Amortisation

When useMortgage = true, the model runs a month-by-month amortisation schedule to compute the exact interest cost, principal reduction, and remaining balance at each year-end.

Monthly Payment (PMT)

This is the standard PMT formula. For zero-interest edge cases, the formula degrades gracefully to loan / nper.

Annual Debt Service

For each calendar year, the model iterates through 12 monthly payment cycles, tracking interest accrued and principal repaid:

This produces the exact remaining balance and total annual debt service (annualDebtService) at each year-end — not an approximation. The schedule terminates when balance reaches zero, handling overpayment scenarios correctly.

Mortgage Insurance

UAE mortgage protection insurance (mandatory for most lenders) is modelled as a declining annual cost, since it is typically calculated on the outstanding balance. Default is 0.4% per year of outstanding balance.

Net Cash Flow per Year (Mortgaged)

A negative annual cash flow means the rental income does not cover mortgage payments — the investor is topping up monthly. The cash-on-cash return and DSCR metrics quantify how severe this shortfall is.

Section 06

Exit / Terminal Event Model

At the end of year totalYrs, the model computes exit proceeds from the hypothetical sale of the property.

Sale Price

Sale Proceeds (Net of Costs)

Selling costs (default 0%, but typically 2% agent commission) are applied to the gross sale price. The remaining mortgage balance is repaid in full at sale. The early settlement penalty (default 1% of outstanding balance, standard UAE bank clause) is deducted separately — this is a cost that most ROI calculators omit entirely.

Launch Gain (Off-Plan Only)

For off-plan investments, the model tracks the embedded launch gain:

This gain is not realised as cash at launch — it is only captured when the property is sold above the cost basis. It is surfaced as a separate line item so investors can distinguish between genuine market appreciation and the launch discount effect.

Section 07

All Derived Metrics — Formulas & Definitions

Section 08

What the Model Does Not Compute

The following factors are not modelled and must be assessed separately:

1. 1.True XIRR / time-weighted IRR: The annualised return metric uses a CAGR approximation. A full XIRR computation would assign precise discounting to each year's cashflow. For holds under 15 years in a relatively stable income environment, the difference is typically under 0.5 percentage points. For irregular cashflow profiles, use a dedicated XIRR tool.
2. 2.Post-handover supply risk: Dubai off-plan projects often see rental yields compress 12–24 months after handover as competing supply from the same development reaches the market simultaneously. The model assumes a stable starting rent — it does not adjust year-1 rent downward for post-handover supply pressure. Investors should apply a conservative initial vacancy (8–12%) for developments in high-supply communities.
3. 3.Refinancing: The model assumes the mortgage remains on its original terms for the full term. Refinancing after the fixed-rate period (typically 3–5 years in UAE) can significantly change the debt service profile. The mortgage calculator at /mortgage handles refinancing scenarios.
4. 4.Currency risk: All values are in AED. For investors holding USD, GBP, EUR, or INR, the AED/USD peg eliminates USD currency risk. Non-USD investors face the residual peg risk (unlikely but non-zero) and must convert AED returns to their home currency independently.
5. 5.Tax in home country: Dubai levies no income tax on rental income and no capital gains tax. However, the investor's home country may tax foreign rental income or property gains. UK, US, and EU residents should consult a tax advisor. This model presents pre-home-country-tax returns.
6. 6.Renovation, furnishing, fit-out costs: One-time setup costs for short-term rental (STR / Airbnb) strategies — furniture, appliances, DTCM permit fees — are not modelled. For furnished units, add these costs to totalCashIn and reduce initial-year income to net of furnishing amortisation.

Section 09

End-to-End Worked Example

The following traces every calculation for a representative off-plan investment.