Break-Even Analysis for a Cambodian Condo Investment

Quick answer: Net rent recovers the cost of buying a Phnom Penh condo in roughly 2.5 to 3 years on central stock, where acquisition costs run 9% to 10% of the price once transfer tax, legal fees and furnishing are counted. The capital itself returns at sale, and from 1 January 2027 the gain carries 20% tax.

Break-even is the question buyers actually ask, phrased as something else. When somebody asks whether a Cambodian condo is a good investment, they usually mean: how long before this thing has paid for itself, and what do I get back at the end.

This page answers both, at four price points, with the numbers our own models use. Financing is deliberately excluded, because it is compared separately in cash or mortgage.

How long does a Phnom Penh condo take to break even?

Break-even on acquisition costs takes 2.5 to 3 years of net rent on central Phnom Penh stock, because costs run 9% to 10% of the purchase price while net yield sits in the 3% to 5% band. Foreign buyers should separate two questions: recovering the cost of buying, and recovering the capital itself.

Question	What it measures	Typical answer
When are acquisition costs repaid?	Transfer tax, legal, furnishing against net rent	2.5 to 3 years centrally
When is the capital repaid from rent alone?	Full price against net rent	20 years or more at 3% to 5% net
When does the position turn positive overall?	Rent plus sale proceeds against total outlay	At exit, and it depends on price
What does the 2027 tax change?	20% of the gain at disposal	Reduces the exit leg

Three framing rules keep the model honest, and they belong at the top of any buyer scenario:

• Rent repays the cost of buying, not the asset. Property is not a bond.
• Every figure below is net of tax, because tax is charged on gross rent at 10% or 14%.
• Exit costs belong in the same model as entry costs, not in a footnote.

What goes into the model, entry to exit

A complete break-even model has three blocks: what you pay to acquire, what you keep each year, and what you lose at exit. Foreign buyers who model only the first two are the ones surprised by the sale, particularly from 1 January 2027 when capital gains tax at 20% applies to the gain.

Block	Line	On a $130,000 unit
Entry	Purchase price	$130,000
Entry	Transfer tax at 4% of assessed value	About $5,200
Entry	Legal review	$1,500 to $3,000
Entry	Furnishing package	$3,500 to $12,000
Annual	Net rent after all deductions	About $4,860
Exit	Agent commission	Typically about 3%
Exit	Capital gains tax from 1 January 2027	20% of the gain

Build it in this order, which is the methodology we apply to every file:

1. Total outlay equals price plus transfer tax plus legal plus furnishing.
2. Annual net rent comes from the deduction stack, not from a gross yield.
3. Cost recovery equals acquisition costs divided by annual net rent.
4. Total return adds the sale proceeds after commission and tax.

Cost detail sits in the closing costs guide, furnishing in the furnishing guide, and the deduction stack in the net versus gross guide.

Furnishing is the line buyers most often leave out, and on a rental unit it is not optional. Unfurnished stock lets more slowly in Phnom Penh and to a narrower tenant pool, so a package of $3,500 to $12,000 is part of the cost of producing rent rather than a lifestyle choice. Treating it as acquisition cost rather than as capital improvement also keeps the model honest, because furniture depreciates across the hold and rarely adds to the sale price. On the $130,000 example, adding a $6,000 package lifts total outlay to about $143,000 and pushes cost recovery from roughly 2.7 years to about 3.9 years, which is the largest swing any single optional decision makes to this model, larger than a full percentage point of yield.

Break-even at four price points

Cost recovery is not linear across price points, and it moves in the opposite direction to what foreign buyers assume. A $50,000 studio carries proportionally similar acquisition costs against a much smaller rent, so it recovers those costs no faster than a $130,000 mid-market unit despite a higher gross yield.

Unit	Acquisition costs	Annual net rent	Years to recover costs
$50,000 studio, outer district	About $5,000	About $2,300	Roughly 2.2 to 3.5
$90,000 one-bedroom, mid market	About $8,600	About $4,100	Roughly 2.1 to 3.0
$130,000 one-bedroom, central	About $13,200	About $4,860	Roughly 2.7 to 3.5
$200,000 prime one-bedroom	About $19,500	About $7,900	Roughly 2.5 to 3.2

Read the table with two cautions:

• The ranges widen with vacancy, which is the variable that moves the answer most.
• Furnishing is a choice at the low end and effectively compulsory at the top end.

Absolute cash is what separates these rows. The $50,000 studio recovers its costs in a similar number of years and produces about $2,300 a year while doing it, which barely covers a service charge, an annual filing and a single flight to inspect the unit. The $130,000 unit takes marginally longer on paper and produces $4,860, which funds the same obligations with something left. Buyers optimising the recovery year sometimes end up in the row with the least usable cash, which is the same trap that makes percentage yield misleading in the district tables. The row to choose is the one whose annual cash covers the annual cost of owning from abroad, with something left. Price points and what each buys are set out in what a condo costs in Phnom Penh.

Insider tip: run your break-even twice, once at one void month and once at three. If the answer moves by more than a year, your position depends on tenant continuity rather than on the asset, and the building matters more than the price you negotiated.

What vacancy does to the break-even year

Vacancy is the single largest variable in a Cambodian break-even model, because each empty month removes rent while the service charge and sinking fund keep running. On a $130,000 unit at $750 a month, moving from one void month to three costs about $1,500 of annual net rent and pushes cost recovery out by roughly a year.

Void months a year	Annual net rent	Years to recover $13,200 of costs
0.5	About $5,200	About 2.5
1	About $4,860	About 2.7
2	About $4,100	About 3.2
3	About $3,360	About 3.9

Three ways to defend the assumption, all on the pre-purchase checklist:

1. Verify the tower’s void history before you buy, per the occupancy guide.
2. Budget a manager who remarkets 6 weeks before a lease ends.
3. Model 2 void months if the building’s listing count is high.

Vacancy compounds quietly, which is why it deserves the stress test rather than a single assumption. One extra void month reduces annual net rent by about $750 on this unit and adds roughly 5 months to cost recovery, and the same month recurring every year for 7 years removes over $5,000 from the total return. None of that appears in a gross yield figure, and none of it is visible in a brochure that assumes 12 months of occupancy. Foreign buyers who model 2 void months as the base case and 1 as the optimistic case land closer to what actually happens than buyers who do the reverse, and they price the building rather than the brochure.

Market averages are not a substitute for this. Reported occupancy of 75% to 80% describes the city as a whole, while your model needs the figure for one building, which is obtainable in an afternoon from portal listing counts and two signed leases in the same tower. Buyers who import the market average into a break-even model are effectively assuming their unit performs like a weighted blend of stock they would never buy, including unsold developer inventory that has never been marketed. The narrower figure is both easier to obtain and more defensible when you re-run the model in year three and want to know whether reality matched the plan.

How the 2027 capital gains tax changes the exit

Capital gains tax at 20% of the gain applies to property disposals from 1 January 2027, which changes the exit leg of every model built before that date. Foreign buyers should compute the tax against a documented purchase price, because an undocumented cost base raises the taxable gain rather than lowering it.

Exit scenario on a $130,000 purchase	Sale price	Gain	Tax at 20%
Flat market	$130,000	Nil	Nil
Modest appreciation	$145,000	$15,000	$3,000
Strong appreciation	$170,000	$40,000	$8,000
Sale below purchase	$120,000	Nil	Nil

Three practical consequences for the exit checklist:

• Documentation from day one protects your cost base, as set out in the repatriation guide.
• Agent commission of about 3% comes out before the tax calculation matters to you.
• Tax on the gain is not a reason to avoid gains, and it is a reason to model the exit honestly.

Rate detail and the wider regime sit in the January 2027 capital gains guide, and exit timing in the exit strategy guide.

What a full seven-year model looks like

A seven-year hold on the $130,000 example returns roughly $34,000 of net rent plus the sale proceeds, against a total outlay near $143,000 including furnishing. At a flat sale price the position ends modestly ahead; at a 10% gain it ends clearly ahead, and the tax takes a fifth of that gain.

Line	Amount
Total outlay, price plus costs plus furnishing	About $143,000
Net rent, 7 years at about $4,860	About $34,000
Sale at $143,000, commission about 3%	About $138,700 net
Capital gains tax at 20% on a $13,000 gain	About $2,600
Position after 7 years	Roughly $27,000 ahead

Three things that model does not promise, and each is a red flag if a seller implies otherwise:

• A buyer at your asking price inside a 6 to 18 month window.
• Rent that keeps pace with inflation in an oversupplied market.
• Appreciation, which in Phnom Penh has been flat to soft in recent years.

Resale evidence sits in the resale liquidity guide, and the market-level verdict in the 2026 investment verdict.

Sale price is the assumption doing the heavy lifting in any seven-year model, and it is the one nobody can verify in advance. The table above uses a flat $143,000 exit deliberately, because Phnom Penh prices have been flat to soft while supply cleared, and a model that only works with 4% annual appreciation is a bet on price rather than a property plan. Run yours at three exits: flat, minus 10%, and plus 10%. If the position still makes sense at the flat case and survives the negative one, the appreciation case becomes upside rather than the premise. That is the only version of this arithmetic we are willing to put in front of a client, and it is the version that leaves a buyer unsurprised in year seven.

What if you use the unit yourself?

Owner use changes the model from an income calculation into an avoided-cost calculation, and for lifestyle buyers it usually improves the answer. Six weeks a year in a $130,000 unit replaces perhaps $2,500 to $4,000 of hotel and rental spend, which is comparable to the net rent the same unit would have produced.

Use pattern	What the model measures	Rough annual value
Let all year	Net rent	About $4,860
6 weeks own use, let the rest	Rent for 10 months plus avoided cost	Similar, with more control
3 months own use, let the rest	Rent for 9 months plus avoided cost	Slightly lower, higher convenience
Own use only, no letting	Avoided cost, no rent	$2,500 to $4,000, plus carrying costs

Three points a lifestyle buyer scenario still has to model:

• Charges run whether or not the unit is let, so the service charge and sinking fund never pause.
• Furnishing to your own taste and furnishing for a tenant are not the same brief.
• Own use during peak letting months costs more rent than the same weeks off season.

Mixed use is where a short-term letting model sometimes earns its keep, because a unit blocked for personal use for 6 weeks cannot hold a 12 month tenancy. That trade, including the operating load and the seasonality, is compared in Airbnb versus long-term letting. What does not change is the entry arithmetic: transfer tax at 4%, legal fees and furnishing still land in year one, and they still take 2.5 to 4 years of value, rent or avoided cost, to recover.

Advantages and disadvantages of a long break-even

A break-even measured in years rather than months is normal for property, and the Cambodian version has specific features worth naming.

Advantages	Disadvantages
Costs recovered from rent inside about 3 years	Capital returns only at sale
No mortgage carry on a cash purchase	Rent growth has been muted
US dollar income, no currency mismatch	20% tax on the gain from 2027
Model is simple and checkable	Sale window of 6 to 18 months

Buyer scenarios

Four profiles read the same model differently.

1. Income buyer, 10 year horizon. Costs recovered by year three, rent thereafter is return on a paid-for position.
2. Buyer needing capital back in 3 years. The model does not work, because capital returns at sale into a slow market.
3. Lifestyle buyer using the unit. Break-even is partly avoided cost, not rent, and the model should count nights used.
4. Yield-maximising buyer at $50,000. Recovery is similar on paper and the absolute cash is thin, so read the district comparison first.

Red flags in a break-even pitch

Four presentation habits make a break-even look shorter than it is, and foreign buyers can catch all four in the arithmetic. Each red flag removes a cost that is real: the 4% transfer tax, the 10% or 14% rent tax, one to three void months, or the 20% tax on the eventual gain.

Red flag	What it hides	What to ask for
Gross rent used instead of net	Management, tax, charges	Full deduction stack
Full occupancy assumed	1 to 3 void months	Building void history
Acquisition costs excluded	9% to 10% of price	Transfer tax, legal, furnishing
Exit ignored	Commission and 20% tax	Exit-inclusive model

Ask for the model itself rather than the conclusion:

1. Net rent, with every deduction listed.
2. The void assumption, in months.
3. Acquisition costs, itemised.
4. The exit leg, including commission and tax.

Our underwriting runs every Phnom Penh file exit-inclusive, because a model that stops at the rent line flatters a market with a slow resale. The funding question sits in cash or mortgage, the district yield bands in the district comparison, and the minimum sensible ticket in the minimum investment guide.

Frequently Asked Questions

How long does a Cambodian condo take to break even? +

Acquisition costs of roughly 9% to 10% of the price are recovered from net rent in about 2.5 to 3 years on central stock. The capital returns at sale, not from rent.

What is included in a break-even model? +

Transfer tax at 4%, legal fees and furnishing at entry; net rent after management, vacancy, charges and rent tax annually; commission and 20% capital gains tax at exit.

Does one void month change the break-even year? +

Yes. Each void month on a $130,000 unit removes about $750, so two voids instead of one pushes recovery out by roughly 6 to 9 months.

How does the 2027 capital gains tax affect it? +

It applies 20% to the gain on disposals from 1 January 2027, so the exit leg needs the tax computed against a documented purchase price.

Is break-even the same as profit? +

No. Break-even is when rent has repaid the cost of buying. Total return needs the sale price, commission and tax, which this page models separately.

What break-even is realistic at the bottom of the market? +

Similar in years and much thinner in cash. A $50,000 studio produces about $2,300 a year, which barely covers charges, filings and an inspection trip.

Can you model break-even on a specific unit? +

Send the price, size, quoted rent and furnishing status. We return the recovery year, the exit-inclusive return and the vacancy assumption used.