Start: where the 12−15% figures come from
Real estate investments are sometimes advertised as a source of 12−15% per annum. Those figures can look realistic and in some cases are indeed achievable. Developer, co‑founder and CEO of Fero Development, Viktor Zabojenko, discussed this in a video for Finance.ua.
According to him, higher returns do not appear out of nowhere. They can be related to entering a new market, a unique project concept or the use of leverage. So it’s not automatic to assume any offer above 10−12% is fraudulent, but you also should not accept such promises without verification.
Next step: checking the financial model
Zabojenko recommends starting by dissecting the project’s financial model. An attractive headline number says nothing by itself if you can’t see what it’s built from. You need to understand which rental rates are assumed, what occupancy is forecast and what expenses are planned.
It is important that each element of the model can be verified. If the yield is based on optimistic forecasts for market growth or tourist flows, the risk of error increases. By contrast, a model where parameters can be compared with real data from competitors gives a much more realistic picture.
Next: how it’s calculated using net operating income (NOI)
One of the key metrics is net operating income (NOI). To calculate it you take into account the daily rate, actual occupancy, operating expenses and taxes. These figures determine whether the claimed 12−15% will turn into real income for the investor.
An investor should dig into every cost item. How much will staff cost, what commissions will the operator receive, what taxes and maintenance expenses are expected. It also makes sense to compare occupancy and rates with operating assets in the same market to test the forecasts’ credibility.
Then: risks that can change the picture
Even if the financial model looks detailed and well justified, it offers no guarantees. Zabojenko draws attention to the asset’s liquidity and safety as factors that affect the final result. The market can become oversupplied, staffing problems may arise, or operational risks can reduce actual returns.
This means the main question for an investor is not only what percentage is promised, but where that figure comes from and whether each component can be verified. As Zabojenko says, “It can be real, but not for everyone who promises such returns — in reality it won’t be like that. In most cases it’s fake.”
What to focus on now before investing
Before you put money into a project on the local short‑term apartment rental market or a small hotel, check a few concrete points. Look at competitors’ rental rates in the same market, compare actual occupancy figures and ask for a breakdown of expenses in the financial model.
You should also compare the projected yield with alternatives. If you are offered high percentages but are not given clear detail, the risk rises sharply. If you prefer, you can start with a more conservative strategy or choose projects where liquidity and transparency of metrics are important.
For more on investment reliability criteria and how to spot a financial pyramid, see the video on Finance.ua and the editorial materials.
