That is true in many countries. In Vietnam right now it is not, and the gap is large. This article shows the gap in numbers, then says what to do about it.
A note for foreign buyers first: Vietnamese banks rarely lend to foreigners for property. If you borrow at home or use your own capital, the same logic applies. Replace the loan rate with what that money costs you or could earn elsewhere.
Two numbers side by side
The first is the loan rate: currently around 10% to 11% a year once promotional rates end.
The second is the rental yield: a year of rent divided by the purchase price. These figures come from real listings, matched district by district and then combined by province:
| Province | Sale price (VND m/m2) | Rent (VND k/m2/month) | Gross yield |
|---|---|---|---|
| Hai Phong | 38.5 | 205 | 7.4% |
| Binh Duong | 23.1 | 96 | 5.2% |
| Da Nang | 52.6 | 180 | 4.6% |
| Ho Chi Minh City | 55.6 | 186 | 3.8% |
| Hanoi | 80.2 | 177 | 2.5% |
Put them together: in Hanoi you borrow at 10.5% to buy an asset that yields 2.5% a year. That 8 point gap is exactly what you top up every month.
How much, in money
A VND 5 billion home in Hanoi, 70% borrowed (VND 3.5 billion), repaid over 20 years:
| Item | Per month |
|---|---|
| Bank repayment | VND 35m |
| Rent received | about VND 10.4m |
| You add | almost VND 25m |
That is nearly VND 300 million a year, and VND 1.5 billion over five years: close to a third of the property's value, not counting the VND 1.5 billion deposit you paid at the start.
The same sum in Hai Phong, at 7.4% yield, brings the monthly top up down to about VND 11 million. Still negative, but a bearable kind of negative.
The uncomfortable part
People who buy in Hanoi to rent out are not buying for cash flow. They are buying because they believe prices will rise, and rent just softens the cost of holding.
Saying this is not meant to put you off. It is so you know what you are betting on. An investment that lives on price growth has to be judged by different questions: when will you sell, to whom, and can you cope if prices stand still for three years.
What to do
If you want positive cash flow from day one: do not use 70% leverage at double digit rates. Either borrow only 30% to 40%, choose a market yielding 6% or more, or buy with cash.
If you want to hold an asset long term: leverage is acceptable, but keep a reserve that covers 24 months of repayments without any rent. People lose homes not because they bought in the wrong place, but because they ran out of cash halfway.
Before signing, do one calculation: estimated rent minus repayment. If the shortfall is more than 30% of your monthly income, the loan is too heavy, however attractive the project.
Instead, if you still want leverage
The maths turns around where rental yields reach 5% or more. In the current data that means Hai Phong and Binh Duong. Two projects there have their own money pages:
Open them, look at the cash flow column, and compare with the Hanoi unit you are considering. The numbers speak for themselves.
When I would change my mind
This article rests on the gap between loan rates and rental yields. It stops being right when:
- Real loan rates fall below 8% a year and stay there for at least a year. Leverage then makes sense again.
- Rents rise faster than prices for three quarters in a row. The system measures yields daily from listings, so this trend shows up early.
- You buy in a market yielding over 6%, such as Hai Phong or Binh Duong above. There the maths is different from the start.
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