The results provided by this calculator are for information purposes only and do not constitute legal or financial advice.
The gross yield is calculated simply by dividing the annual rent by the purchase price. It ignores every expense and therefore overstates real profitability. The net yield is far more reliable: it deducts the costs actually borne by the landlord (property tax, non-recoverable service charges, insurance, management, rent default insurance, maintenance, loan interest) as well as the loss caused by rental vacancy.
The calculation weighs the total cost of the project (purchase price, notary fees and works) against the rental income net of the landlord's costs and vacancy:
Net yield = (annual rent − annual landlord costs − vacancy loss) / total project cost × 100
where the total project cost = purchase price + notary fees + works, and the vacancy loss = monthly rent × number of vacant months.
For a rent of €800 per month, i.e. €9,600 of annual income, with €3,000 of annual costs and one month of rental vacancy (€800), the net annual income comes to:
9,600 − 3,000 − 800 = €5,800
For a total project cost of €225,000, the net yield is therefore:
5,800 / 225,000 × 100 = 2.58%
This yield is before tax: to obtain a fully net (net-net) return, you still need to deduct the tax applicable to your rental income.
