Before buying a property to let, every investor should be able to calculate, in five minutes, the expected gross and net yield. Here is the formula.
Gross Yield
The simplest formula: (Annual Rent ÷ Purchase Price) × 100. A property bought for €250,000 that generates €1,100/month (€13,200/year) has a gross yield of 5.3%.
Net Yield
The net yield subtracts costs: IMI, service charges, insurance, maintenance, any void periods and the management commission, should you use a professional letting service.
Areas with the Best Yield in Portugal
Areas outside the major urban centres — such as parts of the Costa de Prata and the interior Centro — tend to show higher gross yields than Lisboa or Porto, precisely because the purchase price is lower relative to the rent achieved.
Appreciation vs. Income
Some investors favour capital appreciation (buying where the price will rise most) over monthly income. The right choice depends on the investment horizon and the need for liquidity.
The FOZ VILLA team assesses free of charge the yield potential of any property in our portfolio — talk to us before deciding.
