Potential return on renting out your holiday home in Spain

You want to start investing in property in Spain, que bueno! But an essential part is whether you can make enough money on it, and therefore whether it yields enough. And what yield and returns can you expect in Spain? Pedro will be happy to tell you more.

Return on your property investment in Spain

When you start investing in property in Spain, you probably look firstly at the expected return & yield on renting out your Spanish property purchase. You might have heard of returns up to 9%, but in other situations 5% is more realistic (or sometimes even 0%). Besides gross returns, you also have to deal with costs and charges that you want to recoup or have to take into account. But let's start with revenue.

Type of yield on your property in Spain:

If you want to buy a property in Spain, it cuts both ways:

• You invest in bricks (real estate) and, therefore, in the future. If you invest with a long horizon, you benefit from increase in value of your purchased property.
• Direct rental income. You may want to (partially) rent out your property. The rental income thus pays for your expenses or even provides a positive return. This is direct income.

Although the focus is often on the second factor (rental income), we like to look at a mix between the two variables. Pedro is good at determining your returns. He can use sophisticated tools to assess your potential rental yield. Read on to find out how this came about!

What determines your rental income in Spain?

Basically, determining your rental yield is quite simple. It involves a simple sum (revenues minus costs).

The actual finding out of those costs and revenues however, is the real issue! How many expenses will you have when you buy? And how do you predict rental income? And have you already taken fluctuations or different scenarios into account?

Costs when buying in Spain

In costs or charges, you have to deal with:

• Taxes
• Municipal taxes
• Insurance
• Utilities (gas, water, light)
• Internet and ICT
• Contribution building / Communidad
• Cleaning
• Mortgage charges (if Spanish mortgage or home equity value)

Optional costs:

• Property management service (key service, customer contact, etc.)
• Marketing for your property

Pedro obviously has these costs crystal clear.

Many buyers look mainly at the yield in their calculations. But the costs can add up considerably, so make sure your calculation is well thought out! (or let Pedro help you)

Rental income from your Spanish property

Estimating rental income is less straightforward than you think. You need to take into account:

• The location of your property
• Seasonal fluctuations (winter/summer, etc.)
• Holidays and local festivals
• Average rental prices surroundings
• Property type (flat, house, basic or luxury)
• Type of tenants (couple, family, local or foreign)

Again, Pedro can make a good, realistic assessment.

Additionally, an important factor is the rental licence.

Rental licence or tourist licence in Spain

Although, the bank/mortgage lender generally does not have much requirements on the rental potential of your property, the municipality does play a major role! This is because they provide the property registration details for rentals, which are used to apply for the rental licence for your property. Certain municipalities never issue these, some after a long time, and others again quite quickly.

The building (communidad) of your home or neighbourhood also regularly has a say. They can delay or block a permit.

These variables can have a big impact on your returns. Pedro obviously takes this into account.

Need help with your rental yield calculation of your Spanish real estate?

Pedro is happy to help you calculate these with the rental yield calculation. You enter your address with your personal purchase details. The tool further calculates exactly your expected return in different scenarios. Within 1 working day you will receive all your results.

Start your rental yield calculation

What % returns can I expect in Spain?