Property Yield Calculation
Property Yield Calculator
| Property Value | |
|---|---|
| Monthly Rent | |
| Annual Expenses (e.g., maintenance) | |
| Annual Property Tax (ENFIA) | |
| Annual Tax | |
| Gross Rental Yield | |
| Net Rental Yield |
The results provided by the property yield calculator should not be viewed in isolation but always in comparison with alternative options. Ideally, you should evaluate multiple properties suitable for income generation, in simple terms, properties capable of providing you with passive income on a monthly or annual basis.
These properties may be purely residential, commercial, or even land. What is certain, however, is that if you do not possess the necessary expertise, it is advisable to seek guidance from a real-estate investment specialist. YOUR HOME SOLD has the experience and specialization to guide you in selecting your next investment property in the local market of Athens and the Northern Suburbs.
See what the acquisition costs are depending on the property’s purchase price.
Rental Yield: The Key Metric That Measures Your Property Investment
The rental yield of a property—commonly referred to simply as “yield”—is one of the most critical indicators for any investor evaluating a real estate purchase for income generation. In essence, it measures the percentage return a property generates relative to its acquisition cost, based on the rental income it produces.
It is a fundamental tool for assessing the viability and profitability of an investment, enabling investors to compare different opportunities and make well-informed decisions.
To calculate it, we divide the annual net rental income (i.e., total rents received minus operating expenses such as taxes, common charges, insurance, and maintenance costs) by the property’s total value (purchase price plus transfer costs and any renovation expenses). The result is expressed as a percentage. For example, if a property generates €6,000 in net annual rent and was purchased for €100,000, its yield is 6%.
The selection of an investment with a strong rental yield depends on multiple factors, including the property’s location, rental demand in the area, condition of the property, and future market prospects.
For instance, in areas with high tourist activity, short-term rentals may offer significantly higher yields but also involve greater operational costs and management requirements. Conversely, long-term leasing may provide more stable—though sometimes lower—returns, but with reduced risk and less intensive management.
It is important to note that a high rental yield is not always the sole determining factor. Lease stability, tenant reliability, and the potential for capital appreciation (increase in the property’s market value) are equally important components of a successful investment strategy.
Market research and guidance from experienced real-estate professionals are essential for selecting a property that offers the optimal rental yield and aligns with your investment objectives.
Property Yield – Frequently Asked Questions (FAQ)
How Are Rental Income Earnings Taxed?
Rental income in Greece is taxed according to three tax brackets, as follows:
- Annual income ≤ €12,000 → tax rate 12%
- Annual income €12,001 – €35,000 → tax rate 35%
- Annual income ≥ €35,001 → tax rate 45%
How Do We Calculate the Property Rental Yield?
The “rough” calculation is the quotient of the annual rental income divided by the purchase price or current market value of the property, multiplied by 100 to express the result as an annual percentage.
This figure represents the gross rental yield, before taxes and other expenses.
Yield % ＝ (annual rent ÷ property value) × 100
How Is the Net Rental Yield Calculated?
The logic is identical to the gross yield calculation, with the difference that you must deduct all annual expenses that affect the property. These may include:
- Property tax (ENFIA)
- Maintenance costs
- Acquisition costs
Yield % ＝ (annual rent ÷ (property value – ENFIA – maintenance – acquisition costs)) × 100
You can use the rental yield calculator above to estimate your tax liability as well as the gross and net yield of your property.
What Is Considered a Good Rental Yield?
There is only one accurate answer: It depends. A number of techno-economic factors determine whether an investment is profitable, such as:
- The current economic environment
- Market trends and future expectations
- Deposit and lending interest rates
If we must reference specific figures, a good net yield today is considered anything above 5%. Example:
Using the calculator with the following inputs:
Property value = €100.000
Monthly rent = €450
Maintenance expenses = €300
ENFIA = €200
…you will obtain a net yield of over 4%, significantly higher than typical bank deposit rates today.
Should I Take Out a Loan to Buy an Investment Property?
If you lack the necessary knowledge and experience, it is advisable to consult a qualified real-estate investment specialist.
“Broadly speaking,” if the net rental income generated by the investment property is sufficient to cover the future loan installments, then yes, it may be a viable option.
However, you must also factor in:
- Renovation and improvement costs
- Acquisition expenses
- Possible vacancy periods
- Potential tax or regulatory changes
- Fluctuations in lending rates
- Risk of unpaid rents
- Eviction-related costs
All the above must be considered over the entire duration of the loan in order to reach safe conclusions and make the best possible financial decision.