SOBE Knowledge
What Is Rental Yield?
The annual rental income a property produces, as a percentage of what it cost — quoted gross by sellers, survived net by owners. The difference is the whole subject.
What rental yield means
Rental yield is a property’s annual rental income expressed as a percentage of what the property cost.
It is the standard first measure of an income property — and the most commonly flattered one. The version quoted in listings is almost always gross yield: rent against price, nothing subtracted. The version that pays your bills is net yield: what survives after vacancy, community fees, IBI, insurance, maintenance and management, measured against every euro you actually invested.
On the Costa del Sol the distance between the two is not a rounding error. It is routinely a third of the income.
How to calculate rental yield
Net yield = (net operating income ÷ total capital invested) × 100
Net operating income (NOI) is rent after vacancy and all running costs, before any mortgage. Total capital invested is the purchase price plus Spanish acquisition costs — typically 9–14%, which the tax calculator breaks down — plus renovation and furnishing.
The two formulas differ in both the numerator and the denominator. That is why they diverge so sharply: the honest version earns less and cost more.
A worked Marbella example
A simplified, hypothetical long-term let:
Gross yield: €26,400 ÷ €500,000 = 5.3% — the listing figure.
Then reality: 8% vacancy leaves €24,288; community fees (€2,400/yr), IBI (€900), insurance and maintenance (€1,200) and 10% management take it to a net operating income of roughly €17,400.
Net yield: €17,400 ÷ €580,000 = 3.0%. Nothing was hidden — the costs were simply never in the first number.
Try it with your own numbers
SOBE Buy-to-Let Yield Calculator
Enter a real price and rent, and watch gross become net, line by line — with district presets from Estepona to La Zagaleta.
What eats the yield on the Costa del Sol
Community fees do most of the damage, and they vary more than rents do: under €150 a month in a simple building, €500–1,500+ in a full-service resort with spa, security and gardens. Two identical apartments with identical rents can hold entirely different net yields for this reason alone.
Vacancy is the quiet line. A few weeks between long-term tenants is realistic; for short-term lets, applying peak-season occupancy to the whole year is the classic first-time error — the shoulder months decide the year.
Management runs 8–12% for long-term lets and 20–30% for short-term, and IBI, insurance and maintenance arrive whether the property is let or not.
Rental yield vs ROI vs cap rate
Rental yield looks only at income against cost, in a single year. ROI counts the whole holding period — income, amortisation and any capital gain or loss. A cap rate is net yield’s institutional cousin: NOI against market value rather than your historic cost. Read yield to judge the income engine, ROI to judge the whole investment.
Four ways a yield quote misleads
1. It is measured against the price, not your capital. Spanish acquisition costs add 9–14% to the denominator before renovation. A yield quoted on price alone starts flattered.
2. It annualises the best season. August occupancy at August rates, multiplied by twelve, is a fiction. Ask for the twelve-month history, not the peak.
3. It is gross dressed as net. “Yield” without the word net in front of it almost always means before every cost that matters.
4. It ignores what the money could not buy. A high yield in an illiquid building with a looming derrama is not a better investment than a moderate yield in a community that holds its value. Yield is one instrument on the panel, not the panel.
Frequently asked questions
What is a realistic net rental yield in Marbella?
It depends more on the community than on the district. Long-term lets across the Costa del Sol commonly show 4-6% gross; what survives to net depends chiefly on community fees, which range from under 150 euros a month in simple buildings to 500-1,500+ in full-service resorts.
Why is my net yield so much lower than the figure I was quoted?
Quoted yields are usually gross, and usually calculated on the purchase price rather than on total capital invested, which in Spain includes 9-14% in acquisition costs plus any renovation. Both differences push the same direction.
Should the mortgage be included in rental yield?
No. Net yield is measured before financing so properties can be compared on their own merits. The effect of a mortgage shows up in cash-on-cash return and monthly cash flow, which the calculator reports separately.
Are short-term lets always higher-yielding than long-term?
Higher gross, not necessarily higher net: management of 20-30%, more wear, more vacancy risk and licensing requirements narrow the gap. Model both honestly before choosing.
Are the figures tax-adjusted?
No. Yield is conventionally quoted pre-tax. Rental income is taxed at 19% on net income for EU/EEA non-residents and 24% on gross for others; resident landlords letting long-term receive a substantial reduction. Model your case with an advisor.