Comparing investment properties
A higher yield does not automatically mean a better property.
The first comparison needs only a few figures. Before buying, check how reliable those figures are and which expenses still need to be included.
What does gross rental yield show?
It compares annual rent before expenses with the purchase price: monthly rent × 12 ÷ purchase price × 100. This puts listings on a common starting point. It does not include purchase costs, non-recoverable expenses, possible rental gaps, maintenance, financing, or taxes.
Example using fictional listings
Property A costs €250,000 and has monthly rent of €1,000: 4.8%. Property B costs €300,000 and has monthly rent of €1,200: also 4.8%. Equal gross yields do not tell you which property leaves more after costs and financing.
What should you check for both properties?
| Figure | Question for your comparison |
|---|---|
| Price and purchase costs | Which additional acquisition costs apply to each property? |
| Rent | Is the stated rent supported by documents or only an expectation? |
| Ongoing costs | Which expenses remain yours and cannot be passed on to tenants? |
| Condition and reserves | Which repairs or larger projects may be due? |
| Financing | How do interest, repayment, and equity change monthly cash flow? |
What does monthly cash flow tell you?
For an initial calculation, subtract the monthly costs you must cover, an assumed maintenance reserve, and the loan payment from monthly rent before expenses. The result shows whether money remains each month under those assumptions or whether you need to contribute more. Principal repayment is part of the loan payment: it reduces available cash while also reducing debt.
Simplified example before taxes
€1,200 rent − €150 non-recoverable costs − €100 reserve − €850 loan payment = €100 monthly cash flow. A rental gap, repair, or different financing terms can change the result.
Positive cash flow alone does not describe total return or risk. Compare both properties using clear assumptions and calculate a more cautious case as well, such as lower rent or higher costs. Taxes and individual circumstances need a separate assessment.
From listing to decision
Use the comparison above to view two listings with the same basic figures. Then take one property to calcimo and add known costs and your planned financing. Repeat for the second property using the same assumptions. Missing information becomes a question for the documents, viewing, or professional advice.
Published by Nadja Neb, operator of calcimo. This guide explains a calculation method and is not individual buying, tax, or financial advice.