"My property earns me €30,000 a year." That's often the first phrase a landlord utters when discussing profitability.And this is almost always where the calculation goes astray, because gross income says nothing about what's actually left in your pocket.
The calculation of rental yield is not just about dividing rent by purchase price. Among gross, net, and post-tax figures, three very different numbers are hidden behind the same operation. Before embarking on a rental investment project, here's how to distinguish them, with a concrete example and the expenses most landlords forget.
The Gross Return, the Reassuring Number
The gross return is the simplest to calculate, and it's the one everyone cites. It relates your annual income to the purchase price of the property.
The formula fits into one line: annual income divided by the purchase price, multiplied by 100.
Let's take an example. An apartment purchased for €300,000 including fees, which generates €30,000 in revenue over the year, shows a gross return of 10%. The figure is flattering, giving an initial idea of the potential of a real estate investment, but it ignores everything that truly weighs on the operation.
It's a useful indicator for quickly comparing two properties, provided you never stop there.
The Net Return, What Really Matters
The net return starts from the same principle, but it deducts the expenses before performing the calculation. It's the one that reflects the reality of your investment..
The formula becomes: annual income minus expenses, divided by the total cost of the property, multiplied by 100.
Let's revisit our example. Out of the €30,000 revenue, deduct €12,000 annual expenses. That leaves €18,000, or a net return of 6%. We are far from the initially announced 10%, and it's this 6% that truly describes the property's performance.
The gap between the two figures is entirely due to the expenses, and it's precisely there that the success of a real estate investment plays out..
To see how this method is applied in practice to the Cannes property market, read our case study on the profitability of holiday rentals in Cannes.
The Expenses Almost Always Forgotten
This is the blind spot of the calculation. In traditional and short-term rentals alike, the list of expenses is longer than most people think.
You must consider the property tax, non-recoverable co-ownership charges, landlord insurance, management fees, maintenance, and minor repairs, as well as any loan-related expenses if the purchase was financed.
In short-term rentals, additional items specific to this activity are added: cleaning between each stay, linen and its maintenance, consumables, platform commissions, tourist tax, and concierge fees if you delegate. These operating costs are what most distinguish the yield of a furnished tourist rental from a traditional lease.
Forgetting even two or three of these lines is enough to completely skew the calculation and overestimate your real estate investment.
The Net-Net Yield, After Tax
There's one last step, most often overlooked: tax. This indicator, the net-net yield, incorporates taxation and gives the figure actually available.
In furnished rentals, two main regimes apply. The micro-BIC regime applies a flat deduction on the revenue, while the actual regime allows you to deduct actual expenses and amortize the property. Since the Le Meur law, the micro-BIC deduction for a non-classified tourist rental is 30%, compared to 50% for a classified rental.
The chosen regime directly changes the taxable amount, and therefore the final yield. That's why the net-net yield is closely dependent on your personal situation and deserves validation with a specialized accountant.
The Specificity of Short-Term Rentals
In short-term rentals, the yield calculation itself requires more finesse than a simple monthly rent. Annual income depends on three variables: the average nightly rate, the occupancy rate, and the actual number of nights rented.
The same apartment can show vastly different results depending on how it is operated. In Cannes, a night during the Festival or MIPIM does not equal a night in November, and a 70% occupancy rate does not yield the same figure as a 40% rate. This makes the calculation more complex than in traditional rentals, but also reveals a much higher potential.
In other words, in short-term rentals, the outcome of a rental investment depends not only on the property, but on the quality of its management.We illustrate this with real figures in our case study on the profitability of a vacation rental in Cannes.
Our Approach at UPSTAYS
This is precisely where our expertise lies. Across our 150 properties in Cannes and on the Côte d'Azur, we work on each variable of the calculation: a price adjusted daily according to the season and major events in Cannes, an occupancy rate enhanced by carefully crafted listings and positive reviews, and controlled expenses through the mutualization of services.
We never aim to inflate a gross income. What interests us is the figure that remains once all expenses and taxes are deducted, the one that truly ends up in our owners' accounts. This is the net return they track with us, month after month, not a promise displayed in January.
Because a well-located real estate investment is not enough. In Cannes, between the density of the real estate market and strong seasonality, it's the management that makes the difference in the actual yield..
Are you wondering what your property could really earn in Cannes? Discover our property management and concierge service in Cannes, or download our guide for owners we detail the calculation item by item and the levers that make the difference on your investment.
YOUR OWNER QUESTIONS, ANSWERED
When discovering a luxury concierge service, a few questions naturally arise. Here are some useful insights to better understand our approach.
How to Calculate Gross Rental Yield?
Gross yield is calculated by dividing the annual income by the purchase price of the property, then multiplying by 100.
- Annual income: total rents or revenue over the year
- Purchase price: ideally including notary fees and renovation work
- Formula: (annual income / purchase price) x 100
- Example: €30,000 for a property at €300,000 yields 10%
It's a useful first benchmark for comparing real estate properties, but it does not reflect the actual yield since it ignores expenses.
What is the Formula for Yield Rate?
The yield rate relates what the property generates to what it cost, on an annual basis.
- Gross: (annual income / purchase price) x 100
- Net: (annual income minus expenses / purchase price) x 100
- Net-net: the rate net once taxes are deducted
- The same property thus shows three rates, from most flattering to most realistic
For a rental investment, it's the net-net that should guide the decision, not the gross displayed in the window.
What is the Difference Between Gross and Net Yield?
Net yield includes expenses, unlike gross yield, which does not take them into account.
- Gross simply relates income to the price paid
- Net first deducts all operating costs
- The gap between the two can represent several points of yield
- Net better reflects the actual performance of the property
Relying solely on gross yield almost always leads to overestimating an investment's return.
What Expenses to Deduct to Calculate Net Yield?
All expenses related to the ownership and operation of the property must be deducted.
- Property tax and non-recoverable co-ownership fees
- Landlord insurance and management fees frais de gestion
- Maintenance, repairs, and equipment renewal
- In short-term rentals : cleaning, linen,consumables, commissions, and tourist tax
- Possible credit fees related to financing
The more comprehensive the list, the closer the calculation comes to the reality of your operation.
What is a Good Rental Yield?
A good yield depends on the type of property, its location, and the rental method, there is no universal figure.
- Traditional rental is often in a moderate range
- Short-term can aim for a higher yield in tourist areas
- A yield should always be appreciated after expenses and taxes
- Risk, vacancy, and management also come into play
In Cannes, the potential of short-term rentals is real, but it is captured with precise management rather than with a simple good location.
Does Taxation Change the Yield of a Furnished Rental?
Yes, taxation directly influences the final rental yield, known as the net-net yield.
- The micro-BIC applies a flat deduction on revenue
- The actual regime allows you to deduct expenses and amortize the property
- Since the Le Meur law, the deduction for a non-classified furnished is 30%
- A classified furnished retains a 50% deduction
The choice of regime depends on your situation, and it deserves a conversation with a specialized accountant for optimization.
Every property is unique. Whether you would like to estimate your home's rental potential, increase your income or hand over part or all of the management, our teams are here to discuss your project.
Based in Cannes for over 10 years, we help owners make the most of their property and manage their holiday rentals.
Fill in the form and we will get back to you shortly.
LET'S TALK ABOUT YOUR HOLIDAY RENTAL PROJECT
Get an initial evaluation of your property's holiday rental potential, including expert insights into its market positioning, peak rental periods, and the best management approach to maximise its performance.