Work out your real return in six steps
Advertised yields are gross, here as everywhere in property. Here is how to turn that number into what actually reaches your account.
Gross and net are both useful
Almost every property listing in the world quotes a gross yield: annual rental income divided by purchase price. That is the industry convention, and it is genuinely useful — it lets you compare two properties quickly without knowing anything about how either will be run.
What it cannot tell you is what you will bank. That depends on how you operate the property, and only you know that. So the gross figure is the seller's job, and the net figure is yours.
Here is how to do yours.
What sits between gross and net
Management: 15-25% of gross. Bookings, check-ins, cleaning between guests, the 2am phone call. If you are not on the island, this is not optional.
Booking channel commission. Airbnb and Booking.com take their cut first.
Maintenance. Tropical climate, salt air, a pool. Budget it as a recurring line, not as an occasional surprise. Beachfront costs more than inland.
Tax on rental income, plus the annual property tax (PBB).
The empty months. The biggest variable by far. Peak-season occupancy applied to twelve months describes a year that does not exist — for any property, in any market.
The six steps
Take the gross figure from the listing, then:
- Multiply by realistic annual occupancy, not peak-season occupancy
- Subtract the booking channel commission
- Subtract management
- Subtract maintenance and utilities
- Subtract tax
- Divide what is left by the total you paid — price, plus notaris fees, plus transaction taxes, plus setting up the structure
What comes out is your net return. Do it for every property you are comparing and you will often find the ranking changes: the cheapest entry price is not always the best net yield, and the highest gross is not always the winner either.
Run those six steps on the listing you are looking at right now. If the seller cannot give you occupancy, the cleaning fee and the management percentage, you cannot do step 2, 3 or 4 — and a return you cannot compute is not a return, it is a hope. That is a finding in itself, and it is worth more than any worked example someone else prints for you.
The one that changes everything: lease term
If you buy a 25-year leasehold with no agreed renewal, the asset is worth nothing at the end of the term. That reframes the whole calculation — you are no longer looking at "yield plus appreciation" but at "yield minus amortisation".
A property returning 8% on a lease that expires worthless in 25 years is a very different investment from one returning 8% on something you can sell on. Run both. And ask for the renewal clause, at an agreed price, in writing — a lease with one is worth substantially more than a lease without.
Why we lay this out
Because the buyer who does this arithmetic before buying is the buyer who stays happy, refers people and comes back for a second property. The one who does it afterwards does none of those things.
Every yield on this site is labelled as the advertiser's estimate of gross return, which is exactly what it is. Take that number, run these six steps, and you will know more about the deal than most people who buy here.
If you would rather not do it alone, we can run the numbers with you before you commit to anything.
General information, not legal or investment advice. Rules and figures change: check anything that affects a decision with a licensed notaris or lawyer before you sign.