To achieve a lucrative return on investment (RoI), the location of the property (whether it is an attractive travel destination all year round, attractive to several target groups such as cyclists, beach tourists, etc.) and the interior design play a crucial role. They determine the maximum daily rate that can be charged, and the property’s rental capacity. In the latter regard, the rental agency involved plays an important part. Experience tells us that during the first year, when the property is new to the market, there are not as many lettings as in subsequent years, because good properties have a high rate of repeat guests. Premium properties can achieve letting capacity of up to 75% p.a. The average gross return is generally in the region of 4 to 6 percent over the long term.
Three sample calculations:
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1.) Country house San Lorenzo (Majorca Northeast)
Well-kept country houses in a good location are often booked in the summer time of families and are popular holiday homes in the off-season for hikers and cyclists. Ref: 101645
This magnificent stone country house with 255 m² living space, 4 bedrooms and 3 baths located in the middle of a green and peaceful paradise not far from Son Carrió. The new owner expects more than 14,000 sqm, a Garden of Eden, where you can enjoy nature and tranquility. Despite the idyllic are all famous tourist places easily reachable. Manacor is only 5 minutes away by car and the fashionable medieval town of Arta is only 15 kilometers away. Several wonderful beaches and four-maintained golf courses are nearby and complete the attractive leisure activities.
During the last years, this over a hundred years old country house has been carefully renovated, conserving a lot of details. All installations and electrical works are up-to-date.
Sample calculation:
- Purchase price: 545.000,00 €
- Incidentals (electricity, water, waste, municipal taxes): 3.000 €
- Letting in weeks: 20 until 30
- Average daily rate: 250 € until 290 €
- Gross rent: approx. 40.600 € until 52.500 €
- Rent incidentals approx. 30% = approx. € 11,760: 12.180 € until 15.750 €
- Profit before tax approx.: 25.420 € until 33.750 €
- Gross return %: 4,66 % until 6,19 %
2. House, Playa de Muro (North), 4 bedrooms, pool, close to beach
The Playa de Muro on Mallorca’s north coast is one of the most beautiful beaches of the island. A vacation home near the beach can get good returns. Ref 104185
This all-round complete holiday home is located within walking distance of one of the most beautiful beaches in Mallorca – the “Playa de Muro”. On two levels plus basement, this perfect holiday villa comprises four bedrooms, two bathrooms, a large living room and a separate, equally spacious kitchen area. The property also boasts a practical garden area around the house, a private pool, a covered sitting corner and a BBQ area.
Sample calculation:
- Purchase price: 475.000,00 €
- Incidentals (electricity, water, waste, municipal taxes): 2.800 €
- Letting in weeks: 20 until 30
- Average daily rate: 260 € until 280 €
- Gross rent approx.: 39.200,00 € until 54.600,00 €
- Rent incidentals approx. 30% (agency, administration, cleaning): 11.760 € until 16.380 €
- Profit before tax approx.: 24.640 € until 35.420 €
- Return in % approx.: 5,19 % until 7,46 %
3.) Luxury villa by the sea, 5 bedrooms, pool, sea view
5-star comfort in your own home – even in the holiday rental are increasingly homes with luxurious furnishings in demand. Ref 102880
The elegant villa is located in the coastal town of Canyamel.This charming house is built in a Mallorca style and fit perfectly into the hillside. Among a splendid garden and sea views, offers the house a spacious living area of the highest quality, which is partly equipped with high-quality antiques and art objects. The villa, with its five bedrooms and four bathrooms has total of about 358 sqm. these are distributed on the first floor with a large entrance hall, which adjoins the living room first. On this level there is also a kitchen, a bedroom with en suite bathroom and a huge roof terrace with spectacular sea views.
The staircase leads down into the main floor. Here are two bedrooms and two bathrooms en suite.Furthermore, there is a cosy living room with fireplace, a fully equipped kitchen, dining area and laundry room. The living room opens its doors to the pool and to the spacious outdoor terrace, which is dominated by the outdoor kitchen and barbecue.
The technical equipment is of the highest quality and guaranteed owners and holiday guests a comfortable stay on the highest level.
Sample calculation:
- Purchase price: 1.250.000 €
- Incidentals (electricity, water, waste, municipal taxes): 3.200 €
- Letting in weeks: 20 until 30
- Average daily rate: 450€ until 460 €
- Gross rent approx: 64.400 € until 94.500 €
- Rent incidentals approx. 30% (agency, administration, cleaning): 19.320 € until 28.350 €
- Profit before tax: approx. 41.880 € until 62.950 €
- Gross return: 3,35 % until 5,04 %