What “return” means here.

We sum up the whole investment in one number: the Total Return, which is the Internal Rate of Return (IRR) —the annualised return on your money over the years you hold the flat—.

It combines the two ways of making money from property: the rent you collect each year (net of the mortgage and costs) and appreciation, how much the flat goes up in value until you sell it. Most calculators only look at the first, and an area with low rent but strong appreciation —or the other way round— completely changes the result.

We also measure it against the money you actually put in (the down payment plus purchase costs), not the total price. That is why it is a real, complete return, not the “percentage” you get by dividing rent by price. And it is a realistic historical figure for the area, not a market forecast.

The rent. We estimate what that flat can fetch in that area by cross-checking the declared rents nearby with the official SERPAVI methodology (Spain’s state rent reference index). In stressed rental zones (zonas tensionadas) we apply the legal cap, not the free-market price.

Each year’s costs. We subtract what listings never mention, not just the mortgage instalment:

• Property tax (IBI) and the municipal waste charge
• Community fees and upkeep of the flat
• Home insurance and rent-default insurance
• The months the flat sits empty between tenants
• Management, whether you do it yourself or use an agency

Everything starts from a reasonable estimate for the area and the size of the flat, and everything can be adjusted to what you actually pay.

To close the calculation we assume you sell the flat after 10 years (you can change this). What it is worth when you sell depends on appreciation: we use the average of the last 10–15 years for the area itself (neighbourhood or district when data exists; otherwise the city).

It is a realistic historical rate, not a promise, and we cap it so an exceptional stretch does not inflate the number. We keep it the same for everyone —Pro included— so you compare areas on the same basis.

On sale we subtract its costs (agency, mortgage cancellation) and its taxes, such as the municipal capital-gains tax (plusvalía) and the tax on the gain. That way the IRR is the return you actually take home, not one on paper.

Your taxes. On purchase you pay your region’s tax (transfer tax (ITP) on resale homes, or VAT on new builds). On the rent we apply a standard income tax (IRPF) rate, with the residential-letting reduction where it applies. If you are a non-resident, or you are taxed in the Basque Country or Navarre, the result changes.

Your financing (leverage). By default you finance around 70 % with a mortgage at market rate and put in the rest yourself, plus purchase costs. Using a mortgage amplifies the return, for better or worse.

Renovation. If you plan to renovate the flat, we factor it in — it raises the money you need to get in and changes what you can deduct for tax.

Type of letting. You can model the flat let whole, to a single tenant, or by the room, which yields more but takes more management work.

These are the standard values. In your account you can adjust them to your case and, with Pro, see everything recalculated instantly: the map and every analysis.