Succeeding at buy-to-let without nasty surprises

Gross yield is annual rent / purchase price. It's what agents quote. A 2-bed at €180,000 let for €800 a month shows 5.3 % gross. Nice on paper.

Net yield strips out non-recoverable charges, council tax, landlord insurance, management fees, average vacancy, smoothed works. On the same property, you usually land at 3 to 3.8 %.

Net-net yield (after tax) also strips income tax (foncier or BIC depending on regime) plus social contributions. Depending on your bracket, you drop again to 1.5 to 2.8 % net-net. That's the number to compare against a savings account or a property fund.

Properties that let fast and resell well are the ones the local middle class wants: 2-bed or small 3-bed in a lively area, close to transport, schools, shops. Avoid very large places that struggle to let, and oversupplied studios in university towns.

EPC is now decisive. F or G properties are being progressively banned from rental (G in 2025, F in 2028, E in 2034). Either buy planning the works, or buy already at E minimum, ideally D or C.

Beware of buildings with very low advertised charges: often a condo undercharging that will hit hard later. Better a normal-charge condo well run.

Rental demand, demographics, jobs, infrastructure: the four pillars of a good rental market. Favour towns with growing population, diversified economy and an ongoing transport project (tram, rail line).

Avoid declining mono-industry towns where a factory closing can empty the market in two years. Avoid towns that built too many new programmes without underlying demand. You're buying stock that stays empty.

On the neighbourhood, go there several times. If you'd hesitate to live there, your tenants will too. A gentrifying area often offers the best yield-plus-uplift mix.

Three big French regimes: micro-foncier (50 % allowance, up to €15,000 of rent/year), real foncier (deduct all actual costs), LMNP (non-professional furnished, depreciate the property and deduct costs). The right choice depends on your situation and bracket.

LMNP under real regime is often unbeatable for furnished: accounting depreciation of the property (over 25 to 30 years) + deduction of all costs. Taxable result often zero or near zero for 10 to 15 years.

Foncier deficit (real regime, unfurnished) lets you offset up to €10,700 a year against global income, useful if you're doing big works. But the property must stay let unfurnished at least 3 years after.

Credit leverage is buy-to-let fuel. Borrow as much as possible on the longest reasonable term, especially in a mid-rate context. A broker saves you 0.2 to 0.5 % rate, several thousand euros over the term.

Put in a minimum deposit: 10 to 15 % to cover notary fees and security, no more. Keep cash for surprises and to multiply deals.

Borrower insurance is 0.15 to 0.40 % of capital per year. Use delegation: switching can save several thousand euros over the term.

A month of vacancy a year is 8.3 % of rent lost, plus charges you keep paying. Average vacancy of 3 to 5 % is normal. Beyond that, net yield collapses.

To minimise voids: price right (not over), property in good shape at check-in, well-presented ad, fast on applicants, picky on dossiers but not over-the-top. A bad tenant always costs more than a vacant month.

Check the town's average vacancy rates in public sources. Above 7 %, the market is in oversupply, be cautious.

Self-management saves 6 to 9 % of rent excl. tax but takes time: tenant search, inventories, receipts, chasers, tax returns, small works. Budget 30 to 80 hours per year per unit.

Agent management (classic rental management) costs 6 to 9 % excl. tax + setup fees (one month's rent). You gain time and legal expertise, lose yield. Judge against your availability.

For short-let (Airbnb), commission runs 20 to 30 % under full management, against gross income often 50 to 100 % higher. First check your commune allows it and the condo doesn't ban it.

Cash-flow = rent collected - mortgage payment - non-recoverable charges - council tax - insurance - vacancy - tax. Truly positive cash-flow means the result is > 0 every month on average.

Most recent purchases run negative cash-flow of €100 to €400 a month in year one. Not a problem in itself if you know and accept it, but many investors hadn't done the math.

Really good deal: zero or slightly positive cash-flow net-net from year one, on a property with 10-year uplift potential. Run a spreadsheet before every offer.