Rental Yields in Portugal: What Foreign Investors Can Expect

Gross yields look attractive, but net yield is what you keep — and default risk is the variable most investors ignore. Model it, and your expected yield becomes a realistic one.

The problem

Listings advertise gross yield. Reality subtracts IMI, IRS, maintenance, vacancy — and, occasionally, a months-long default that erases a year of returns in one go.

From gross to real yield

1. Start with gross yield (annual rent ÷ purchase price).
2. Subtract recurring costs: IMI, management, maintenance, insurance.
3. Subtract tax: IRS on rental income.
4. Adjust for risk: factor in the probability and cost of default.

Why default belongs in your model

With 25% of landlords hit by arrears over three years, ignoring default overstates yield. A single €10,800 loss can turn a 6% headline into a 3% reality for that year.

Frequently asked questions

What’s a realistic net yield in Portugal?

It varies widely by city and property, but net is always meaningfully below the advertised gross once costs, tax, and risk are included.