Paris 3-bed villa: €519,800 purchase and €3,695 monthly rent — does it work net?

[horizon.common]

The headline return looked better than I expected. Once I allowed for the full cost of buying, however, it became much less convincing.

The property is a 3-bed villa in Paris priced at €519,800, with projected rent of €3,695 a month. That gives annual rent of €44,340 and about 8.5% gross against the price. I have allowed for empty periods, management, regular upkeep and a sizeable repair, and I am not relying on appreciation.

The building seems sound, but I am less confident about recurring local charges and the cost of changing tenants. Which figures should I verify rather than estimate, particularly property tax, insurance and any management or shared-estate charges? What unlevered net return would justify the risk for you?

 

[sasha_grove]

Before choosing a target yield, recalculate against the all-in acquisition cost rather than €519,800 alone. Then deduct the actual property-tax figure, insurance quote and any shared-estate charges, if applicable. Those are easier to verify than a general contingency percentage.

Personally, I would want the conservative case comfortably above 5% net, with no appreciation needed, but the rent assumption is the bigger issue here.

 

[hugo.linden]

Where does the €3,695 come from: an existing lease, an agent’s estimate or the listing itself? Is it furnished or unfurnished, and does that number include charges? The district, floor area and tenancy arrangement matter enormously. A precise projected rent can create false confidence if it has not been supported by genuinely comparable lets.

 

[AlbaCane]

I have compared stable occupancy with frequent tenant changes, but the likely operating pattern is still unclear. That is why I would not choose a minimum net yield yet.

A long tenancy with little management is materially different from a furnished arrangement involving regular gaps, cleaning and reletting fees. I would run both versions and make any offer conditional on the weaker case still producing acceptable cash flow. The turnover case should include lost rent, minor work between occupants and every fee caused by finding the next tenant.

 

[drawTheSparrow]

The single “larger repair” reserve may be hiding rather than clarifying the risk. Split it into likely building components and timing, even if the estimates remain rough. A repair in year one affects the decision differently from the same amount spread across ten years.

I’d calculate: gross rent minus vacancy, management, routine maintenance, insurance, property tax and turnover costs. Divide that by the full cash required to acquire the villa. That gives a cleaner comparison than the headline 8.5%.

 

[drawTheSparrow]

One addition to my previous post: keep financing out of the property-level net yield, then run debt separately. Test the payment at the actual proposed terms and at a less favourable rate, alongside a temporary rent shortfall. Otherwise leverage can make the projected return look excellent while leaving very little cash-flow margin.

 

[hugo.linden]

Agreed on separating financing, but I wouldn’t automatically use a heavy vacancy allowance just because it feels conservative. If the rent is realistic and the tenancy is durable, vacancy may be less important than an underestimated tax bill or capital work. The useful move is to obtain the property’s actual recent costs and inspect what the owner has classified as exceptional rather than recurring.

 

[mapsAndBench]

At €3,695 per month, the deal looks unusually strong on the headline numbers, so I’d verify the income before refining the expense model. Ask for evidence supporting that rent, clarify whether charges are included, and confirm whether it reflects the villa’s present condition. Then collect the exact property-tax, insurance and any shared-charge figures.

If the return only works at the full projected rent with minimal turnover and no early major work, the 8.5% headline is not providing much protection.