Rental deal in Lisbon: €529,000 purchase, €2,128/month — sanity check / price-per-square-metre

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I’m deciding whether to pursue a 4-bed villa in Lisbon at €529,000. Expected rent is €2,128 per month, giving a headline gross yield of roughly 4.8%. The building appears sound, but property tax could materially alter the result.

My conservative model already allows for vacancy, management, routine maintenance and a separate larger-repair reserve. Which local cost am I most likely to be underestimating, and what net yield would justify the risk? I also can’t assess the price per square metre properly from these figures alone.
 
To clarify, I’m initially evaluating it as a cash purchase, then I’ll test financing separately. I’m not trying to make the deal work by assuming perfect occupancy. My concern is whether tax, insurance or tenant turnover will take a bigger bite than the general allowances suggest.
 
The annual rent is €25,536, so the 4.8% gross figure is sound. The more important missing fact is how firm the €2,128 estimate is. Is that supported by comparable long-term rents, or merely an asking estimate? At this starting yield, even modest optimism on rent can change the conclusion.
 
I would not use four bedrooms as a substitute for floor area when judging value. Until you have the villa’s area and genuinely comparable properties, price per square metre cannot tell you much.

For the income model, get the property-specific annual tax amount and an insurance indication rather than applying broad percentages. Also clarify what parts of the villa you must maintain yourself. A building that looks sound can still need irregular spending on the roof, exterior or services, which is why your larger-repair reserve matters.
 
I disagree that property tax is necessarily the biggest threat here. One vacant month removes €2,128 before any turnover work, and management costs may depend on rent actually collected. I’d run separate cases for zero, one and two empty months, then add a distinct turnover allowance rather than hiding both inside one vacancy percentage.

Financing could be more decisive still. Once you have possible loan terms, stress the payment rather than relying on the cash-purchase yield.
 
That is the sensible next step. I would pause the decision until three items are pinned down: evidence supporting €2,128/month, the villa’s actual recurring tax and insurance costs, and its usable floor area. Keep vacancy, tenant turnover and major repairs as separate lines so one generous assumption cannot conceal another.

I would not choose a target net yield without comparing the result with your financing and alternatives. At a 4.8% gross starting point, though, there is not much room for unexplained costs.
 
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