Rental deal in Paris: €423,200 purchase, €2,786/month — sanity check

L

LocalEcho

Landlord
I can either proceed based on the attractive gross numbers or step back until the costs and rent are firmer, and neither option feels comfortable yet. The property is a two-bedroom Paris townhouse priced at €423,200, with projected rent of €2,786 a month. That produces a headline yield of roughly 7.9%, but not necessarily convincing net cash flow.

I have allowed for vacancy, management, ordinary upkeep and one substantial repair, though the lease length and turnover assumptions could still move the result materially. I also need to test the financing against a higher cost rather than relying on the initial terms. Which ownership expenses or shared-building obligations should I verify from actual bills, and what evidence would you require before accepting the €2,786 rent estimate?
 
The gross arithmetic works: €2,786 × 12 is €33,432, or about 7.9% of the purchase price. But your true cost basis may be higher than €423,200 once acquisition costs are included.

I’d scrutinise property tax, landlord insurance and any owner-only shared-building costs. Even for something described as a townhouse, confirm whether there are communal elements or planned works. Do you have actual bills rather than estimates?
 
Before debating an acceptable net yield, how firm is the €2,786 figure? Is it rent under an existing lease, an agent’s estimate, or an advertised asking rent? Also, is the intended letting furnished or unfurnished, and is the lease length already fixed? Those details affect turnover assumptions and whether the projected rent is sustainable.
 
I wouldn’t focus too heavily on vacancy as a standalone percentage. Tenant turnover can produce vacancy, management work and maintenance at the same time, so treating them as unrelated lines may understate a bad year. Run one scenario with a change of tenant, a gap in rent and meaningful preparation costs all occurring together. Then test the same year with higher financing costs, if debt is involved.
 
The rent needs careful verification. €2,786/month on this purchase price looks attractive enough that I’d want to understand exactly why the seller is leaving that income behind. Check that the rent and proposed lease structure fit the rules applying to the exact address and letting type; Paris treatment can depend on details. That is a local professional question, not something I’d infer from the headline yield.
 
Agreed that the rent should be verified, although an attractive ratio does not by itself mean something is wrong. I’d ask for the current lease, rent-payment history if there is a tenant, the latest property-tax and insurance figures, and records of significant works.

Then rebuild the calculation in euros: annual rent of €33,432, minus each recurring cost and a realistic turnover scenario. Showing the resulting cash amount as well as the percentage makes optimistic assumptions easier to spot.
 
There isn’t one net yield that compensates everyone, because financing can dominate the outcome. I’d calculate net operating income before debt, then separately apply the proposed loan payment and stress the interest rate or refinancing terms. Also compare a normal year with the combined turnover-and-repair year suggested above. If the deal only clears your required return when all twelve months are occupied and nothing breaks, the 7.9% headline is doing too much of the work.
 
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