Rental Investment: Understanding Gross, Net, and Net-Net Yields
Rental yield is a key indicator to evaluate the profitability of a real estate investment. There are several calculation levels, each including different expenses:
Gross yield: ratio between the annual rent excluding charges and the purchase price of the property. It does not take into account expenses or taxes.
Net yield: gross yield minus non-recoverable expenses (property tax, management fees, landlord insurance, routine maintenance).
Net-net yield (or net yield after tax): net yield minus taxation on rental income (30% social contributions included in France).
According to an INSEE study (2023), the average gross yield in major French cities is around 4.5%, while the average net yield is about 3.2%, and the net-net yield drops to approximately 2.2% after taxes.
For a successful rental investment, it is essential to accurately estimate these three levels to avoid overestimating the actual profitability.
110% Financing: Reality and Conditions in 2026
110% financing means the bank finances not only the purchase price of the property but also ancillary costs (notary fees, agency fees, renovation works). This option is attractive for first-time buyers wishing to limit their personal contribution.
In 2026, according to the Bank of France, the average interest rates for a mortgage loan are around 3.1% over 20 years, with a slight increase compared to 2023 (2.4%). Banks remain cautious about 110% financing, mainly accepting it for strong applications with a minimum down payment of 5-10% excluding fees, and for properties located in high-demand rental areas.
Warning: 110% financing increases monthly payments and interest, reducing monthly cash flow, especially if the rent does not cover all charges and repayments.
Property Management: Direct vs Agency, Advantages and Disadvantages
Property management can be handled directly by the owner or entrusted to a specialized agency.
Criteria
Direct Management
Agency Management
Cost
€0 (excluding personal time)
7-10% of rent excluding charges (source: AMF, 2025)
Time invested
significant (tenant search, claims management)
low (full delegation)
Legal expertise
variable depending on the owner
professional, secures leases and collections
Responsiveness
variable
often better, dedicated team
For a first investment, delegating to an agency reduces management risks and saves time, at a monthly cost. Conversely, direct management maximizes cash flow but requires availability and enhanced legal knowledge.
Recoverable and Non-Recoverable Charges: Impact on Profitability
Rental charges are divided into recoverable charges (which the owner can pass on to the tenant) and non-recoverable charges (borne exclusively by the owner).
Recoverable charges: maintenance of common areas, cold water, electricity for common areas, household waste collection tax.
On average, according to an AMF analysis 2024, recoverable charges represent about 15% of rents, while non-recoverable charges can reach 25% of rents, significantly impacting net yield.
Simulation of a Rental Investment in Bordeaux for €200,000
To illustrate these concepts, let's analyze a typical investment in Bordeaux, a dynamic city with a tight rental market.
The cash flow is negative in this scenario, meaning the owner must cover €465 per month to meet charges and loan repayments.
If a €20,000 down payment is included to reduce the borrowed capital to €180,000, the monthly payment drops to about €1,003, reducing the negative cash flow to -€353 per month.
To achieve a neutral or positive cash flow, either a higher rent (around €1,200 excluding charges), partial financing, or reduced charges (direct management, tax optimization) is necessary.
Verdict and Recommendations for Investors in 2026
In 2026, rental investment remains an interesting but complex option, requiring rigorous analysis:
The real net-net yield, after charges and taxes, is often below 3%, limiting maneuvering room.
110% financing is possible but reserved for strong and well-located applications, with a negative impact on immediate cash flow.
Agency management secures the process but reduces profitability; direct management increases cash flow but demands time and skills.
Recoverable charges should not mask non-recoverable charges, which heavily weigh on actual yield.
For a €200,000 investment in Bordeaux without significant contribution, cash flow is negative, confirming the need for a down payment or an optimized rental strategy (shared housing, furnished rental, tax incentives).
TradeXora Advice: prioritize a minimum down payment of 10-20%, perform a comprehensive simulation including all charges and taxes, and assess your ability to manage the property or delegate before committing.
Sources: INSEE (2023), Bank of France (2026), AMF (2025), Bloomberg (2026).
