Four strategies
Most private investors choose one of four approaches. They differ in return, time commitment and risk, and not every approach suits every area equally well.
Holiday letting
You let the property for short stays in a tourist area. This usually gives the highest gross yield, but requires more management and is exposed to seasonal swings. In Andalusia the property must be registered as a VFT (vivienda con fines turísticos, a dwelling for tourist use) and meet minimum requirements such as air conditioning in the living areas and a first-aid kit. Some municipalities and owners' associations impose further restrictions, so have this checked before you buy.
Long-term letting
You let to a single tenant on an annual contract. Income per night is lower, but management is simpler, vacancy is more limited and cash flow is more predictable. For investors who want to spend little time on their property, this is often the calmer option.
Buying off-plan
You buy a property that is still under construction and pay in instalments during the build. This means less equity is needed at the outset. During this phase the return comes from any increase in value up to completion; rental income only follows afterwards. Have the purchase contract and payment schedule reviewed by an independent lawyer. You can read more in buying off-plan.
Buy, renovate and sell
You buy a property in need of work well below market value, carry out a full renovation and sell within roughly nine to fifteen months. This offers the largest potential margin, but also the greatest exposure to building costs and delays. According to estimates from our local partners, the purchase price usually needs to be 25 to 35 per cent below the going price per m² in the area. The fixed costs of buying and selling, including the transfer tax ITP (impuesto de transmisiones patrimoniales, 7 per cent in Andalusia as of 2026), notary, land registry, holding costs and the selling agent's commission, can together amount to 12 to 15 per cent of the purchase price. A full mid-range renovation costs an indicative 750 to 950 euros per m², and considerably more if the structure or services need replacing. See also renovating.
What drives gross rental yield
Gross rental yield is annual rental income divided by the purchase price, before costs, taxes and vacancy. Several factors determine where a property lands on that scale.
- Purchase price relative to rent. Areas with a lower price per m², such as Manilva and Torremolinos, generally show a higher gross yield. In more expensive areas such as Marbella, rents are higher, but prices are higher still.
- Rental demand. Tourism across much of the year, proximity to the beach and the airport, and the mild climate all help to limit vacancy.
- Property type and letting model. Holiday letting usually earns more per year than long-term letting, at the cost of more expense and effort. Layout matters too; read why two-bedroom apartments are popular with investors.
- Capital growth is separate from rent. An area with strong price growth, such as Estepona, does not automatically have the highest rental yield. Any rise in value is only realised when you sell, and it is never certain.
How to read the price and yield table
The table on this page shows, for each area, an average asking price per m², the price trend and a gross rental yield. Please bear the following in mind.
- Indicative. The figures are estimates from our local partners. They are not official transaction data from the cadastre or the land registry.
- Based on asking prices. The estimates rely mainly on published asking prices. The price at which a property actually sells may differ.
- Averages. Within a single municipality there are large differences by neighbourhood, location and property type. An average says little about one specific home.
- Price trend. This compares the most recent level with the same month a year earlier. The figures are recalibrated every quarter and indicate a direction, not a count of sales.
- Gross. The rental yield is calculated before all costs and taxes.
- Not a valuation. The figures are not intended as a valuation for tax, mortgage or legal purposes. For that you need an approved valuer (tasador homologado); see valuations and values.
An explanation by area is given in the article yield by area.
From gross to net
Between the rent that comes in and what you keep lie a number of costs:
- service charges of the owners' association (comunidad);
- IBI (impuesto sobre bienes inmuebles), the annual municipal property tax;
- buildings and liability insurance;
- maintenance and replacement of furnishings;
- management, cleaning and guest handover for holiday lets, see property management;
- vacancy between lettings;
- IRNR (impuesto sobre la renta de no residentes), the income tax for non-residents. As of 2026 this is 19 per cent of net profit for residents of the EU or EEA, and 24 per cent of gross income for others, with no guarantee.
According to our local partners, net yield therefore usually comes out 1.5 to 2.5 percentage points below gross yield. On a sale, the plusvalía (a municipal tax on the increase in land value) and tax on the capital gain also apply; see capital gains tax for non-residents. One-off purchase costs are covered on the costs page.
Risks
- Regulation. Rules on tourist letting can vary by municipality and by building, and they change over time. Read more about the tourist licence.
- Seasonality and vacancy. Income fluctuates through the year, particularly with holiday letting.
- Construction and renovation. Budget and schedule overruns, hidden defects that only appear once work begins, and permits that take longer than expected.
- Market and liquidity. Prices can cool, and a property cannot be sold overnight. During a renovation your capital is tied up without any rental income.
- Financing. Interest rates and terms affect the return on your own equity; see financing.
Please seek advice from an independent lawyer or tax adviser on the legal and tax implications. A comparison of the two letting models is set out in holiday versus long-term letting. If you would like to compare areas, start with the overview of areas.
How CostaVista can help
CostaVista guides you in setting a strategy that fits your budget and goals, in choosing an area and through the purchase itself, together with our local partners and independent specialists. Please contact us for an initial conversation, or browse the current listings.
General information, as of October 2026. This is not legal, tax or financial advice; for your own situation, consult an independent specialist.