Every rental property spreadsheet starts with rent and ends with a number that never survives contact with reality. Here is what belongs in it.

Before you own it at all

Purchase costs are the first surprise: transfer tax, notary, legal fees, mortgage arrangement, survey, and the initial furnishing and repairs to make it lettable. These do not show up in yield calculations because they happen once — but they are permanently part of what you paid.

The running costs everyone forgets

  • Vacancy. Not an accident — a certainty. Tenants leave, and re-letting takes weeks. One empty month a year is roughly 8% off your gross rent.
  • Tenant turnover. Cleaning, repainting, small repairs, letting fees. Turnover costs far more than the void itself.
  • Maintenance. The small, constant stuff. Taps, locks, appliances, a plumber who charges a call-out fee to tighten a nut.
  • Capex. The big, rare stuff — boiler, roof, windows, a full kitchen. It feels like bad luck each time; over twenty years it is a line item, not an event.
  • Building levies. The maintenance fund is fine until the block votes for a new lift and issues a special assessment.

The costs that are not money

Your time. Viewings, contracts, chasing late rent, coordinating tradesmen, dealing with the neighbour downstairs. Either you do it — and it is unpaid work — or you hire an agent and pay a slice of gross rent for it. There is no free option; there is only choosing which currency you pay in.

Tax, which is not optional

Rental income is taxable, usually as ordinary income. Depreciation and expense deductions soften it, and rules vary enormously by country — but the headline yield you calculated is a pre-tax number and your life is post-tax.

Putting it together

A property advertising a 5% gross yield very plausibly nets 2.5–3.5% after all of the above, before any mortgage. That can still be a fine investment, especially with leverage and appreciation. It is simply not the number on the listing.

Summary

Budget for vacancy and capex explicitly, price your own time, and calculate everything after tax. A rental that only works when nothing goes wrong is a rental that does not work — because something always goes wrong.