Simulating a rental investment step by step in Belgium
How to simulate a rental investment in Belgium. Yield calculation, cash flow, taxation and step-by-step method with worked examples.
Step-by-step simulation method
Simulating a rental investment before buying is essential. Here is the 4-step method to evaluate a property’s profitability in Belgium.
Data to collect
| Data | Source |
|---|---|
| Purchase price | Listing, valuation |
| Market rent | Property portals, rent observatory |
| Cadastral income | Cadastral register (MyMinfin) |
| Co-ownership charges | Property manager (annual accounts) |
| Property tax | Tax assessment notice |
| Mortgage rate | Bank simulation |
| Notary fees | notaire.be calculator |
The 4 steps
- Calculate the gross yield
- Calculate the net yield
- Analyse the monthly cash flow
- Project over 10-20 years
For the basics, consult our guide first rental investment.
Yield calculation
Example: apartment at EUR 220,000, rent EUR 900/month
Gross yield
| Element | Amount |
|---|---|
| Annual rent | EUR 10,800 |
| Purchase price | EUR 220,000 |
| Gross yield | 4.9 % |
Net yield
| Item | Annual amount |
|---|---|
| Gross rent | EUR 10,800 |
| Vacancy (1 month) | -EUR 900 |
| Non-recoverable charges | -EUR 1,200 |
| Property tax | -EUR 1,100 |
| Landlord insurance | -EUR 350 |
| Maintenance and repairs | -EUR 500 |
| Net income | EUR 6,750 |
| Net yield (on purchase price) | 3.1 % |
| Net yield (on total investment) | 2.7 % |
Total investment includes notary fees (approx. EUR 28,000): net yield = 6,750 / 248,000 = 2.7 %.
Gross yield is misleading. Net yield (after all charges) is 1.5 to 2.5 points below gross yield. Always calculate the net yield before making your decision.
Cash flow and treasury
Monthly cash flow (with mortgage)
| Item | Monthly amount |
|---|---|
| Rent collected (11 months/12) | +EUR 825 |
| Mortgage payment (EUR 218,750 over 20 yrs at 3.5 %) | -EUR 1,268 |
| Non-recoverable charges | -EUR 100 |
| Property tax (monthly equivalent) | -EUR 92 |
| Insurance + maintenance | -EUR 71 |
| Monthly cash flow | -EUR 706 |
Cash flow without mortgage
| Item | Monthly amount |
|---|---|
| Rent collected (11 months/12) | +EUR 825 |
| Non-recoverable charges | -EUR 100 |
| Property tax | -EUR 92 |
| Insurance + maintenance | -EUR 71 |
| Monthly cash flow | +EUR 562 |
10-year projection (with mortgage)
| Year | Cumulative cash flow | Capital repaid | Net wealth |
|---|---|---|---|
| 1 | -EUR 8,472 | EUR 7,500 | EUR 38,778 |
| 5 | -EUR 42,360 | EUR 42,000 | EUR 49,390 |
| 10 | -EUR 84,720 | EUR 97,000 | EUR 62,030 |
The monthly treasury loss is offset by wealth building (capital repaid + property appreciation).
Summary and decision
Decision grid
| Indicator | Threshold | Our example |
|---|---|---|
| Gross yield | > 4 % | 4.9 % (good) |
| Net yield | > 3 % | 3.1 % (decent) |
| Monthly cash flow (with mortgage) | > -EUR 500 | -EUR 706 (watch) |
| Price-to-rent ratio | < 250 | 244 (good) |
Parameters to vary
- Increase rent by 2 % per year (indexation)
- Test a 1 % rate increase
- Simulate 2 months of vacancy instead of 1
- Add EUR 5,000 of unexpected works
For letting, generate your lease and manage your properties with a rental management software. Also consult our guide on the buy-to-let mortgage.