Finance with Rentals
How to Finance Your Spanish Property with Rental Income
Discover how holiday rentals can offset ownership costs, making a Spanish property surprisingly affordable. Learn what to buy and where.
Making Spanish Property Ownership Affordable
Many people dream of owning property in Spain but assume it's beyond their budget. Here's a different perspective: by renting out your property during peak seasons, you can significantly offset ownership costs—potentially making that Spanish apartment or villa surprisingly affordable.
The strategy is straightforward. You use your property during the low season (October through April) when rental demand is lower, plus take two weeks for yourself during the summer holidays. The rest of the year—the shoulder seasons and high season—you rent it out when tourists are willing to pay premium rates. The rental income covers a substantial portion of your ongoing costs, sometimes even generating profit.
According to recent data, average gross rental yields in Spain range between 4% and 7%, with top-performing locations like Almería, Valencia, and Alicante achieving yields above 8%. The key is understanding what makes a property succeed as a rental—and aligning that with your own usage goals.
Choosing the Right Property and Location
Not every Spanish property works as a rental investment. Success depends on three factors: location, property type, and year-round demand. Get these right, and your property can largely pay for itself.
Year-Round Demand
Choose locations with consistent tourist appeal—not just summer beach crowds. Areas with golf, culture, and mild winters attract visitors across all seasons.
Apartments Over Villas
Apartments typically have lower running costs (community fees cover maintenance) and are easier to manage remotely. Two or three bedrooms offer flexibility for couples and families.
Price-to-Rent Ratio
The goal is maximum rental income relative to purchase price. Emerging areas often offer better ratios than established luxury markets.
Currently, some of the best opportunities are in areas experiencing new development—cities like Valencia, Alicante, and parts of Costa Cálida offer strong rental yields because property prices remain reasonable while tourist demand grows. Coastal cities like Málaga and the Costa Blanca also perform well for holiday lets.
Read our rental property guide for detailed advice on what to look for when buying to let.
The Numbers: What It Really Costs
Let's break down the actual costs of owning a Spanish rental property. We'll use a €300,000 two or three-bedroom apartment as our example—a realistic price point for a quality property in a good rental location.
With a Mortgage
Cash Purchase
Important: When calculating mortgage costs, remember that paying down the principal isn't really a cost—it's building equity in your property. Only the interest portion is a true expense. This distinction matters when comparing ownership costs to rental income.
In our scenario, you use the property from October through April (7 months) plus two weeks during summer. That leaves May, June, half of July, August, and September available for rental—roughly 18-20 weeks during the most profitable seasons.
Gross Rental Income by Month (€300k Apartment)
The numbers work out to roughly break-even—your rental income covers nearly all ownership costs. You enjoy the property for over 7 months yourself, including two prime summer weeks, and pay essentially nothing out of pocket for the privilege.
Note: The 50% deduction from gross rental covers property management (15-20%), platform fees (15%), rental income tax (19% for non-residents on net income), and ongoing maintenance.
Use our rental income calculator to estimate earnings based on your target location, and our annual costs calculator to see typical running costs for different property types.
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