Is buying to rent still profitable?

Category: General

Buy to rent in 2025: an investment that continues to pay off?

From La Home Inmobiliaria, based in La Cañada (Valencia), we have accompanied hundreds of investors, both national and international, on their path to a profitable real estate investment. And if there is one question we hear every day it is: is it still a good idea to buy to rent in 2025?

The short answer: yes. But, like everything in the real estate world, it depends on where, how and for whom. Investment in rental housing continues to be one of the most stable bets, especially when done with judgment, data and good knowledge of the terrain.

In this article we share a direct and practical vision based on our experience, especially in residential areas like La Cañada, where the demand for quality rentals remains strong. We also address how profitability varies depending on the type of property, its location and the management approach applied.

What does it really mean for a home to be "profitable"?

When talking about profitability of rental apartments, it is not enough to look at the purchase price and the monthly income. The gross profitability is calculated by dividing the annual rental income by the purchase price (plus expenses), and is usually the first figure that appears on investment portals or reports.

But the real analysis comes with the net profitability, which includes:

• Community expenses
• IBI
• Maintenance
• Vacuums between tenants
• Taxes
• Management fees

In our case, we manage homes with net returns of 3.5?% to 6?% in areas such as La Cañada, depending on the condition of the property and its attractiveness for the family profile.

Gross vs net return: how to calculate real return

A common mistake is to take the purchase price and the monthly rent without further ado. Suppose:

• Purchase price: €180,000
• Monthly rent: €850
• Annual income: €10,200

That gives a gross profitability of 5.6?%. But now we subtract annual expenses:

• Community + IBI + insurance: €1,400
• Maintenance + vacuum: €800
• Management: €600

The net profitability drops to 4?%, still good for conservative profiles that value stability and physical assets.

At La Home we develop a comprehensive rental management that minimizes voids and keeps properties in excellent condition, something key to sustaining good profitability over time.

Expenses that affect profitability: beyond the purchase price

Buying involves initial costs such as:

• Property transfer tax (ITP): in Valencia, 10?%
• Notary fees, registration, appraisal
• Reform (if applicable)

But there are also recurring costs that directly affect net profitability:

• Community expenses (from €30 to €150/month)
• Insurance (home, non-payment)
• Preventive maintenance (boilers, paint, appliances)

One of our recommendations to foreign clients, for example from France, Germany or the United Kingdom, is to consider a 5% cushion on the purchase price to adequately cover these expenses in the first year. In many cases, we manage it directly from our comprehensive system.

Where to buy to rent? Areas with greater demand and return

Location is 50?% of profitability. In our daily lives we observe how residential areas close to the city, such as La Cañada (Valencia), have a sustained high demand by families looking for space, tranquility and a good connection with the city.

The investor who buys in these environments usually obtains a better return/risk ratiothan in saturated central areas or in tourist neighborhoods, today more uncertain due to the regulation of vacation rentals.

The well-connected urban periphery is the bet that we are recommending today:

• Best prices per m²
• More stable tenants
• Lower rotation
• Fewer incidents

In addition, as an agency with clients in countries such as USA, Russia or China, we have seen how these areas represent a real opportunity for those who want to invest without living in the property and still obtain professional management from a distance.

The key is in the tenant profile: residential and family housing

Another essential factor that affects long-term profitability is the type of tenant that you seek to attract. In our case, we work with:

• Families with children
• Professionals with job stability
• Young couples who have not yet purchased

All of them value homes with:

• Garden or terrace
• Good orientation
• Proximity to schools, parks and transportation

Therefore, investing in residential areas is not only profitable because of the numbers, but because it offers a long-term tenant. Someone who values the environment and takes care of the home as their own. This stability translates directly into less turnover, less expenses and greater profitability.

Rent taxation: what you should know to maximize your benefits

Another key aspect is taxation. At the national level, rental income for primary residences can benefit from a 60?% reduction in personal income tax (for contracts prior to 2024), which has a direct impact on net profitability.

In addition, it is possible to deduct expenses as:

• Mortgage interest
• Repairs
• Taxes and insurance
• Property Management

At La Home we advise many owners who live outside of Spain and need complete tax support. We do this by working with specialized agencies and offering the peace of mind of a well-managed investment, even from a distance.

Renovations and added value: when is it worth reforming?

One of the most common dilemmas is: renovate before renting?

Our experience says: it depends on the objective and type of tenant. We have managed renovated properties that have increased their rent by 20?% compared to the previous state, managing to recover the investment in 3–4 years.

But there are also cases where a minimal renovation—paint, floor, kitchen—is enough to increase the value without compromising cash flow.

Keys to decide:

• If the area allows high rents, the renovation usually pays for itself quickly
• If the target audience is long-term (families), they will value modern and functional finishes
• If the property is very deteriorated, there may even be extra tax deductions

At La Home we analyze each property and propose a personalized roadmap, with a clear budget and deadlines. Our approach is to maximize value without overspending.

Comprehensive rental management: from marketing to maintenance

We say it clearly: time is the most important asset in your life, and also in your investment. That is why we have developed a 100% comprehensive system where we take care of:

• Publish and disseminate the property with a powerful online strategy
• Filter tenants with stable and solvent profiles
• Formalize the contract with all legal guarantees
• Manage incidents, collections and maintenance

This allows us to ensure a stress-free experience for owners, especially those who live abroad and need results without surprises.

Thanks to our multilingual team, we can serve clients in English, French, Russian, German and Spanish, something that has been key in our international expansion.

Is it still profitable to buy to rent in Spain?

Yes, it still is. But only if it's done right.

In 2025, with a market seeking stability, residential rentals in areas with a high quality of life will consolidate as one of the safest investments. The figures support it, but also our experience from laHome: year after year we see how those who invest with vision, advice and good management, obtain sustained benefits.

If you are thinking about investing in rental housing, our advice is clear: choose the area well, know your target tenant and work with a professional team that supports you throughout the process.

From La Cañada (Valencia), our family accompanies you every step of the way. Because more than selling properties, we create relationships of trust for life. Contact us, we will be happy to help you!