Gross yield vs net cash flow: what to underwrite before buying in France

What gross yield measures

Gross yield divides annual rent by the purchase price. It is simple and useful for first screening, but ignores acquisition costs, works, running costs, vacancy and financing.

Two properties with the same gross yield can produce very different cash flows depending on service charges, property tax or condition.

From rent to net operating income

Start from a realistic rent excluding charges, deduct a vacancy and arrears allowance, then non-recoverable costs: service charges, property tax, insurance, management, routine maintenance. The result is net operating income.

Divided by the all-in budget (not just the price), it gives a far more meaningful net yield.

Add financing

Then deduct debt service to get pre-tax cash flow. This shows whether the project funds itself or needs a monthly top-up.

A top-up is not necessarily a problem if it fits a wealth-building objective; it simply needs to be known and affordable.

Don't forget tax

Tax depends on the letting regime and your situation in both countries. It should be estimated with a professional; a serious model treats it as an explicit assumption rather than ignoring it.