Look behind the percentage before relying on the projection

A property projection can look precise long before its assumptions are reliable. A spreadsheet with two decimal places may still depend on an unverified rent, an incomplete cost list or permission that has not been established. Start by asking where each important number came from.

This guide provides a practical way to review an agent’s, developer’s, manager’s or your own investment model. It does not assume that a commercial projection is wrong. It helps you distinguish evidence, judgement and uncertainty before using the result to justify a purchase.

Ask for the working model

Request the inputs, formulae, time period and explanation behind the headline return. A single net-yield figure is difficult to assess if the income, costs and denominator are hidden. Ask for a version that shows the calculation clearly.

Record who prepared it, when, for which property and for what purpose. Identify whether the author would receive a fee or commission if the purchase or management appointment proceeds. A commercial interest does not automatically invalidate the work, but it belongs in your assessment.

Keep the original version and any later revisions. If a key assumption changes, the effect should be traceable. Do not overwrite the original number and lose the explanation for why the proposed return moved.

Establish the intended use first

A model cannot establish permission to operate. Identify whether it assumes a residential tenancy, a genuine temporary arrangement, tourist accommodation or another use. Have the property and proposed activity assessed under the relevant current requirements.

Check community and municipal questions alongside the wider legal framework. A property already appearing on a booking website does not settle the position for your ownership and plans. Read the holiday-rental guide and the relevant rental guides before treating the model’s income stream as available.

If an essential use remains unconfirmed, flag the result as conditional. Do not describe it as expected income without making that dependency prominent. Keep an ownership scenario without the proposed letting so you can understand the consequence if it cannot proceed.

Identify the income evidence

Ask whether the rent is based on achieved receipts, signed contracts, comparable advertisements, a manager’s estimate or a target. Record dates, property characteristics and any important differences. An advertised nightly price is not evidence of the amount received after discounts, cancellations and fees.

For historic operating data, ask for a suitable reconciliation between bookings, receipts and statements, with personal information handled appropriately. Establish whether the period was representative and whether the conditions are likely to continue. Past performance remains history, not a promise.

For a new or unlet home, keep the estimation method visible. A forecast may still be useful, but the absence of operating history should not disappear behind a polished chart or a rounded occupancy assumption.

Check the calendar and denominator

For a tourist model, write down the nights offered, expected bookings, owner blocks, maintenance periods and other unavailable dates. Ask whether occupancy is calculated against the whole year or only the offered period. Both descriptions need clear labels.

For another rental arrangement, identify the assumed contract period, vacancy and timing of receipts. Do not mix a full-year rent with costs calculated for a shorter operating season. Keep each assumption on the same calendar.

If the model assumes personal use, make those blocks explicit. The personal-use and letting guide explains why owners cannot simultaneously occupy the home and count the same dates as available for paying guests.

Rebuild the cost list independently

List management, platform or marketing charges, cleaning where applicable, consumables, utilities, insurance, local charges, community costs, repairs and administration. Ask which amounts the tenant or guest pays and which remain with the owner. Avoid a generic all-costs percentage without a scope.

Identify whether quoted fees include relevant taxes and whether the calculation base is gross rent, collected rent or another amount. Two managers’ percentages may not be comparable if their services and charging bases differ.

Include occasional work and replacement needs separately from recurring operations. The ownership-cost calculator can help organise the budget. A quiet maintenance year should not be treated as proof that future repair costs will remain minimal.

Keep finance and tax in the right place

Show the loan amount, term, rate structure and debt payments separately. A model based on an introductory payment may need a later-stage scenario. Use the mortgage guide and written offer to establish the actual assumptions.

Tax depends on the owner and activity. Do not apply a generic net-tax percentage without advice about residence, ownership, eligible expenses and filing obligations. Read resident or non-resident rental income as appropriate.

Explain whether the result is before or after tax and debt payments. A pre-tax operating surplus is not the same as spendable household income, and a gross yield is not a full investment return. Keep the labels consistent from the first chart to the final summary.

Recalculate a simple example

Suppose a fictional model assumes 20 booked weeks at €1,000 per week. That gives €20,000 gross income. If the entered operating costs are €6,000, the simplified operating surplus is €14,000 before finance, tax and any omitted items.

Now ask what the figures mean. Does the weekly amount represent money received by the owner? Are the costs complete? Is the use lawful and are 20 bookings supported by evidence? Correct multiplication does not answer those questions.

Use the rental-yield calculator to test entered assumptions, not to certify them. Reconcile its definitions with the model under review before comparing percentages that may measure different things.

Challenge the exit assumptions

Identify the assumed sale date, value, outstanding debt, disposal costs and tax treatment. Ask what evidence supports any growth rate and why the chosen horizon fits the owner’s plans. A sale is not guaranteed to complete when a spreadsheet says it will.

Run a scenario with no price growth and one with a lower sale amount. Include the actual costs of entering and leaving. The growth-versus-income guide shows why a rise in the headline price does not automatically cover transaction expenses.

Keep the ability to fund a delay visible. If a forced early sale would undermine the plan, ask an appropriate adviser whether the commitment fits the household’s circumstances and accessible reserves.

Question claims of return without risk

CNMV’s investor education rejects the combination of high return and no risk, using the words:

esa combinación no existe

This is general financial-investment education, not a regulatory judgement about the direct property being considered. Use the principle to ask what could cause the projected result to fail and how the presenter has allowed for that uncertainty.

If a guarantee is claimed, obtain the actual document and independent advice about the guarantor, scope, exclusions, duration and enforcement. Do not treat a marketing phrase as equivalent to an enforceable, adequately supported commitment.

Record a decision rather than just a percentage

Summarise the evidence quality, unresolved permissions, income assumptions, complete costs, finance, tax questions and exit risks. Mark what needs confirmation and assign the next enquiry. Ask an independent adviser to review material uncertainties before commitment.

Use the buyer-decision worksheet to connect the model with the property and household. A credible projection makes its assumptions easy to inspect and its limitations easy to see. That is more useful than a higher headline return whose working cannot be explained.