How to calculate the return on a retail unit
The initial yield is only a starting point. Net income, investment, lease risk and exit must also be assessed.
Spain · Retail units · Land · Commercial property
Gross yield
Annual rent divided by acquisition price. It is quick, but excludes costs and investment.
Net yield
It should deduct non-recoverable costs, insurance, service charges, property tax, maintenance and void periods.
Total entry cost
Price, taxes, notary, registry, fees and capex make up the real investment.
Income risk
The same yield may represent very different transactions depending on the lease, operator, location and liquidity.
Exit scenario
The final return also depends on resale value, exit yield and capital invested during the holding period.
Conclusion
The analysis should lead to a clear decision: hold, invest, renegotiate, reposition, market or walk away. The more uncertainty removed before presenting the transaction, the lower the discount typically required by the market.
Submit the property or transaction
With the location, size, status and objective, we can provide an initial assessment.