Is it profitable to buy an apartment to rent it out?

Buying an apartment to rent it can generate a good return, but it depends on many parameters. In 2025, between stabilized credit rates, new energy standards and rental types, each project must be analyzed in detail. This article guides you to accurately estimate the real profitability of your rental investment.

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📉 Real estate context 2025

Rates and price trends

En 2025, the French real estate market is undergoing an adjustment phase after the outbreak in previous years. Transaction volumes are stabilizing and prices are beginning to fall or stagnate slightly in many cities.

This lull follows the sharp rise in interest rates observed in 2022—23, which reduced households' borrowing capacity. Good news for investors: Real estate mortgage rates, which peaked above 4% at the end of 2023, fell back to around 3% in the first quarter of 2025.

For example, a 20-year loan trades on average around 3.2% in March 2025, compared to nearly 4.0% at the end of 2023. This easing in rates, coupled with the slight correction in prices (more than -10% over two years in cities like Paris or Bordeaux), significantly improves the real estate purchasing power of investors.

Concretely, the balance of power is in balance between buyers and sellers in 2025. Buyers are taking back control thanks to more affordable rates and wiser prices, even if the latter remain high in some major cities. This context opens up opportunities for those considering a rental investment, provided they choose their property carefully.

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A more stringent regulatory framework

However, recent regulatory changes should be kept in mind: for example, Since January 1, 2025, homes classified G at the energy diagnosis have been considered indecent and can no longer be rented again. The owners of “thermal strainers” (DPE F or G) will therefore have to carry out work under penalty of forced vacancy at the end of the lease.

In this changing real estate context (interest rates higher than a few years ago, more reasonable prices but stricter standards), the question arises: Is it profitable to buy an apartment to rent it out?

To answer them objectively, you must first understand how rental profitability is measured, then examine the success criteria and strategic choices (type of rental, location, etc.), without forgetting to illustrate the point with a few numerical examples and to analyze the risks involved.

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📈 Understanding rental profitability

Rental profitability is the key indicator for judging the performance of a real estate investment put up for rent. In simple terms, it is the ratio between what the house brings in (rents) and what it costs (purchase price, charges, taxes...). There are several levels of calculation, from the simplest to the most successful:

Gross profitability

It's the Relationship between the gross annual rent and the purchase price of the property, multiplied by 100. For example, an apartment purchased €200,000 and rented €800 per month (€9600 per year) displays around 4.8% of gross rental yield. This basic indicator allows an initial comparison between properties or cities, but It does not take into account operating costs.

It is simply calculated: annual rent/purchase price x 100. This gives an initial estimate, but it does not take into account expenses or taxation.

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Net profitability (of expenses)

Net profitability deducts non-recoverable expenses (property tax, maintenance, etc.). All charges not paid by the tenant must be removed from the annual rent (property tax, non-recoverable condominium fees, insurance, rental management, taxes, etc.). We then divide by the purchase price. This gives the net return.

In the previous example, with €2,000 in annual expenses, net profitability falls to around 3.8%. The net better reflects the real gain for the owner, by integrating the outflows of money related to the property.

The amount of taxes depends on the tax regime chosen (micro-real estate, real estate, LMNP, Pinel, etc.) and the possible tax advantages enjoyed by the investor.

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Cashflow

Beyond rates of return, Cashflow measures the cash flow generated by the operation each month or year.

In practice, it is the difference between the rents received and all the expenses related to the investment, in particular Monthly credit payments if you have borrowed.

A positive cash flow means that the rent covers all expenses. and repaying the loan, leaving even a surplus.

A negative cash flow indicates that you have to add money each month to complete the financing, this is called a savings effort. This indicator is crucial for assessing short-term financial sustainability: a property can have a high gross return but a negative cash flow if borrowing is too expensive.

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Internal Rate of Return (IRR)

It is the most comprehensive measure of profitability. The TRI takes into account all the financial flows of the investment over its entire duration.

This includes net annual rents, but also the possible resale of the property with the added value carried out, purchase costs (notary, work), resale, taxation on capital gain, etc. Technically, the IRR is the discount rate that cancels the net current value of the project.

More simply, it gives the average annual return of your investment by integrating rent + resale. A high IRR means that the investment “performed” well overall, taking into account all cash flows.

This indicator is particularly useful for comparing a rental investment to other long-term financial investments. For example, an IRR of 5% means that over time, your real estate project brought you the equivalent of 5% interest per year.

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Profitability by city

In France, the rental profitability can vary a lot between cities and properties. In general, it varies between 2% (in very popular and expensive areas) and 7% (in medium-sized cities or popular neighborhoods).

A student studio in Saint-Étienne can exceed 8% gross, while a two-bedroom apartment in Paris can struggle to reach 3%.

You don't have to stop at the raw number: high profitability often comes with greater risks or lower valuation potential, while a low return in a large metropolis can be offset by a resale in added value later.

The important thing is to Calculate net profitability accurately of your project (after expenses and taxes) and to compare it to the cost of your financing.

In 2025, with loan rates around 3-4%, aiming for a net return greater than these rates is the minimum to hope for neutral or positive cash flow.

For example, a net return of 3% with a 4% loan will involve a savings effort (rent is not enough to pay the loan), where a return of 5-6 per cent will generally generate a profit surplus.

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🔎 The criteria to be analyzed to assess profitability

To determine Whether a rental purchase will be profitable, a set of objective criteria must be studied. Attractive profitability is not just a matter of theoretical percentage: many concrete factors influence real performance of your investment. Here are the main things to sift through:

Location and rental demand

“Location, location, location”, says the adage. The geographical location of the property is decisive. A popular location (city center, dynamic neighborhood, proximity to transport and universities) ensures strong rental demand, therefore a very low vacancy risk and greater ease in adjusting the rent.

In Lille, for example, the rental tension is such that “properties are often rented within a few days, with low vacancy rates”.

On the other hand, a poorly located property (remote periphery without transport, small town with a declining population) may display a high gross return on paper, but suffer from chronic rental vacations or difficulties in choosing a solvent tenant.

‍The economic and demographic dynamism of the city, the presence of students, employment centers, etc., are indicators of a promising rental market. Furthermore,

‍location affects future valuation: a booming neighborhood can offer both a fair return and a potential for added value, while an area that is not in demand is likely to stagnate or decline.

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Purchase price and work

The yield depends directly on price paid upon purchase. A price per m² that is too high will hamper profitability. So, in cities like Paris or Bordeaux where the m² exceeds €4,000-10,000, it is difficult to obtain more than 3-4% of gross yield.

Conversely, medium-sized cities per m² that are still affordable (2000-3000€) make it easier to reach 5-6% or more. It is also worth considering The condition of the housing: an old apartment requiring major work will have higher costs initially (or soon), but this work can improve rent and valuation.

‍Improvement work can be seen as an investment: they weigh on cash flow at the start, but make the property more attractive (higher rent, reduced vacancy) and can often be tax deducted (real regime).

Let's also not forget that environmental standards are evolving: buying a poorly classified home (DPE F or G) requires plan energy renovation work to be able to rent it for the long term. This cost should be included in your profitability calculation.

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Recurring charges and fees

To go from gross to net return, you have to subtract all expenses borne by the owner. Among the heaviest, we find the property tax, often equivalent to one or even two months of rent per year depending on the municipality. Les non-recoverable condominium fees (maintenance of the common areas, trustee, etc.) can also represent 10 to 20% of the rents.

Add the rental management fees if you delegate to an agency (generally 5 to 10% of the annual rent), non-occupying owner insurance, possible unpaid rent guarantee, current maintenance (boiler, household appliances in a furnished apartment), and one-off work (repair of a floor, painting between two tenants).

‍The bigger or older a property is, the higher the maintenance costs are likely to be, which erodes net profitability. A good practice is to estimate these costs over several years from the start (e.g.: provision 1% of the price of the property per year for future work).

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Rent taxation

This is an aspect that is sometimes underestimated by beginners. Rental income is taxed, either in the category of land revenue (naked rental), or BIC industrial and commercial benefits (furnished rental). The tax regime chosen will have a major impact on net profitability.

For naked rental, the microland regime grants a flat rate reduction of 30% on rents (increased to 50% as of 2025 to encourage renovation), while in non-professional furnished rental (LMNP), the Micro-Bic offers a 50% discount if the furnished apartment is classified as tourism (30% otherwise). These simplified allowances are suitable if you have few expenses.

If not, the Real regime allows you to deduct all real expenses (loan interest, works, insurance, expenses...) and To depreciate the property and the furniture furnished, which often greatly reduces taxation. The flip side is more complex management (accounting, tax package).

Be that as it may, Rent tax must be included in the calculation: a very profitable gross investment can become mediocre net of tax if you do not choose the right regime.

As an illustration, an annual rent of €12,000 received in a bare rental will be taxed on €6,000 only in 2025 micro-real estate (50% reduction), while in furnished micro-BIC (30% reduction) it would be taxed on €8400. Depending on your marginal tax bracket, the difference in net income can be significant.

Finally, think about possible fiscal arrangements (new rentals Pinel, Denormandie in the old one with works, Loc'Avantages, etc.) which, without being an end in themselves, can improve the overall return via tax cuts: they should be considered as a bonus.

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Financing and leverage

The financing method also has an impact on profitability for the investor. If you buy 100% cash, you receive immediate net income (after expenses and taxes) that can be compared to other investments.

On the other hand, if you opt for a bank loan, you use theCredit leverage: your rental income partially reimburses the loan. This often makes it possible to invest without a massive contribution, or even several times, but the cost of interest must be taken into account.

With current rates (3-4%), the leverage effect is only interesting if the net rental yield exceeds the credit rate. Otherwise, credit will increase your financial effort instead of alleviating it.

Also pay attention to Personal debt ratio: a rental project that is profitable on paper may be refused by the bank if your finances are fair. Finally, who says credit says borrower insurance (to be included in the charges) and Interest rate risk if you borrow at a variable rate (rare in France in terms of housing, but to be noted).

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🏡 Comparison of rental types

Another crucial choice for profitability is The type of rental that you are going to practice. Will you rent empty for the long term, in furnished, in student roommates, in tourist vacation rentals? Each formula has its pros and cons, and profitability may be significantly affected. Overview of the main rental strategies:

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🛆 Empty location

Stability, low turnover, 3-year lease. Lower profitability, but lower risks.

🏦 Furnished rental

Higher rents, advantageous LMNP tax regime, but more management (furniture, maintenance).

👥 Colocation

Very profitable in student cities. Allows you to maximize the overall rent, at the cost of more dynamic management.

🏓️ Seasonal rental

High profitability but intensive management. Especially suitable for properties located in tourist areas or in attractive city centers.

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In the details:

Empty rental vs furnished rental: stability or yield?

The most classic shape is the Naked location (unfurnished), with a standard lease of 3 years (for individuals). The other option is furnished rental, where the accommodation is equipped with enough furniture and household appliances to be immediately habitable (lease of one year, or 9 months for students).

‍In 2025, furnished rentals are on the rise among investors, because it generally offers better performance. In fact, The rents for a furnished apartment are 15 to 20% higher than those of a comparable rented naked unit. The owner can value the equipment provided and the flexibility offered to the tenant.

According to a study by Pretto, the Average net profitability is around 3.7% for empty rentals compared to 4.8% for furnished rentals in 2025. The difference is significant. However, Who says higher rent also means more turnover : the furnished lease being for one year renewable, the tenant can leave more easily. You should expect more frequent turnover and therefore an increased risk of rental vacancies, especially in non-student cities.

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On the contrary, naked renting binds the tenant for 3 years (and often longer, because moving is expensive). Cela ensures stability of occupancy significant: regular income and fewer repair costs (painting, minor repairs) between tenants.

From the point of view fiscal and regulatory, empty and furnished rentals also differ. In bare rentals, the legal framework is more protective for the tenant (3 months' notice, compared to 1 month in furnished apartments) and the lessor has less leeway (fixed lease term, more supervised leave).

But renting is part of property income, with the simple micro-land regime (50% reduction as of 2025). Furnished rentals, on the other hand, are subject to BIC: to the regime Micro-Bic we only get a 30% lump-sum allowance (for ordinary furnished apartments), but At the real regime You can depreciate property and furniture, which often means you don't have to pay rent taxes for many years.

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The choice of diet is therefore crucial. Let us also note that Managing a furnished apartment requires a little more investment in time and budget : it is necessary to buy and renew the furniture, manage any damage to it, and respect the list of mandatory elements (bed, table, chairs, kitchen equipment, etc.).

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Colocation: sharing to maximize 📈

The roommate consists of renting the same unit to several tenants simultaneously, via a common lease or multiple leases per room.

This is a very common strategy in large student cities or cities with a high percentage of young people working (Lille, Montpellier, Toulouse, etc.). The financial advantage of shared accommodation is to be able to obtain a higher overall rent by renting “by the room” rather than a single family. For example, a large T4 rented for €1,000 to a family could be rented 3 x €400 = €1,200 if it is transformed into a shared apartment for 3 people, expenses included.

The roommates, on the other hand, find themselves there because the rent per person is lower than if they each rented a studio. In the end, everyone is a winner and the rental yield is improving. It is generally estimated that colocation can increase gross yield by around +2 points compared to a traditional rental on the same property (for example, going from 5% to 7%).

Unscrupulous property dealers even put forward profitability of 10-12% “thanks to colocation”, but be careful: this is sometimes based on assumptions of excessively high rents that will not be sustainable on the market. You must remain realistic in your rent calculations: shared accommodation improves efficiency, without being an absolute miracle.

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In terms of managerial, sharing a flat requires some precautions. First of all, The accommodation must be suitable : typically, an apartment with 3 rooms or more, with a sufficiently large living room (ideally, each roommate should have a comfortable private space and pleasant common areas).

Of specific arrangements can be useful to optimize shared accommodation: add an additional bathroom, partition differently to gain a bedroom, equip each bedroom with a lock, etc.

Then, the Shared apartment is almost always furnished, roommate candidates want to put their bags down without worrying about furniture. You will therefore benefit from the LMNP status and its tax advantages in amortization, as with any classic furnished rental. Furniture and equipment must be provided accordingly (large capacity washing machine, equipped kitchen, sufficient refrigerators, etc.).

‍The selection of tenants is also crucial: to avoid incessant turnover and conflicts, it is better to form a roommate of people with compatible and solvent lifestyles (for example all serious students from the same school, or young people working on a permanent contract). One good roommate profile usually stays longer, which reduces the wear and tear of the home and ensures the rent on time.

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Finally, the lease can be common (solidarity between roommates) or individual per room; each formula has its legal and practical implications.

Colocation therefore involves a greater human investment in rental management (communication with several tenants, mediation in the event of an internal dispute, management of staggered departures, etc.).

Some specialized agencies offer to manage shared apartments for a fee, which can relieve the lessor. Despite these constraints, colocation remains a very profitable strategy in cities with high demand: students or young workers., as it maximizes the exploitation of the property.

It can even be combined with seasonal rentals outside of university periods (so-called shared accommodation). mixed): for example, renting rooms to students for 9 months and then for short-term tourist rentals in summer. This hybrid strategy can boost profitability, at the cost of increased management complexity.

In short, colocation is suitable for the investor looking for a high return and agreeing to be more involved, or to delegate to a professional. Well done, it allows you to shoot The best part of a large home while responding to real market demand (housing cheaper by sharing).

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Seasonal rental: maximum efficiency, intensive management ✈️

Finally, it is possible to rent your property in short-term furnished rental (such as Airbnb) to temporary customers (tourists, business travelers). Seasonal rentals are potentially the most profitable of all, in terms of rent per square meter.

During busy periods, the rate per night is much higher than the standard daily rent. So, “compared to a classic, empty or furnished rental, the income from a seasonal rental varies between 4% and 11% net”, according to Trackstone. On average, in tourist areas, Airbnb profitability can be almost double that of a long-term rental over a year.

For example, an apartment that would bring in 5% gross in annual rentals can generate 8 to 10% in short-term rentals if the occupancy rate is optimized. La flexibility is also an advantage: you can block dates for your personal use of the accommodation, or adapt the rates in high/low season to maximize income.

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However, these gains have In return, management is much more demanding.. Renting on Airbnb or other platforms involves multiple tasks: management of listings and reservations, entry and departure of travelers, frequent cleaning and laundry, reactive maintenance in the event of a failure (a tenant staying will not wait a week for the boiler to be repaired...).

Many owners use companies of Concierge to take care of reception and cleaning, which can represent 20 to 30% of rental income. These fees should be included in the net return calculation.

In addition, The irregular nature of short rentals creates a high variability in income. There are often off-peak periods (out of tourist season) during which the accommodation remains empty, unless prices are sold off.

Location is key here: a vacation rental is only interesting in areas where there is sufficient demand for tourism or short stays (coastline, mountains, tourist centers, business areas). Otherwise, you will have too low a occupancy rate to beat long-term rentals. It is recommended to Do not overestimate the annual occupancy rate : as a matter of caution, calculate the return on 8 or 9 actual rented months rather than 12, to take into account unavoidable periods of vacancy.

You should also be aware of local rules : in many large cities (Paris, Lyon, Bordeaux...), short-term rentals are regulated (declaration by town hall, or even obligation to compensate by commercial premises transformed into housing in certain hypercenters).

It is appropriate to strictly comply with local legislation to avoid fines or prohibitions. Finally, from a fiscal point of view, seasonal rentals fall under the BICs (like classic furnished apartments). If your income exceeds €23,000 per year and this is your main source of income, you could be considered a professional rental company (LMP), with specific tax implications. However, most lessors remain in LMNP (micro-BIC allowance of 50% for furnished apartments classified as tourism, otherwise real regime with amortization).

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In short, the Seasonal rental can boost profitability impressively, but it is only viable if you (or an intermediary) can ensure quality hotel management. It is an almost commercial activity more than a simple real estate investment.

For a well-located studio rented by the week, efforts can pay off: many investors notice a net annual income greater than 20 to 50% to what they would have had in a long-term rental. But watch out for the other side of the coin: more variable incomes, increased management time, changing regulations. The game is worth it, especially for properties with high tourist potential or for owners who are able to devote time to it.

For a remote investor or looking for a hassle-free passive income, seasonal investing is not necessarily the most suitable strategy, unless delegated to a specialized agency (which is expensive).

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🏢 Examples of profitability in 2025

Let's talk about concrete figures: the expected profitability depends a lot on the city where you invest. Here are a few examples of gross rental returns observed in 2025 in various cities in France, to illustrate the differences in potential. We will also compare, for each city, the types of rentals that can improve profitability.

Examples of cities

• bordeaux : 5% furnished, up to 6% shared
• marseilles : 6% when empty, up to 9% when seasonal
• lille : 6% in shared apartments, strong student demand
• Clermont-Ferrand : 7% furnished, good value for a small budget
• Nantes : 5% shared or seasonal

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⚠️ Limits and pitfalls to avoid

Even though rental investment may seem very attractive on paper, it has its share of risks and limitations which should be evaluated lucidly. Here are the main points of vigilance to avoid disappointments:

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❌ Overestimated profitability

As has been pointed out, the returns announced in advertisements or by some sellers may be optimistic. Care should be taken when dealing with promises of exceptional profitability.

For example, such a vendor of turnkey programs who highlights “12% return on shared accommodation” Perhaps omitting to specify that this calculation does not take into account vacation periods, furniture costs, or non-optimized taxation, etc.

‍Do not overlook any expense item in your projections (including provisions for future work). It is often useful to simulate several scenarios: a central scenario, a pessimistic one (lower rent, longer vacation, heavier charges) and an optimistic one.

If, even in a pessimistic scenario, your project remains in balance, you will approach the investment with confidence. On the other hand, if profitability only holds up under ideal assumptions, think twice.

The reality is often in between. In summary: keep a cool head and rely on realistic local market data (what rents are actually charged? How long does it take to rent the properties again?) , even if it means challenging the seller's information with your own research (advertising sites, notaries, etc.).

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♻️ Vacancy and unpaid

An empty home does not bring in anything, but it always costs (condominium fees, credit, property tax). The rental vacancy is the enemy of profitability. To reduce it, you must choose your property carefully (location with high demand) and practice a rent in line with the market.

It is better to rent €10 less per month than to suffer 3 months without a tenant by being too greedy. In a tense area, vacancy is low, but in a city that is not very dynamic or for a rental that is too specific (luxury rent, very atypical), it can strongly affect the real return.

Likewise, Unpaid rent constitute a risk: a defaulting tenant can deprive you of income for months, while you cancel the lease and rent again, with no guarantee of recovering the amounts due.

To protect yourself, it is recommended to take out unpaid rent insurance (which will partly cover the missing rents) and/or to check the solvency of the candidates carefully (sufficient income, solid guarantors).

Vacancy and unpaid bills are part of hazards to be anticipated: Trackstone advises, for example, to always calculate your return by planning for a small vacation and unexpected costs, in order to ensure that the investment remains profitable even in these cases.

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🛃 Daily management

Renting a property is not a 100% passive investment, especially if you manage directly. You have to devote time to find tenants, write leases, take stock of fixtures, collect rents, manage maintenance (boiler breaks down, water leak), etc.

All of this represents an opportunity cost (unpaid time) or fees if you delegate to an agency. In the case of furnished rentals and especially seasonal rentals, the management burden is even higher (frequent entrances/exits, households, online ads to keep up to date, etc.).

‍These operational aspects can wear out some owners and reduce the expected gain.. You must either prepare for it by spending time or be willing to pay for management services, which will of course lower the net return.

Geographical distance is a factor: investing away from home may be profitable on paper, but will almost require the hiring of a local Airbnb agency or manager, which weighs on profitability.

Ask yourself the question of your capacity and will to manage before choosing a particular mode of operation. For example, a roommate of 4 students will require more follow-up than a rental to a couple on a permanent contract.

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🧲 Tax or regulatory changes

Yesterday's favourable tax framework may change. We saw this with the gradual end of the Pinel system, the creation of new regimes (Loc'Avantages) or the modification of micro-land allowances and micro-BIC in 2025.

The same is true of regulatory standards: the ban on renting housing classified G in 2025 was not necessarily anticipated by all owners. Other ecological measures could follow (ban on F housing in 2028, etc.).

It is therefore necessary to integrate a margin of safety in your calculations to compensate for an increase in property tax, a new tax on vacant housing, or compulsory work imposed by law. A profitability considered acceptable today could decrease tomorrow if taxation increases (for example, if you move to a higher tax bracket, or if social security contributions increase).

Diversifying your investments or opting for a protective tax regime (LMNP in fact amortizing a lot of expenses) can help mitigate this risk. Stay informed of legislative developments to adjust your strategy.

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Conclusion: profitable, but not automatic

Buying an apartment to rent it out can definitely be profitable in 2025, provided that the project is set up rigorously and carefully. We have seen that rental profitability depends on a subtle balance between the market context, the precise financial calculation and the strategic choices of the investor.

In the current context, it is essential to Buy well (at the right price, in the right city), of Rent well (by optimizing the type of rental and taxation), and Manage well (or have them managed) to limit the unexpected.

Les pros of such an investment are numerous: passive income, constitution of a tangible asset, possible capital gain on resale, protection against inflation, etc. But constraints and risks are real: you have to devote time to it, put up with possible periods of no income, and accept a certain uncertainty on final profitability (according to legal and market developments).

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In 2025, the real estate market offers opportunities for patient and well-informed investors. Interest rates that are slightly higher than a few years ago make it necessary to select properties with sufficient profitability, and to favor, for example, strategies such as furnished or shared accommodation to boost net returns.

However, one should not Overbid blindly in the race for performance: a balance must be found between profitability and quality of the property, between income and risks. One successful rental investment is often the one that corresponds to your personal goals (preparing for retirement, diversifying your assets, tax exemption...) while being adapted to the specificities of the local market.

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To maximize your chances of success, it may be a good idea to surround yourself with competent professionals.

‍Call on a Real estate hunter, for example, allows you to benefit from tailor-made support in the search for the ideal property. These experts know cities, promising neighborhoods, rent levels and pitfalls to avoid. They can you Help find the rare pearl offering a good return while corresponding to your criteria, negotiate the right price and secure the transaction.

Likewise, a good wealth management advisor or a chartered accountant can optimize the fiscal and financial part of your project. Of course, these services come at a cost, but it is often quickly amortized by the gains made or the mistakes avoided thanks to their expertise.

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