The Worked Model
An illustrative €300,000 two-bedroom sea-view apartment in Vlorë, carried from purchase price to all-in cash cost, through every operating line, the 15% Albanian rental tax, ten years of cash flow, the capital-gains and disposal drag at exit, and finally the unlevered IRR the owner actually receives.
Step one
| Acquisition item | Amount | Treatment |
|---|---|---|
| Property purchase price | €300,000 | Sale contract price; modelled capital-gains basis |
| Investor advisory fee (2%) | €6,000 | Buyer-side analysis, coordination and execution |
| Legal, DD, notary and registration | €5,000 | Illustrative budget; quotations obtained per property |
| Furnishing and equipment | €25,000 | Cash investment; no depreciation modelled |
| Photography and rental launch | €2,000 | Initial operating setup |
| Working-capital reserve | €3,000 | Owner liquidity, not an expense |
| Total all-in cash investment | €341,000 | Initial outflow used for the IRR |
The developer’s 4% distribution commission is paid by the developer, disclosed to the buyer, and is not an additional buyer cost. The investor pays a separate 2% advisory fee. Every return on this page is measured against the €341,000 all-in figure, never against the €300,000 sticker price.
Side by side
| Metric | Conservative execution | Base case | Strong execution |
|---|---|---|---|
| Year 1 gross rent | €30,000 | €37,000 | €44,000 |
| Gross yield on price | 10.0% | 12.3% | 14.7% |
| Year 1 owner cash flow | €6,550 | €10,330 | €15,870 |
| Year 1 after-tax cash yield | 1.9% | 3.0% | 4.7% |
| Ten-year rent collected (net) | €58,862 | €113,110 | €184,445 |
| Net exit proceeds | €291,000 | €359,901 | €409,140 |
| Total profit | €8,862 | €132,011 | €252,585 |
| Equity multiple | 1.03x | 1.39x | 1.74x |
| Ten-year unlevered IRR | 0.3% | 3.8% | 6.8% |
The asset never changes. The purchase price never changes. The entire spread between a 0.3% and a 6.8% ten-year return sits in letting execution, cost terms and the market at exit — which is exactly the part a listing photograph cannot tell you.
Case A — Conservative execution
The same apartment modelled on weaker bookings, 1% rental growth, 3% cost inflation and no capital appreciation across the full ten-year hold.
€341,000
Case A — Conservative execution
€30,000
Case A — Conservative execution
€6,550
Case A — Conservative execution
0.3%
Case A — Conservative execution
Year 1 income and cost waterfall
Assumption set
What has to be true
Ten-year cash flow, year by year
| Year | Gross rent | Mgmt & channels | Fixed costs | Rental tax | Owner cash flow | Cumulative | Value |
|---|---|---|---|---|---|---|---|
| 1 | €30,000 | (€9,300) | (€9,650) | (€4,500) | €6,550 | €6,550 | €300,000 |
| 2 | €30,300 | (€9,393) | (€9,940) | (€4,545) | €6,423 | €12,973 | €300,000 |
| 3 | €30,603 | (€9,487) | (€10,238) | (€4,590) | €6,288 | €19,260 | €300,000 |
| 4 | €30,909 | (€9,582) | (€10,545) | (€4,636) | €6,146 | €25,406 | €300,000 |
| 5 | €31,218 | (€9,678) | (€10,861) | (€4,683) | €5,997 | €31,403 | €300,000 |
| 6 | €31,530 | (€9,774) | (€11,187) | (€4,730) | €5,839 | €37,242 | €300,000 |
| 7 | €31,846 | (€9,872) | (€11,523) | (€4,777) | €5,674 | €42,917 | €300,000 |
| 8 | €32,164 | (€9,971) | (€11,868) | (€4,825) | €5,500 | €48,417 | €300,000 |
| 9 | €32,486 | (€10,071) | (€12,224) | (€4,873) | €5,318 | €53,735 | €300,000 |
| 10 | €32,811 | (€10,171) | (€12,591) | (€4,922) | €5,127 | €58,861 | €300,000 |
Exit in year ten
Ten-year outcome
With no appreciation, the investment barely returns its capital in nominal terms over ten years. This is the number a buyer should be shown first.
Case B — Base case
The reference case in our tax and return memorandum: a completed €300,000 two-bedroom apartment, direct personal ownership, no debt, year-round managed short-stay letting.
€341,000
Case B — Base case
€37,000
Case B — Base case
€10,330
Case B — Base case
3.8%
Case B — Base case
Year 1 income and cost waterfall
Assumption set
What has to be true
Ten-year cash flow, year by year
| Year | Gross rent | Mgmt & channels | Fixed costs | Rental tax | Owner cash flow | Cumulative | Value |
|---|---|---|---|---|---|---|---|
| 1 | €37,000 | (€11,470) | (€9,650) | (€5,550) | €10,330 | €10,330 | €307,500 |
| 2 | €37,740 | (€11,699) | (€9,843) | (€5,661) | €10,537 | €20,867 | €315,188 |
| 3 | €38,495 | (€11,933) | (€10,040) | (€5,774) | €10,747 | €31,614 | €323,067 |
| 4 | €39,265 | (€12,172) | (€10,241) | (€5,890) | €10,962 | €42,576 | €331,144 |
| 5 | €40,050 | (€12,415) | (€10,445) | (€6,007) | €11,182 | €53,758 | €339,422 |
| 6 | €40,851 | (€12,664) | (€10,654) | (€6,128) | €11,405 | €65,163 | €347,908 |
| 7 | €41,668 | (€12,917) | (€10,867) | (€6,250) | €11,633 | €76,796 | €356,606 |
| 8 | €42,501 | (€13,175) | (€11,085) | (€6,375) | €11,866 | €88,662 | €365,521 |
| 9 | €43,351 | (€13,439) | (€11,307) | (€6,503) | €12,103 | €100,765 | €374,659 |
| 10 | €44,218 | (€13,708) | (€11,533) | (€6,633) | €12,345 | €113,111 | €384,025 |
Exit in year ten
Ten-year outcome
A 12.3% headline gross yield converts into roughly a 3% Year 1 after-tax cash yield on all-in invested cost. That gap is the entire reason we underwrite before we sell.
Case C — Strong execution
The same asset with better rate and occupancy execution, renegotiated management and channel terms (17% / 10%), and a firmer coastal market at the point of sale.
€341,000
Case C — Strong execution
€44,000
Case C — Strong execution
€15,870
Case C — Strong execution
6.8%
Case C — Strong execution
Year 1 income and cost waterfall
Assumption set
What has to be true
Ten-year cash flow, year by year
| Year | Gross rent | Mgmt & channels | Fixed costs | Rental tax | Owner cash flow | Cumulative | Value |
|---|---|---|---|---|---|---|---|
| 1 | €44,000 | (€11,880) | (€9,650) | (€6,600) | €15,870 | €15,870 | €312,000 |
| 2 | €45,320 | (€12,236) | (€9,891) | (€6,798) | €16,394 | €32,264 | €324,480 |
| 3 | €46,680 | (€12,603) | (€10,139) | (€7,002) | €16,936 | €49,200 | €337,459 |
| 4 | €48,080 | (€12,982) | (€10,392) | (€7,212) | €17,494 | €66,694 | €350,958 |
| 5 | €49,522 | (€13,371) | (€10,652) | (€7,428) | €18,071 | €84,766 | €364,996 |
| 6 | €51,008 | (€13,772) | (€10,918) | (€7,651) | €18,667 | €103,432 | €379,596 |
| 7 | €52,538 | (€14,185) | (€11,191) | (€7,881) | €19,281 | €122,713 | €394,780 |
| 8 | €54,114 | (€14,611) | (€11,471) | (€8,117) | €19,916 | €142,629 | €410,571 |
| 9 | €55,738 | (€15,049) | (€11,758) | (€8,361) | €20,570 | €163,199 | €426,994 |
| 10 | €57,410 | (€15,501) | (€12,052) | (€8,612) | €21,246 | €184,446 | €444,073 |
Exit in year ten
Ten-year outcome
Even in the upside, the return is earned through purchase price and operating discipline — not through a promotional yield number on a brochure.
Sensitivity
Ten-year unlevered IRR on the base-case cost structure, varying only Year 1 gross rent and the annual appreciation assumption. Everything else — the €341,000 all-in cost, 31% variable costs, 15% rental tax, 15% capital-gains tax and 3% disposal costs — is held constant.
| Appreciation \ Year 1 rent | €28,000 | €32,000 | €37,000 | €41,000 | €45,000 |
|---|---|---|---|---|---|
| 0.0% p.a. | 0.3% | 1.0% | 2.0% | 2.7% | 3.4% |
| 1.5% p.a. | 1.5% | 2.2% | 3.0% | 3.7% | 4.4% |
| 2.5% p.a. | 2.3% | 2.9% | 3.8% | 4.4% | 5.1% |
| 3.5% p.a. | 3.0% | 3.7% | 4.5% | 5.2% | 5.8% |
| 5.0% p.a. | 4.3% | 4.9% | 5.7% | 6.3% | 6.9% |
Read the grid rather than the brochure. A €4,000 swing in annual rent moves the return roughly as much as a full percentage point of annual capital growth — and only one of those two is inside the owner’s control.
What it takes
| Target | Required Year 1 gross rent | Gross yield on €300k |
|---|---|---|
| Operating break-even after Albanian tax | €17,870 | 6.0% |
| 4% after-tax cash yield on all-in cost | €43,130 | 14.4% |
| 5% after-tax cash yield on all-in cost | €49,444 | 16.5% |
At this cost structure the property needs close to €49,500 of annual gross rent — about 16.5% on purchase price — to deliver a 5% Year 1 after-tax cash yield. Purchase price discipline and operating efficiency matter more than promotional yield claims.
Tax structure
Rental income of an individual owner is reported gross and taxed at 15% of gross rent — management, channel and maintenance costs do not reduce the base. Residential buildings carry an annual tax around 0.05% of the assessed base, adjustable by municipality. The sale gain is taxed at 15% on the nominal price increase.
A Dutch resident reports the foreign property in Box 3. On the provisional 2026 method a €300,000 second home implies roughly €5,198 of theoretical Box 3 tax before relief. The Netherlands–Albania treaty allocates taxing rights over Albanian immovable property to Albania and requires a Dutch reduction, so the incremental Dutch charge is expected to be close to nil in this simplified standalone case.
Albania still taxes at source; the residence country then determines reporting and relief. Belgium assigns a cadastral income with possible progression effects, Germany may exempt with progression, France can pull the asset into IFI above €1.3m of household net real estate. We never quote one 'European after-tax yield'.
Direct personal ownership is the launch structure. An Albanian company is only considered once scale and facts justify the cost, and only with a written tax opinion. A corporate structure is never marketed as automatically more efficient.
Full transparency
Important
These are illustrative modelled cases, not advice and not a guarantee. Figures are unlevered, before investor financing, personal use, currency movement, VAT and inheritance or gift taxes. Tax treatment depends on the investor, the rental activity, the ownership structure, the municipality, treaty application and the law in force at the time. Legal and tax opinions come from qualified professionals.
How we underwriteTake it with you
The complete written memorandum behind this page: the model workbook, the tax analysis and the underwriting standard we apply before a property reaches you.