Residential yields in Bucharest are frequently quoted at 7–8% gross. That figure is useful for comparison, but it is not what reaches an investor’s account. The gap between gross and net is substantial and worth modelling before committing capital.
A worked example, using a central Bucharest 2-room apartment at a purchase price of €230,000 and a monthly rent of €1,100.
Gross annual rent: €13,200. Gross yield: 5.74%.
Deductions: Income tax on rental revenue — in Romania, natural persons declare rental income and apply a standard 40% deductible expense; the taxable base is 60% of gross rent, taxed at 10%. On €13,200 gross, that is approximately €792/year in tax. Property management fee (10% of rent): €1,320/year. HOA and building maintenance charges: approximately €100–150/month, so €1,200–1,800/year. One month vacancy per year (conservative for a well-located central unit): €1,100.
Net rental income after these deductions: approximately €8,700–9,300/year. Net yield: 3.8–4.0%.
The spread between gross and net — roughly 170 basis points in this scenario — is within the normal range for a professionally managed central residential asset. It is not a problem; it is the operating cost structure of the investment. The issue arises when investors size their acquisition on the gross figure and then find the net income does not service the acquisition cost.
Two variables that move the net yield materially: vacancy rate (the largest single risk in yield-focused residential) and management costs (which can be reduced by direct management at the cost of time). A corporate or diplomatic tenant on a 2-year lease eliminates most vacancy risk. In central Bucharest, this type of tenant is the primary rental demand driver.
Note: the income tax calculation above reflects the Romanian tax regime as of my training data and should be verified against current legislation before use in financial modelling. If you want to model an investment scenario for a specific unit, I am happy to walk through the numbers. Details at mihaelaoroian.com. If you would like to see more about a project suitable for asset income generators, please visit www.mosaicresidencebucuresti.ro.
