Making an investment property profitable: the tourism exploitation model

How to turn a real estate asset into a stable source of income

Making an investment property profitable: the tourism exploitation model

How to turn a real estate asset into a stable source of income

When a client presents us with an investment opportunity on the Costa del Sol with the intention of generating returns, one of the first conversations we have is about the operating model. The choice between long-term rentals, holiday rentals, or a hybrid model defines the expected profitability, the daily operations, and the tax implications of the investment. There isn't one model that's inherently better than another; there's a model that's right for each type of property and each investor profile.

Holiday rentals, regulated in Andalusia as Tourist Accommodation (VFT), offer the highest gross returns on the market when managed correctly. A well-located and well-managed property in Marbella, Estepona, or Mijas Costa can achieve between 5% and 7.5% gross annual returns. The key variable is occupancy, which in turn depends on three factors: location, product quality, and management model.

Andalusian regulations for holiday rental properties require registration in the Tourism Registry, compliance with minimum technical requirements (WiFi access, air conditioning, basic equipment), a visible identification sign, and adherence to homeowners' association regulations. The operation is legal, safe, and compatible with professional rental income, but it demands rigorous management that few owners can handle directly.

This is where the Marevo model comes in. We offer our investor clients a comprehensive management service that handles all operations: registration and maintenance of the VFT (Vacation Rental Property) registry, generation of multilingual listings on Airbnb, Booking.com, Vrbo, and our own platforms, reservation management, guest communication, personalized check-in, cleaning and restocking services, technical maintenance, tax management, and quarterly settlements. The owner receives a clear monthly report, and the property operates like a professionally managed asset.

The numbers are interesting when executed well. A three-bedroom villa in Nueva Andalucía with an acquisition price of €1.5 million can generate between €80,000 and €120,000 gross annually with proper occupancy. After deducting management fees, community fees, utilities, property tax, and maintenance, the net return is between 4% and 6%. To this must be added the asset's appreciation, which on the Costa del Sol has averaged around 4% annually over the last decade.

The tax regime is reasonable. Income is subject to Non-Resident Income Tax (IRNR) or Personal Income Tax (IRPF) for residents, with deductions for expenses. The business structure—sole proprietorship or company—depends on the volume of business and the client's personal circumstances, and the decision is made with specialized tax advice. For larger transactions, a holding company may be more tax-efficient.

Long-term rentals are the ideal option for those who prioritize stability over profitability. Gross returns range from 3% to 4.5%, but operations are simpler and the risks associated with problematic tenants are lower. We recommend this model for investors seeking predictable income without operational overhead, or for properties whose location or type makes them unsuitable for vacation rentals.

At Marevo, we work with both models with the same rigor. The key is aligning the strategy with the client's objectives and executing operations professionally. A poorly managed property destroys profitability. A well-managed property becomes a superior financial asset to almost any alternative in today's market.