"Guaranteed returns", "double-digit yield": listings for buy-to-let flats in Cape Verde often quote an attractive percentage and rarely show how it was worked out. This guide gives no market rates. Instead, it shows you how to calculate rental yield in Cape Verde yourself, line by line, so you can compare two properties on the same basis and test a promise before you sign.
Gross or net yield: what does each figure measure?
Gross yield compares annual rent with the purchase price and ignores every expense. It is useful for a first sort of listings. Net yield deducts the costs the owner actually bears and compares the result with the total amount invested. Only net yield tells you what the property really earns, and the gap between the two can be wide.
- Gross yield = expected annual rent ÷ purchase price × 100.
- Net yield = (rent actually collected − owner's annual costs) ÷ total investment × 100.
- Total investment = price + acquisition costs (deed, transfer tax, registration) + works + furnishing.
This calculation stops before income tax on rent. How your rental income is taxed depends on your position in Cape Verde and, if you live abroad, in your country of residence, so ask an accountant to model it before comparing any "after-tax" figures.
Which costs must you deduct to get net yield?
Deduct every expense the owner carries in a normal year, including those that do not fall due every month. The usual omissions are empty periods, replacing furniture and maintenance caused by salt air. Each line should rest on a quote, an invoice or a document, never on a verbal estimate.
- Management: an agency fee or payment to someone on the island for check-ins, check-outs, cleaning and emergencies, essential if you live abroad.
- Maintenance and repairs: air conditioning, water heater, paintwork, locks, and joinery exposed to corrosion.
- Condominium charges: the share you cannot pass on to the tenant, plus any works voted by the condomínio.
- IPI: the annual municipal property tax, paid in April, with a surcharge provided for unoccupied buildings.
- Insurance for the property and, for holiday lets, the operator's liability cover where relevant.
- Furniture and equipment: spread over their useful life instead of forgetting them after year one.
- Vacancy: weeks or months without a tenant, and unsold nights in the low season.
- Utilities you still pay: water, electricity, internet, if the rent includes them.
Long-term or short-term letting: how does the calculation change?
You cannot compare the two models on headline rent alone. A long-term let brings a steady monthly amount with low running costs. A holiday let may show higher income, but it adds a licence, guest services, cleaning, platform commissions and uncertain occupancy. Run a separate calculation for each scenario.
| Calculation line | Long-term (lease) | Short-term (alojamento complementar) |
|---|---|---|
| Income | Monthly rent × months let | Nightly rate × nights actually sold |
| Vacancy | Gaps between tenants | Seasonality, cancellations, unsold nights |
| Legal framework | Lease and security deposit | Registration and licence, renewable every three years; stays capped at 90 days per guest |
| Specific costs | Refreshing the flat between leases | Annex II licence fees, contribuição turística, cleaning, linen, guest reception |
| Building rules | House rules of the building | Cap on the floor area used for AC in the building |
For a holiday let, check before buying that the building still allows a new alojamento complementar. Decreto-Lei n.º 56/2024 caps AC floor area in a building divided into units at 50%, which can rise to 75% only on a resolution of the condomínio. A flat that cannot be licensed has no holiday-let yield at all.
What does a full calculation look like? An illustrative example
The example below is entirely fictitious: the amounts were chosen to show the method and do not describe a real property, rent or price observed in Cape Verde. It covers an imaginary flat let furnished on an annual lease, with one empty month and local management.
| Item (illustrative example) | Annual amount | Note |
|---|---|---|
| Purchase price | €100,000 | Basis for gross yield |
| Acquisition costs + furnishing | €10,000 | Total investment: €110,000 |
| Expected rent (€650 × 12) | €7,800 | Gross yield: 7.8% on price |
| Vacancy (1 month) | −€650 | Rent collected: €7,150 |
| Local management | −€715 | Fictitious: 10% of rent collected |
| Non-recoverable condominium charges | −€600 | From the condomínio accounts |
| Maintenance and repairs | −€500 | Air conditioning, paint, small breakdowns |
| Insurance | −€250 | Per the insurer's certificate |
| IPI | −€80 | Fictitious amount; taxable value is set by the municipality |
| Furniture replacement reserve | −€300 | Furniture spread over its useful life |
| Net result before income tax | €4,705 | Net yield: 4,705 ÷ 110,000 ≈ 4.3% |
The point is not the percentage, which is no benchmark, but the gap: here, net yield is barely more than half of gross yield. Rebuild the same table with your own quotes and documents, and do it for every property on your shortlist.
How do you check a seller's yield claim?
First ask whether the figure is gross or net, which price it is based on, and whether it uses rent actually received or rent assumed. A credible yield is backed by paperwork: lease, statements, condominium accounts, tax notices. Without documents, treat the number as a sales assumption rather than a fact.
- Already let: a copy of the current lease, the actual rent, how long the tenant has been there and proof of payments.
- Holiday let: the AC registration number, a valid licence and booking and income history covering at least one full year.
- Condominium: recent minutes, the level of charges and any works voted or announced.
- IPI: assessment notices and proof of payment for previous years.
- Management: the current agency or manager's contract, with fees and duties.
- Comparables: asking rents for similar properties in the same neighbourhood, cross-checked with a local professional.
Be especially wary of yields "guaranteed" by a developer or a management company. Ask who provides the guarantee, for how long, how financially solid they are and what happens when it expires. Also check the figure has not been worked out while leaving out furniture or acquisition costs.