Rental Yield in Montevideo 2026: Gross vs. Net

INGAR · 2026-02-13 · Investment

The number that matters is not the one they show you

When you look for investment properties in Montevideo, you'll see "yield" everywhere: on portals, in real estate listings, in press articles. It's almost always gross yield. And it's almost always inflated.

Not because it's a lie, but because gross yield doesn't include vacancy, doesn't include taxes, doesn't include maintenance, doesn't include management. It's like looking at your nominal salary without deducting income tax or social security contributions: it's not what ends up in your pocket.

In this article we go through the full calculation. With a real-numbers example, line by line, so you can see how much a rental apartment in Montevideo actually yields in 2026. And above all, so you can replicate the calculation for any property you're evaluating.

Gross vs. net: the two formulas

Gross yield (for quick filtering)

This is the quick calculation, useful for comparing properties against each other and filtering out those that don't work even in the best-case scenario:

Gross yield = (Monthly rent × 12) / Purchase price

If you buy an apartment for USD 120,000 and rent it out for USD 650/month:

Gross = (650 × 12) / 120,000 = 6.5%

That's what you see published. Now let's look at what you actually keep.

Net yield (for making decisions)

Net yield = (Real annual income − All costs) / Total investment

This includes all expenses a landlord actually pays. And total investment includes not only the property price but also purchase costs (deed, notary fees, transfer taxes). Let's take it step by step.

The complete example: USD 120,000 apartment

Let's take a concrete case that represents the current market well: a 2-bedroom apartment in Cordón or Tres Cruces, purchased for USD 120,000, rented at USD 650/month (approximately $28,000 pesos at current exchange rates).

Annual gross income

Item	Annual amount (USD)
Monthly rent × 12	7,800

Annual costs for the landlord

Cost	Annual amount (USD)	Note
Vacancy (1 month/year)	−650	27-day average placement time (InfoCasas 2025 data), plus tenant turnover
Real estate management	−536	8% of rent collected + VAT (22%); market range: 5–10% + VAT
Property tax (Contribución Inmobiliaria)	−350	Varies by cadastral value; rates from 0.18% to 1.80% (IMM)
Primary Education Tax (Impuesto de Primaria)	−120	Exempt if cadastral value < $282,612; applies in this case
Income tax (IRPF) on rental income	−720	12% on net annual income (after deducting taxes and commissions)
Maintenance/repairs	−540	Prudent reserve: ~1 month's rent/year (appliances, paint, etc.)
Fire insurance (PH)	−80	Mandatory in horizontal property (Law 10.751)
Total annual costs	−2,996

Net result

Metric	Value
Annual gross income	USD 7,800
Total costs	−USD 2,996
Annual net income	USD 4,804
Gross yield	6.5%
Net yield	4.0%

From 6.5% gross to 4.0% net. 2.5 percentage points vanished in costs. And this is a reasonable scenario, not a pessimistic one. If vacancy extends to two months, or there's a major repair (boiler, moisture, pipes), the net drops to 3% or less.

IRPF breakdown: how it actually works

Income tax on real estate capital income has its quirks in Uruguay and is worth understanding well:

Annual rate: 12% on net income (after allowed deductions)
Monthly advance payments: 10.5% of gross monthly rent, withheld on a monthly basis
Allowed deductions: property tax (Contribución Inmobiliaria), Primary Education Tax, real estate commissions + VAT, bad debts (after 3 months of non-payment)
Non-residents (IRNR): pay 10.5% on gross income, with no deductions
Exemption: if your total rental income is less than 40 BPC annually ($274,560 in 2026), you may be exempt, provided you waive banking secrecy before DGI and do not generate other capital income exceeding 3 BPC

In our example, USD 650/month (~$28,000) yields annual income of ~$336,000, which exceeds 40 BPC, so IRPF applies. At year-end, a return is filed: total rents received are summed, deductions are subtracted, 12% is applied, and the result is offset against the 10.5% monthly advance payments already made.

To understand the full tax framework: property taxes in Uruguay.

Yield by zone: what the data says

According to the latest InfoCasas report (1st half 2025, cited by Ámbito), gross yields in Montevideo vary enormously by neighborhood:

Zone	Profile	Gross yield	Estimated net yield*
Manga	Peripheral	~13%	8–10%
Casabó	Peripheral	~12%	7–9%
Las Acacias	Peripheral	~11.5%	7–9%
Colón Sureste	Peripheral	~10.5%	6–8%
Aguada / Goes	Emerging	~7–8%	4–5%
Cordón / Tres Cruces	Established	~6–7%	3.5–4.5%
La Blanqueada	Established	~5–6%	3–4%
Pocitos / Punta Carretas	Premium	~5%	2.5–3.5%
Parque Rodó	Premium	~5%	2.5–3.5%
Carrasco / Punta Gorda	Premium	~4.5–5%	2–3%

*Estimated net yield assumes 1 month vacancy, management, taxes, and maintenance. In peripheral areas, actual vacancy and turnover tend to be higher, which can significantly reduce these figures.

How to read this table without misleading yourself

High gross does not mean high net. Peripheral neighborhoods with 10–13% gross have higher tenant turnover, more default risk, higher management costs, and actual vacancy that may be 2–3 months per year.
Low gross does not mean a bad investment. Pocitos at 5% gross may yield less cash flow, but with more stable tenants, lower vacancy, and greater potential for property appreciation.
The middle ground is where balance usually lies. Cordón, Tres Cruces, La Blanqueada, and Aguada combine sustained demand with more accessible purchase prices.

The five traps in yield calculations

1. Ignoring vacancy

According to InfoCasas, a rental property takes an average of 27 days to be placed in Montevideo. But that's the average listing time. Add the days of vacancy, cleaning, repairs between tenants, and you easily reach 1–1.5 months per year. For a studio with high turnover, it could be 2 months.

One month of vacancy in our example represents 8.3% of gross income. Two months, 16.6%. It's the biggest hidden cost.

2. Forgetting management fees

If you don't manage the rental yourself (rent collection, complaints, repairs, tenant relations), a real estate agency will charge you between 5% and 10% of the monthly rent, plus VAT. In the Uruguayan market, 8% + VAT is most common. On USD 650/month, that's ~USD 63 per month you don't see.

And note: the real estate commission at the start of the contract (1 month's rent + VAT for the landlord) is an additional cost that gets spread over the years of the contract but still exists.

3. Underestimating taxes

Property tax (Contribución Inmobiliaria) + Primary Education Tax + Income Tax (IRPF). All three are the landlord's obligation and cannot be passed on to the tenant. Together, they can represent between 15% and 20% of gross rental income, depending on the property's cadastral value and the income level.

4. Not budgeting for maintenance

Water heater, air conditioning, paint, moisture repairs, locks, appliances if the apartment is rented furnished. A practical rule: set aside the equivalent of one month's rent per year for maintenance. Some years you won't use it. Others you'll need double.

5. Calculating on purchase price without closing costs

The deed price is not your total investment. Add to that notary fees (~3%), transfer tax (ITP, 2% if applicable), and miscellaneous costs. On a USD 120,000 apartment, you're really investing USD 126,000–128,000. Calculating the return on 120,000 instead of 128,000 inflates your yield by half a point.

Studio vs. 2 bedrooms: the trade-off

It's a question we get constantly. The pure numbers say one thing, the operational reality says another.

Factor	Studio	2 bedrooms
Typical purchase price	USD 70,000–100,000	USD 110,000–160,000
Typical rent	USD 400–550/month	USD 600–800/month
Gross yield	6.5–7.5%	5.5–6.5%
Tenant turnover	High (shorter leases)	Medium-low (families, couples)
Actual vacancy	1.5–2 months/year	0.5–1 month/year
Property wear	Higher per m²	Lower per m²
Tenant profile	Students, young singles	Couples, small families
Management required	More intensive	Less intensive

In gross terms, the studio wins. But when you adjust for actual vacancy (more turnover = more empty months), greater wear, and more management time, the difference narrows considerably. In many cases, a well-located 2-bedroom yields more net income with fewer headaches.

Full analysis with scenarios: studio vs. 2 bedrooms for investment.

The price-to-rent ratio: another way to look at it

In addition to the percentage yield, there is a complementary metric: the price-to-rent ratio. It's calculated as follows:

P/R ratio = Purchase price / (Monthly rent × 12)

In our example: 120,000 / (650 × 12) = 15.4 years. That means you would need 15.4 years of gross rent to recoup the investment.

According to Numbeo data (January 2026), the average ratio in central Montevideo is 26 years, reflecting that many premium properties have low rental yields (their value lies more in appreciation).

As a general rule:

Under 15 years: good rental cash flow opportunity
15–20 years: reasonable range, balance between cash flow and appreciation
Over 20 years: the investment is justified more by appreciation than by rental income

Three scenarios for your investment

It's always worth projecting three scenarios. Using our base example (purchase USD 120,000, rent USD 650/month):

Variable	Optimistic	Base	Conservative
Annual vacancy	0.5 months	1 month	2 months
Management	0% (self-managed)	8% + VAT	10% + VAT
Annual maintenance	USD 300	USD 540	USD 900
Annual net income	USD 5,860	USD 4,804	USD 3,420
Net yield	4.9%	4.0%	2.9%

The difference between the best and worst scenario is 2 percentage points. Make decisions based on the base scenario, not the optimistic one. If the numbers don't work in the base case, it's not a good investment.

Common expenses: the cost you can't control

In horizontal property, common expenses are paid by the tenant. But they indirectly affect your investment: a building with high common expenses reduces the pool of tenants willing to rent your unit, which can increase vacancy or force you to lower the rent.

Approximate ranges in Montevideo (2026):

Building without amenities, no 24-hour doorman: $3,000–$6,000/month
Building with doorman, elevator: $6,000–$10,000/month
Building with amenities (pool, gym, etc.): $10,000–$18,000/month or more

A studio with common expenses of $12,000 and rent of $18,000 is unattractive to tenants (they pay almost the same in expenses as in rent). Before buying, ask for the last 6–12 months of common expense statements for the building.

More detail on what they include and how they're calculated: common expenses in Uruguay.

Checklist: before calculating yield

Define your goal: are you looking for monthly cash flow (rent income) or long-term appreciation? This completely changes which properties make sense for you.
Get real data from the building: common expenses for the last 12 months, condition of plumbing and roof, age of electrical installations.
Estimate a realistic rent: look for comparable properties in the same area on InfoCasas or MercadoLibre. Don't use the number the seller gives you.
Calculate net, not gross: use the cost table in this article as a base and adjust for your situation.
Use 3 scenarios: optimistic, base, and conservative. If the conservative case gives you less than 2.5% net, think twice.
Consider opportunity cost: that same capital in a UI-indexed term deposit or monetary regulation notes yields ~4–5% with zero management effort. The property must compensate for the work and the risk.
Review the legal framework: rental law and property taxes.

Calculation template

Use this structure to evaluate any property. Fill in your numbers and calculate both gross and net:

Field	Your number	Reference
Purchase price	USD ______	Deed price + closing costs (~3–5%)
Expected monthly rent	USD ______	Look for real comparables on portals
Vacancy (months/year)	______	Minimum 1 month; 1.5 if it's a studio
Real estate management	______%	5–10% + VAT; 0% if self-managed
Property tax (Contribución Inmobiliaria)	USD ______/year	Check with IMM using the cadastral number
Primary Education Tax (Impuesto de Primaria)	USD ______/year	Check with DGI; exempt if cadastral value < $282,612
IRPF (12% on net)	USD ______/year	Annual rent − deductions × 12%
Maintenance	USD ______/year	~1 month's rent as annual reserve
Fire insurance	USD ______/year	Mandatory in PH; ~USD 60–100/year
Annual net income	USD ______	(Rent × months collected) − all costs
Net yield	______%	Net income / Total investment × 100

In summary

The average gross yield in Montevideo is around 6% per year. But after vacancy, management, taxes, and maintenance, the actual net yield lands between 3.5% and 4.5% for established areas. That's not bad, but it's far from the 6% you see in listings.

The three rules that will save you from bad decisions:

Always calculate in net terms. Gross is for filtering, nothing more.
Vacancy is the biggest hidden cost. One empty month wipes out the equivalent of IRPF for the entire year.
Higher yield = more management work. If you don't have the time or inclination to deal with a challenging rental, established areas with lower turnover tend to be a better real-world deal.

If you're evaluating a specific property and want help with the numbers, talk to us. We do this calculation every day.

Sources

InfoCasas — 2025 Real Estate Market Report (average placement time: 27 days)
Ámbito (Uruguay) — Record rental yields by neighborhood, 1H 2025
DGI — IRPF on real estate capital income
IMM — Property tax: rates and deadlines
DGI — Primary Education Tax
Numbeo — Price-to-rent ratio Montevideo (January 2026)
INE — Real Estate Activity Indicators - Rentals