What Costs Do Landlords Bear and How Can They Reduce Them?

March 4, 2025
Duprat

Real estate investment attracts many private investors. However, do initial simulations truly capture all the costs associated with rental investments?

Costs Associated with Real Estate Investment

Once a property is identified, landlords must repay their loan, including principal, interest, and borrower’s insurance. These expenses depend on the total cost of the investment, including notary fees, renovation work, and furnishings. Additionally, unexpected maintenance or energy efficiency improvements can add to the budget.

The main way to optimize these costs is through regular renegotiation of both the mortgage and borrower’s insurance, a strategy that can lead to substantial savings over time.

Costs Related to Rental Management

Hiring a property management agency generally costs around 8% of the total rent collected, and sometimes, the cost of tenant placement (advertisement, visits, lease drafting, and condition reports) is billed separately—often equivalent to half or a full month’s rent.

A 2019 study published in Les Echos highlighted the lack of transparency in agency fees, estimating the actual cost of property management at 10.2% of collected rent and charges—or €930 per year for an average rent of €760 per month in France. This means that self-management can save landlords a significant amount annually.

Lease agreements, condition reports, and other administrative documents are sometimes billed separately. However, free, legally compliant templates are now widely available. Moreover, landlords are responsible for additional mandatory documents such as condominium regulations and technical diagnostic reports.

Insurance Costs for Landlords

Each rental property is typically associated with four types of insurance (excluding borrower’s insurance):

Multi-risk home insurance (MRH): This is mandatory for tenants, so it does not generally concern landlords.
Non-occupant landlord insurance (PNO): Mandatory for condominium properties, costing around €5 to €10 per month. Surprisingly, only 15% of landlords subscribe to this insurance, even though it provides crucial protection.
Unpaid rent insurance (GLI): Subscribed to by about 20% of landlords, costing 2% to 3% of rental income (around €20 per month for an average rental). Alternatives exist, such as GarantMe, Visale, or using a third-party guarantor. However, combining GLI and a guarantor is illegal, except in specific cases.
Legal protection insurance: Subscribed to by 40% of individuals, costing €50 to €80 per year (around €5 per month), helping cover legal disputes.

In total, landlords spend approximately €30 per month on insurance, or €10 to €15 per month in cases where a tenant provides a guarantor. Over the past five years, insurance costs have risen by 11%, making regular comparisons of coverage and market rates essential. Qlower automatically does this for its clients.

Accounting and Tax Declaration Costs

The complexity of tax filing depends on the rental scheme chosen:

For unfurnished rentals, calculating income and expenses is relatively simple. Rental income is added to the landlord’s total taxable income and taxed at their marginal tax rate.
For furnished rentals, accounting complexity increases, especially under the real taxation regime (BIC réel), which requires professional bookkeeping to account for property depreciation. Accounting fees typically range from €500 to €1,000 per year, plus €140 for a tax compliance center (CGA) to validate declarations.

Fortunately, these accounting costs are partially deductible, and new digital solutions like Qlower can significantly reduce them by automating tax calculations.

Contact Qlower Accountants for Free

We will get back to you as soon as possible.

Additionally, furnished rental properties require business registration (SIRET number), which is free but makes landlords liable for CFE (Cotisation Foncière des Entreprises) from the second year onward. The CFE is calculated based on the property’s rental value and local tax rates—a fixed cost that cannot be optimized.

General Taxation Costs for Landlords

Taxes significantly impact rental investment profitability. Regardless of the rental model, landlords must account for:

Property tax (taxe foncière), which the owner pays except for the household waste collection tax (TEOM), which tenants must cover (approximately €80 per year). Many landlords forget to pass this cost onto tenants, leading to unnecessary expenses.

Qlower Experts’ Advice

Beyond unavoidable costs such as taxes and insurance, real estate investors now have access to innovative solutions for financing, management, insurance, accounting, and taxation.

Traditionally, landlords paid around 10.2% of rental income (€930 per year) for property management plus €600 in accounting fees. However, by spending just a few hours per year on self-management and automation tools, landlords can easily save over €1,000 per rented unit.

By dedicating just a few hours annually, landlords can significantly improve their rental profitability.

Join the Qlower Community

Qlower offers useful content (articles, tips, and more) to help you build and grow your real estate portfolio. Join the Qlower community and share your questions and feedback.