Overseas income-generating real estate is one of the areas that has attracted the most interest among Israeli investors in recent years. The reason is clear: certain markets appear to offer lower entry prices, rental yields that seem higher than in Israel, and the potential to diversify risk beyond the local market. But behind the headlines, advertisements, and marketers’ presentations lies one fundamental question: How much do you actually earn from this investment, after all the costs, taxes, and risks?
To answer these important questions, we need to distinguish between “on-paper” returns and actual returns. This is a critical distinction, because many investors are drawn to impressive gross return figures, only to discover later that the bottom line is much lower. When professionally evaluating an overseas real estate investment, one cannot rely solely on the monthly rent listed in an ad or a salesperson’s projection. One must examine the entire economic framework surrounding the property: purchase price, associated costs, taxation, maintenance, management, vacancy rates, currency, and the investor’s ability to navigate geographical and regulatory challenges.
To prepare yourself to make an informed decision, we recommend expanding your knowledge of overseas real estate investment by taking a course on overseas real estate investment, which covers transaction analysis, tax implications, and potential risks.
Why Are Israeli Investors Looking Abroad?
The growing interest in income-producing real estate abroad stems from several reasons. First, many investors feel that the Israeli market is very expensive, especially in the major cities. Second, there is a genuine desire to diversify their investment portfolios and not be dependent solely on the local economy. Third, certain countries in Europe offer properties at prices that seem more affordable, and sometimes also provide current yields that appear more attractive.
But these figures can be misleading. A low purchase price isn’t necessarily a good deal. A cheap apartment may be located in an area with low demand, a less stable population, high renovation costs, or a rental market that doesn’t really support high returns over the long term. Therefore, anyone looking to invest in overseas real estate should think like an analyst rather than a consumer lured by marketing hype.
The real need for an Israeli investor is to understand whether the property generates positive cash flow, or is simply a property that “sounds good.” An Israeli investor must also factor in distance: they are not located near the property, are not always familiar with the local market, and cannot handle every issue on their own. Therefore, the calculation must include not only the financial return but also the level of operational complexity.
How to Calculate Real Return
When discussing returns, there is a tendency to use terms that are too general. But in practice, it is necessary to distinguish between several componentswhen calculating the return on an overseas real estate investment: Gross return is the annual rental income divided by the property price. This is a useful figure, but it is only part of the picture.
Net yield is the income after deducting operating expenses and taxes.
Total yield may also include future appreciation, but this is a projection rather than guaranteed income.
True yield, from the perspective of a prudent investor, is what remains after all direct and indirect costs have been accounted for.
This means that the question isn’t just “how much rent the property generates,” but “how much money actually goes into the account, relative to the amount of money invested.” That’s the difference between a deal that looks great on paper and one that truly contributes to your investment portfolio.
Costs That Must Be Included in the Calculation
One of the most common mistakes is to calculate the return based solely on the apartment’s price and the monthly income. In reality, every overseas investment property transaction involves a series of costs that can completely change the picture.
There are purchase costs: purchase tax, attorney fees, real estate agent fees, legal due diligence, registration, and sometimes fees charged by a local agent. There are move-in costs: renovations, furniture, adjustments to a rental property, utility hookups, or upgrades needed to make the property suitable for rent. There are operating costs: property management company fees, maintenance, repairs, insurance, transfer fees, managing a local bank account, and sometimes accounting services.
Beyond that, there are indirect but significant costs: periods when the property is vacant, tenants who don’t pay on time, currency depreciation, or the need to replace wear-and-tear items such as air conditioners, appliances, or furniture. All of these must be converted into monetary terms before drawing any conclusions about the rate of return.
The Right Work Formula
The simple way to calculate the real return is as follows: net annual income divided by the total investment.
The total investment includes not only the price of the property, but also all costs associated with the purchase and preparation for rental. The net annual income includes not only rent, but also what remains after all operating expenses have been paid.
For example, if an investor purchased an apartment for 150,000 euros and paid an additional 15,000 euros in taxes, legal fees, and renovations, his total investment is 165,000 euros. If the apartment generates €800 per month—that is, €9,600 per year—but the investor pays €2,000 per year for management, maintenance, and insurance, plus another €1,000 for vacancies and other expenses, his net income is €6,600. In this case, the actual return is only around 4%, not close to the 7% it seemed to be at first glance.
That is exactly the difference between a marketing figure and an economic model.
Why Does Taxation Make Such a Difference for Income-Generating Real Estate Abroad?
For an Israeli investor, taxation is not a technical detail but a key factor in determining whether a transaction is worthwhile. Investing in overseas real estate almost always results in double taxation: both in the destination country and in Israel, according to the tax rules applicable to Israeli residents. This means that what appears to be a pre-tax profit may be significantly reduced after tax liabilities are taken into account. In countries that have a tax treaty with Israel, such as Greece, there is no risk of double taxation.
In addition, every country operates differently: some places have high property transfer taxes, some have taxes on rental income, and others have relatively low taxes but high other expenses. Sometimes, it is precisely in states that seem “investor-friendly” that the actual cost rises due to operational inefficiencies, high tenant turnover, or the need for closer management.
Therefore, anyone considering investing in overseas income-producing real estate must also examine the tax implications and not just the gross return.
Currency, Returns, and Risk
Another factor that cannot be ignored is currency. If an Israeli investor purchases a property in euros or dollars, but the income or some of the expenses are affected by the exchange rate, the investor’s real return may change even without any change in the property itself.
For example, if the shekel strengthens against the euro, the rent received in euros is worth less in shekels. If the shekel weakens, the situation is reversed. Therefore, investing in overseas real estate is not just a real estate transaction but also a currency exposure. Some investors view this as a diversification advantage; others see it as an additional risk that must be managed carefully.
Anyone who prepares a return forecast without taking currency into account is painting an incomplete picture.
Why do Athens and Greece keep coming up again and again?
When discussing income-generating real estate abroad, Greece in general—and Athens in particular—almost always come up. There are several reasons for this: a relatively large market, tourist appeal, entry-level prices that are still considered reasonable compared to other Western European cities, and rental demand coming from both the local and tourist markets.
But caution is needed here as well. Athens is not a monolith. Some neighborhoods offer better potential, some are more suitable for long-term rentals, and others are geared more toward tourism or short-term rentals. The differences from one neighborhood to another can be dramatic, both in terms of purchase prices and in terms of demand, tenant quality, and the risk of vacancy.
Therefore, when considering real estate investments in Greece, it’s not enough to simply say “Athens.” You need to ask: Which neighborhood? What type of property? Who is the target audience? And what rental strategy is appropriate?
A Practical Example from Athens
Suppose an investor is considering a small apartment in Athens with a purchase price of 170,000 euros. In addition to the property price, he pays another 18,000 euros for taxes, a lawyer, real estate agent fees, and initial renovations. In other words, his total cost is 188,000 euros.
If the apartment is rented out for 950 euros a month, the gross annual income is 11,400 euros. But now we have to factor in property management, maintenance, insurance, periods when the apartment isn’t rented out, and ongoing repairs. Let’s assume these expenses total 3,000 euros per year. At the same time, if there are also local taxes or additional tax liabilities, the net income could drop even further. In such a scenario, the net income might be around 8,000 to 8,200 euros per year.
In such a case, the real yield would be around 4.2%–4.4%. This might still be a reasonable investment, but it’s a far cry from the figure an investor might have expected if they had considered only the gross rent. And that’s exactly the point: real yield is measured after the last expense, not before the first.
Who is this for?
Overseas income-generating real estate is best suited for investors who are willing to work methodically, analyze the numbers in depth, and maintain a medium- to long-term investment horizon. It is suitable for those who understand that an overseas property is not just an investment product but also a management project. It is suitable for those seeking geographic diversification and those willing to invest time in researching the market, the region, taxation, and property management.
This is also suitable for those looking for an alternative to the local market, especially when real estate prices in Israel seem too high relative to the return. For such investors, income-producing real estate abroad can be a diversification tool, as long as it is evaluated with an open mind and not through the lens of a “get-rich-quick” fantasy.
What should you watch out for?
There are times when it’s best to take your foot off the gas. If you don’t have a solid understanding of the local market, if you don’t have legal and tax advice, if the return is presented too aggressively, or if the deal is based on general promises rather than verified data—these are red flags.
You should be especially cautious when the marketing pitch focuses solely on the property’s low price or high return, without disclosing all the expenses. Even an investment that seems “simple” can become very complicated if it turns out that management is difficult, there’s a problem finding tenants, or the area is less stable than it initially appeared.
For those seeking peace of mind, day-to-day control, and simple management, investing in overseas real estate may be less suitable, especially if there isn't a strong professional support system in place.
Don't ask "how much," but rather "how much is left"
If you had to sum up the main idea in one sentence, you could put it this way: A smart investor doesn’t just ask what the return on an overseas apartment is, but rather how much is left after taxes, expenses, vacancy, and management costs. That’s the question that distinguishes a deal that looks good from one that actually generates value.
To put it more simply: Overseas income-producing real estate should not be evaluated based on promises, but on results. Those who understand this know how to calculate the true return and aren’t blinded by incomplete figures.
Frequently Asked Questions
What is the difference between gross yield and net yield?
Gross yield calculates only rental income relative to the property's price. Net yield also includes expenses, taxes, management, maintenance, and vacancy.
Why Are Actual Returns on Overseas Real Estate Sometimes Lower Than What Is Advertised?
Because financial reports typically show income before expenses. In reality, there are costs associated with purchasing, managing, and repairing the property, as well as taxes, and sometimes periods without a tenant.
How to Determine Whether an Overseas Real Estate Investment Is Really Worth It?
Calculate all costs in advance, estimate a realistic annual income, and divide the net profit by the total investment.
Is Athens a good destination for overseas real estate investments?
Yes, but it depends a lot on the neighborhood, the type of property, and the rental strategy. Not every apartment in Athens will yield the same return.
Who Should Invest in Overseas Income-Generating Real Estate?
For those who are willing to analyze data in depth, work with local professionals, and hold an investment for the medium or long term.
When Should You Be Especially Careful?
When they promise excessively high returns, when they don't disclose all the costs, or when there isn't full transparency regarding taxation, management, and risk.
