Before calculating how much your property can earn, you need to know how much it actually costs to operate.
Owning a holiday rental in Mallorca can be an excellent investment. But the nightly rate you see on a booking platform is not your profit.
Between maintenance, utilities, cleaning, taxes, insurance and management, there are several costs that need to be considered before deciding whether a property is truly profitable.
Here is a simple framework to help property owners understand the real numbers.
Some costs exist whether the property is occupied or not.
These may include:
Add these together to understand the annual cost of simply owning and operating the property.
Some expenses increase every time a guest arrives.
For example:
This is why the number of bookings matters, not just the number of nights occupied.
A property occupied for 200 nights through 20 bookings has a very different cost structure from one occupied for 200 nights through 60 short stays.
Electricity, water, gas and air conditioning can represent a significant expense, especially during Mallorca’s hottest months.
A property with a swimming pool, large garden, several bathrooms or extensive air conditioning can have considerably higher running costs than a small apartment.
Understanding your average monthly consumption helps you calculate a realistic operating budget.
If you use booking platforms, there may be commissions or other booking-related costs.
And if you work with a professional property manager, management fees should also be included in your calculation.
This isn’t necessarily a cost to minimize.
Professional management can increase occupancy, improve pricing, reduce operational problems and save the owner a considerable amount of time.
The important thing is to calculate the net return, not simply the gross booking revenue.
A property doesn’t only cost money when something breaks.
Furniture wears out.
Air conditioning needs servicing.
Mattresses eventually need replacing.
Paint deteriorates.
Appliances don’t last forever.
A good financial plan should include a maintenance and replacement reserve every year.
That way, an unexpected repair doesn’t suddenly turn a profitable year into a loss.
This is where many calculations become unrealistic.
Don’t calculate your income based on:
365 nights × your average nightly rate
Instead, estimate a realistic occupancy rate based on the property’s location, quality, seasonality and demand.
For example:
200 booked nights × €180 average nightly rate = €36,000 gross rental revenue
But €36,000 is not your profit.
You still need to subtract your operating costs.
A simple formula is:
Gross rental revenue
− platform/booking costs
− cleaning & turnover costs
− utilities
− maintenance
− insurance & property costs
− management
− applicable taxes
= Net income
Only after doing this calculation can you understand whether your property is actually performing well.
This is an important part of the calculation—and one that deserves its own article.
A two-night booking and a two-week booking don’t generate the same operational cost.
Every turnover can involve:
cleaning + laundry + check-in + check-out + consumables + coordination + potential maintenance.
So choosing the right minimum stay isn’t simply about getting more bookings.
It’s about finding the right balance between:
occupancy + nightly rate + turnover costs + workload.
We’ll dedicate a separate article to this because the ideal minimum stay can be very different for an apartment in Palma, a beachfront property or a large villa.
There is no single number that applies to every property in Mallorca. Location, size, condition, community fees, energy consumption and amenities can make a significant difference.
As a rough annual planning guide, before rental-platform commissions, management fees and income tax, you could consider:
| Property type | Approx. annual operating costs* |
|---|---|
| 🏠 Apartment | €4,000 – €8,000 |
| 🏡 House, 2–4 bedrooms | €7,000 – €14,000 |
| 🌴 Villa, 4+ bedrooms with pool | €15,000 – €30,000+ |
*Indicative ranges only. Actual costs vary significantly according to location, property size, community fees, utilities, pool/garden requirements, insurance, maintenance and level of service.
Apartment
House, 2–4 bedrooms
Villa, 4+ bedrooms with pool
For context, current Mallorca cost guides put annual running costs excluding community fees at roughly €1,170–€2,360 for an 80 m² apartment, €2,600–€5,300 for a 180 m² house, and €4,200–€9,600 for a 300 m² finca, before adding items such as management, pool/garden services and some property-specific costs. Another 2026 Mallorca guide gives example totals of about €3,640/year for a €350,000 apartment, €9,300 for an €850,000 house and €27,800 for a €2.5m luxury villa, illustrating how dramatically the profile of the property changes the budget.
Don’t confuse operating costs with investment costs.
Mortgage payments, purchase taxes, financing costs and depreciation are separate considerations. And the tax treatment of rental income depends on the owner’s circumstances, so those figures should be calculated with a qualified tax adviser rather than estimated generically.
The right question isn’t:
“How much can I charge per night?”
It’s:
“How much will I actually earn after all the costs of operating my property?”
A profitable holiday rental starts with realistic numbers.
At myOM Property Management, we believe property owners should understand the economics of their investment before making decisions about pricing, occupancy and management.
Know your costs. Know your numbers. Then optimize your property.
When calculating the profitability of your holiday rental, which cost do you think is most often underestimated?