How to invest in real estate and earn monthly income in Portugal

Why invest in real estate in Portugal?

In recent years, Portugal has consolidated its image as a safe country with a high quality of life, investor-friendly policies, and strong housing demand. Cities like Lisbon, Porto, Coimbra, Braga, and regions like the Algarve attract national tenants, Erasmus students, and tourists, ensuring high occupancy rates. Properties offer stable returns, protected against inflation and stock market volatility.

Monthly returns: traditional rentals

The most common model for monthly income is long-term rental. By purchasing a property and putting it on the rental market, investors benefit from predictable cash flow. Occupancy rates often exceed 90%, especially when the property is close to public transport, universities, or business zones, is well-maintained and equipped, and the rent aligns with the local market.

Location makes all the difference

Metropolitan areas record average monthly yields between €700 and €1,100 for one- or two-bedroom apartments. In other cities, the average rent ranges from €600 to €900. Predefining the right location is crucial to maximize profitability.

Beyond rent: property appreciation

Appreciation of the asset can generate significant profit on future sale. Thoughtful purchases in emerging areas (which register growth of 5% to 8% per year) ensure gains over time.

Renovations that add value

Small upgrades — such as updating bathrooms, renovating kitchens, improving insulation and energy efficiency — enhance property value and increase rental income. Investments of €10,000 above average costs can result in a 10% rent increase and 15–20% value appreciation.

Market study: informed decisions

Before investing, it's essential to conduct a real estate market study. This analysis should include price evolution per m² in recent years, the most in-demand segments—rental and/or short-term accommodation, tenant profiles (young professionals, students, families), and maintenance, condominium, and tax costs.

Short-term rentals: an opportunity to explore

Short-term rentals can yield higher returns than traditional rentals—up to 50% more in tourist areas. However, they require municipal licensing or usage authorization, active management of bookings, cleaning, and maintenance, as well as careful calculation of seasonality and potential vacancy periods. With professional management from Engel & Völkers, you can explore this model without being overwhelmed and maximize your income.

Strengthening your portfolio and planning for retirement

For many investors, buying property is also a long-term asset accumulation strategy. Planning the purchase of a second property or exploring new models (such as co-living or coworking) allows for building a true passive income portfolio.

Knowing the current value of your property

It’s important to know how much your property is worth on a regular basis. This helps decide whether it’s worth selling to reinvest or holding the asset, adjusting strategies accordingly.

Taxation: key factors to consider

Rental income is subject to IRS — with an option for aggregation or a flat 28% rate. It is important to issue electronic rental receipts, declare income in your tax return by June, and assess capital gains taxes if selling. The Engel & Völkers team is ready to guide you through the best tax strategies, helping you maximize net income.

Selling to reinvest: a virtuous cycle

Many investors choose to sell a property that has appreciated in value to reinvest the profit. This strategy requires a precise assessment of potential gains, calculation of taxes and selling fees, and identification of assets with better future income potential. In this context, the support of real estate consultants is essential to ensure secure and profitable decisions.

The role of a specialized team

Successful investing requires coordination across multiple areas: research and selection, evaluation and negotiation, financing, post-purchase management, and resale or reinvestment planning. The experienced real estate team at Engel & Völkers provides these services with transparency, international expertise, and regional reach.

Strategic sale to prepare the next investment

When the time comes to sell your apartment, it is essential to define a strategy based on the property's condition, local price evolution, transfer costs and taxes, and what you plan to do with the capital—reinvest or realize profit. With professional support, it’s possible to reduce selling time and secure better terms.

An investment that creates financial freedom

Investing in real estate in Portugal to earn monthly income isn’t just possible — it’s a proven strategy when well planned. Success depends on market research, rigorous evaluation, active management, and professional support. If you want to grow your capital sustainably with real security and returns, trust Engel & Völkers and their expert consultants. Let us support you at every step — from purchase to ongoing management — and ensure consistent results from your real estate investment.