On Monday 19 October the BTP Valore went on sale, and it gave me the excuse to finish a calculation I’d had in draft for two weeks: does buying a home to rent out yield more than a government bond? I’ll write my thesis the way I said it: long-term rentals almost never beat the return on a bond. I’m putting it to the test on Forlì, my city, and over the life of the BTP Valore, five years.
First the perimeter, because “almost never” doesn’t mean “never”. I’m talking about a private individual who buys from another private individual at market price, without a mortgage, and rents out on a long open-market lease (canone libero) under the flat tax on rent, the cedolare secca (no short lets). The comparison is with the same money put into the BTP Valore and held to maturity, net of everything. I did the home’s math first roughly, with declared and generous assumptions, and then redid it in the Excel model I had built to value properties, which is stricter.
What does the October BTP Valore pay?
The Treasury is placing it from Monday 19 to Friday 23 October, until 1 pm on the last day, unless it closes early. It lasts five years, matures on 27 October 2031 and pays a coupon every three months, with rates that step up: 3.70% in the first two years, 4.10% in the third and fourth, 4.70% in the fifth. These are guaranteed minimum rates, which at the close of the placement can only be revised upwards (press release no. 110 of the Ministry of Economy and Finance, MEF, 16 October 2026). You buy it at par, that is at 100, with no commissions and a minimum subscription of €1,000. This issue has no extra final bonus, while the 12.5% tax rate, the exemption from inheritance tax and the exclusion from the ISEE calculation (the Italian means test) up to €50,000 of government bonds all remain.
In the same placement there’s also the BTP Valore Insieme, which instead of coupons pays a single 22.25% at maturity: for the Treasury the value of the payments is the same, a yield of 4.10% a year. In the math I use the BTP Valore with coupons every three months.
With the minimum rates, whoever buys it now and holds it to maturity gets a gross yield of 4.10% a year. After the 12.5% tax 3.59% is left, and taking off the stamp duty of 2 per thousand a year on the securities account too, 3.38%. To compare it with the home I put into the BTP the same money the home really costs, €218,306: €200,000 of price plus €18,306 of purchase costs, which I count item by item further down.
| BTP Valore on €218,306 | Gross rate | Gross coupons a year | After the 12.5% | After stamp duty too |
|---|---|---|---|---|
| First and second year | 3.70% | 8,077 | 7,068 | 6,631 |
| Third and fourth year | 4.10% | 8,951 | 7,832 | 7,395 |
| Fifth year | 4.70% | 10,260 | 8,978 | 8,541 |
| Total over five years | 44,316 | 38,777 | 36,594 |
Amounts are rounded to the euro, so a column can be a euro off. I don’t reinvest the coupons, just as I don’t reinvest the home’s rent, so the two calculations stay level. At maturity the €218,306 comes back.
Why Forlì, and why a 5% rent?
The number that seduces is the gross yield, a year’s rent divided by the price. For Forlì I worked it out zone by zone with the quotations of the property market observatory (OMI) of the Italian Revenue Agency (Agenzia delle Entrate), first half of 2026, ordinary homes in normal condition. The math is the monthly rent per square metre times twelve, divided by the price per square metre, taking the midpoint of each range.
| Forlì OMI zone | Price, € per sq m | Rent, € per sq m a month | Gross |
|---|---|---|---|
| B3, historic centre | 1,450-1,700 | 6.7-7.8 | 5.5% |
| C1, semi-centre (Porta Schiavonia, viale Vittorio Veneto, station) | 1,600-1,850 | 6.8-7.7 | 5.0% |
| D3, Ronco, Carpena, San Martino in Strada | 1,500-1,800 | 6.2-6.9 | 4.8% |
| D4, Ospedaletto, Pianta, Foro Boario | 1,550-1,800 | 5.6-6.6 | 4.4% |
| R2, San Tomè, Branzolino, Roncadello | 1,150-1,550 | 4.1-5.3 | 4.2% |
| E4, Villa Selva and Forniolo light-industrial area, San Leonardo | 1,150-1,500 | 4.0-5.2 | 4.2% |
| E6, Villafranca | 1,250-1,550 | 4.3-5.4 | 4.2% |
| D2, Pieveacquedotto, San Giorgio, Coriano | 1,250-1,500 | 4.3-5.2 | 4.1% |
| E8, Grisignano, San Lorenzo in Noceto | 1,300-1,650 | 4.4-5.7 | 4.1% |
| E5, Carpinello, Pievequinta, La Rotta | 1,300-1,700 | 4.5-5.7 | 4.1% |
| R3, Magliano and the hills | 1,250-1,650 | 4.2-5.5 | 4.0% |
| Simple average of the 11 zones | 4.4% |
The average comes to 4.4%, the same as in the second half of 2025, and only the historic centre and the semi-centre reach 5%. OMI quotations are ranges, not averages of signed contracts, so the number should be read as an order of magnitude.
The home in the math costs €200,000: for example 125 square metres at €1,600 a metre, a price that sits within the OMI ranges of seven zones out of eleven, including the historic centre and the semi-centre. I set the rent at 5% of the price, €10,000 a year, €833 a month. It’s an assumption that favours the home, higher than the city average, and I redo the math with 4.4% among the risks.
How much does buying cost, on top of the price?
On top of the €200,000 price there’s another €18,306, 9.15%. I count it item by item for a home that isn’t your first, bought from a private individual.
| Purchase cost | Euros | Where it comes from |
|---|---|---|
| Registration tax, 9% of the cadastral value | 10,206 | Revenue Agency, with the €900 cadastral income from its own example |
| Agency, 3% of the price including VAT | 6,000 | the maximum around here |
| Notary | 1,500 | assumption |
| Technical checks | 500 | assumption |
| Mortgage and cadastral taxes, €50 each | 100 | Revenue Agency |
| Total, 9.15% of the price | 18,306 |
The heaviest item is the registration tax, 9% for anyone buying from a private seller without the first-home tax breaks. It isn’t paid on the price if in the deed you ask the notary for the price-value system (prezzo-valore): the base becomes the cadastral value, that is the cadastral income revalued by 5% and multiplied by 120. The cadastral income of the home in the math is an assumption, €900, the same one the Revenue Agency uses in its example on a €200,000 home. The cadastral value comes to €113,400 and the registration tax to €10,206, against the €18,000 you’d pay on the price. With the price-value system the law also cuts the notary’s fees by 30%, while the mortgage and cadastral taxes, when a private individual sells, are fixed.
Around here agencies charge 3% at most, and the 3% applies when you resell too. In the math it includes VAT: if it were plus VAT, purchase costs would rise to €19,626. The notary at €1,500 is an assumption too, and a low one: at €2,500 purchase costs would be €19,306. Anyone buying from a company that sells with VAT pays instead 10% VAT on the price (22% for luxury homes, categories A/1, A/8 and A/9) plus €200 each of registration, mortgage and cadastral tax, and the math has to be redone.
How much is left of €10,000 of rent?
| Item, typical year | Euros a year | Per 100 of rent | Where it comes from |
|---|---|---|---|
| Rent, 5% of the price | 10,000 | 100 | assumption, above the OMI average for Forlì |
| Vacancy and arrears | 0 | 0 | taken out of the math, among the risks |
| Flat tax on rent (cedolare secca) at 21% | -2,100 | 21 | Revenue Agency, open-market lease |
| IMU, 1.06% on the cadastral income | -1,603 | 16 | Municipality of Forlì, open-market lease |
| Non-recoverable expenses and insurance | -500 | 5 | assumption |
| Maintenance | -1,000 | 10 | assumption |
| Management | 0 | 0 | the owner handles it, among the risks |
| Cash left | 4,797 | 48 |
Of 100 euros written on the lease, 48 reach your pocket. The cedolare secca is worth 21% of the annual rent on open-market leases (Revenue Agency). IMU, the municipal property tax, is Forlì’s: the cadastral income revalued by 5% and multiplied by 160 gives €151,200, and 1.06%, the rate the municipality applies to homes let on open-market leases, brings it to €1,603 a year (city council resolution no. 103 of 2024; we haven’t found new rates for 2026). The non-recoverable expenses (the ones you can’t pass on to the tenant), insurance and maintenance, on the other hand, are assumptions: we haven’t found a public average for them.
I left two items out on purpose. Management, because the home is looked after by whoever owns it and here their time costs nothing. Vacancy along with arrears, as if the tenant moved in on the day of the deed and paid to the very last month for five years. It’s the case most favourable to the home I can imagine, and both items come back among the risks with their number.
The real capital is €218,306, the €200,000 price plus €18,306 of purchase costs. On that capital the cash is worth 2.20% a year, so even before the resale the home yields less than the BTP, 2.20% against 3.38%.
Five years later, who earned more?
For the resale I use house prices in Italy as measured by Eurostat: between 2015 and 2025 the index went from 100 to 116.2, that is 1.5% a year. At that pace, after five years the home is worth €215,457. The agency on the sale, 3% including VAT as on the purchase, takes €6,464, and €208,993 is left. The appreciation (€15,457) doesn’t cover the transaction costs, €18,306 on the purchase and €6,464 on the sale, so at the exit €9,313 is missing from the €218,306 spent. With these numbers there is no capital gain to tax, because you sell for less than it cost to buy.
| Year | Home in Forlì | BTP Valore |
|---|---|---|
| Today | −218,306 | −218,306 |
| 1 | 4,797 | 6,631 |
| 2 | 4,797 | 6,631 |
| 3 | 4,797 | 7,395 |
| 4 | 4,797 | 7,395 |
| 5 | 4,797 + 208,993 from the sale | 8,541 + 218,306 repaid |
| Gain over five years | 14,673 | 36,594 |
| Annual return | 1.37% | 3.38% |
Put in three lines, the home’s math can be redone by hand, and every cost that weighs on the resale sits in its own line:
| The math in three lines | Euros |
|---|---|
| Net rent over five years, 5 × 4,797 | 23,986 |
| Resale: 215,457 collected, minus 200,000 paid, 18,306 of purchase costs and 6,464 of agency fees (no taxes, because there’s no capital gain) | −9,313 |
| Total, home | 14,673 |
| BTP Valore: 38,777 of net coupons, minus 2,183 of stamp duty | 36,594 |
The BTP Valore earns more than double. In annual return it makes 3.38% against 1.37%, and I’ve already handed the home the perfect tenant and free management. For the BTP the year-by-year table adds up each year’s coupons, while the return is calculated on the quarterly ones.
How much do prices have to rise to break even?
I looked for the price growth that brings the home level with the BTP. For the same annual return you need 3.65% a year for five years in a row, and for the same euros 3.55%: more than double the 2015-2025 pace.
The more recent pace is higher. Between 2020 and 2025 the Eurostat index rose from 100.4 to 116.2, 2.97% a year: at that pace the home earns €30,252 and yields 2.74%, still below the BTP. With prices flat it loses €320, a return of −0.03% a year.
| Price growth, every year | Net sale | Gain over five years | Annual return |
|---|---|---|---|
| Flat prices | 194,000 | −320 | −0.03% |
| 1.5%, as in Italy in 2015-2025 | 208,993 | 14,673 | 1.37% |
| 2.97%, as in Italy in 2020-2025 | 224,572 | 30,252 | 2.74% |
| BTP Valore, for comparison | 36,594 | 3.38% |
What are the home’s risks if the costs I left out come back?
Management is paid by anyone who hands the home to an agency or a property manager, and whoever looks after it themselves pays in time: with an assumption of 7% of what’s collected that’s €700 a year. Vacancy and arrears at 5% mean three months without rent in five years, and every empty month costs €833 of rent, €658 net of the cedolare secca, if the month is vacant. Rent at 4.4%, the average of Forlì’s OMI zones, comes to €8,800 a year, €733 a month.
| If it comes back… | Cash a year | Per 100 of rent | Gain over five years | Annual return | Price growth to break even |
|---|---|---|---|---|---|
| Nothing, base case | 4,797 | 48 | 14,673 | 1.37% | 3.65% |
| Management at 7% | 4,097 | 41 | 11,173 | 1.04% | 3.99% |
| Vacancy and arrears at 5% | 4,402 | 44 | 12,698 | 1.18% | 3.84% |
| Management and vacancy together | 3,737 | 37 | 9,373 | 0.87% | 4.15% |
| Rent at 4.4%, Forlì OMI average | 3,849 | 44 | 9,933 | 0.93% | 4.10% |
| Rent at 4.4%, management and vacancy | 2,916 | 33 | 5,269 | 0.49% | 4.54% |
| BTP Valore, for comparison | 36,594 | 3.38% |
With management and vacancy together the home drops to 0.87% a year, and with Forlì’s average rent plus those two items to 0.49%. In that case, to match the BTP, prices would have to rise 4.54% a year, three times the 2015-2025 pace.
Is the BTP Valore risk-free?
No, and that needs saying just as frankly. The rates are fixed at the start, so if inflation rises again the real return falls, while the rent can be realigned at renewals. If you sell it before maturity you sell at the market price, which can be lower than the 100 you paid. That’s duration, the sensitivity of a bond’s price to rates, which I wrote about in the piece on bonds in crises. Italy risk, finally, you take in both cases.
The home has its own risks outside the table. It asks for time, tenants, surprises and months to be sold, and it puts €218,306 on a single property in a single city.
Where does the Excel model come from?
The math so far fits on the back of a napkin, and it’s generous with the home: costs flat for five years, rent flat, no vacancy and a low bar, matching the BTP. The questions are always the same (how much it costs to get in, how much of the rent is left, at what price you break even). At the start of October I turned them into a standard Excel, which I asked AI for, to value every property “by entering only the first values needed”. How I work with AI I’ve described on the page about how I use it.
The yellow input cells include price, square metres, cadastral income, who sells and who buys, renovation works, rent, years of ownership, resale price per square metre, price growth and mortgage. The sheet returns the expected return and the perfect one, the net BTP of the same duration, the bar to beat and three prices: the maximum offer, break-even with the BTP and the price above which you never go. Every assumption has a source, or is declared as an estimate or as an assumption. Here are the same items, in the math and in the model.
| Assumption | Rough math | Excel model |
|---|---|---|
| Price | 200,000 | 200,000 (125 sq m at €1,600) |
| Cadastral income | 900, assumption | 900 |
| Purchase costs | item by item, 18,306 | the same, 18,306 |
| Rent | 10,000 a year, flat | 833 a month, +1% a year |
| Vacancy and arrears | 0, among the risks | 6% in the expected scenario, 0 in the perfect one |
| Management | 0 | 0 |
| Cedolare secca | 21% | 21% |
| IMU | 1,603, Forlì’s 1.06% on the cadastral income | the same, 1,603 |
| Expenses and insurance | 500, flat | 250 of expenses entered plus 250 of insurance, +2% a year |
| Maintenance | 1,000, flat | 1% of the home’s value, 2,030 in year one |
| Price growth | 1.5% a year | 1.5% a year |
| Selling costs | agency 3% including VAT | agency 3% including VAT and 1,000 of fixed costs (energy certificate and compliance) |
| BTP | BTP Valore, 3.38% net | five-year BTP from the 29 September 2026 auction, 4.08% gross, 3.37% net of withholding tax and stamp duty |
| Bar | match the BTP | net BTP plus 3 points of risk premium, 6.37% |
In the model the cadastral income changes two lines. Without it, the sheet puts the registration tax on the price (here €18,000 instead of €10,206) and estimates IMU as a percentage of the price, the worst case. With it the registration-tax base becomes the cadastral value and IMU is calculated from the cadastral income, with the rate you enter (by default the ordinary maximum, 1.06%, which in Forlì is also the rate for homes let on open-market leases). That’s why, faced with a real home, the cadastral income is the first figure to ask for. The rent grows only 1% a year, an assumption of the model: with the cedolare secca the owner gives up any rent update, ISTAT indexation included (Revenue Agency), and realigns it only at renewals. Vacancy at 6% is an estimate within a 3-12% range that depends on zone and tenant. The risk premium is the same one I demanded of the warehouse against the BTP, and there I explain it item by item: one point for illiquidity, the rest for uncertain cash flows, obsolescence, management and extraordinary events.
What does the model say about the Forlì home?
To see how much each difference weighs I redid the math in the model and then changed one item at a time, keeping the previous ones. The capital is the same in every row, €218,306, because the purchase costs in the two calculations coincide.
| From the rough math to the model, one item at a time | Annual return |
|---|---|
| Rough math, redone in the model | 1.35% |
| plus maintenance at 1% of value instead of 0.5% (about €1,000) | 0.86% |
| plus expenses and insurance growing 2% a year | 0.85% |
| plus rent growing 1% a year | 0.92% |
| plus €1,000 of fixed selling costs: perfect scenario | 0.83% |
| plus vacancy and arrears at 6%: expected scenario | 0.61% |
The first row gives 1.35% instead of 1.37% for one reason only. In the model maintenance is a percentage of the home’s value (here 0.5%, €1,015 in year one) and grows with prices. The rest matches to the euro. The biggest jump is maintenance, which alone takes away almost half a point, then comes vacancy.
With its assumptions the model gives the Forlì home a return of 0.61% a year in the expected scenario and 0.83% in the perfect one. Over five years, in the expected one, it earns €6,492. The sheet’s verdict is a single line: “Even if everything goes well it yields less than the BTP: at this price you don’t buy.”
The model also answers the question that matters, which is at what price. To yield as much as the BTP in the expected scenario the home would have to be bought at €173,926, 13% below the €200,000, and even if everything goes well no higher than €176,052. To pay for the risk premium too the maximum offer is €149,935, 25% below. Alternatively you keep the €200,000 price and raise the rent. To yield the risk premium as well, 6.37% a year in the expected scenario, you’d need €2,195 a month: 13.2% of the price in a year, more than two and a half times the €833 in the math.
And if I keep it ten years? The entry costs spread over more years and the return rises to 1.82% in the expected scenario and 2.05% if everything goes well. But at ten years the comparison is with a ten-year BTP, which at the 29 September 2026 auction yielded 4.58% gross, 3.81% net of withholding tax and stamp duty. The break-even price drops to €165,133, 17% below.
When does renting beat the BTP?
There are three levers, and the math says how much each is worth. The first is the price you pay: in the model, in the expected scenario, the Forlì home matches the BTP only if you buy it at around €174,000. The second is price growth, which has to reach about 3.7% a year for five years, higher even than the 2.97% a year of 2020-2025. The third is the rent, which in Forlì’s historic centre reaches 5.5% gross, but isn’t enough on its own. In the rough math 5% leaves the home at 1.37% a year, and with 5.5% you get to 1.74%.
The warehouse and the Forlì home say the same thing, with different numbers: what counts is the price you buy at, and how much the alternative yields on the same day. Today the alternative pays 3.38% net for five years, and waiting for the right price with the money in the BTP costs little. If it comes, the math can be redone in an afternoon, and now I’ve got the sheet to do it too.
Those of you who own a rental home: of 100 euros written on the lease, how many are left in your pocket? And if you find a mistake in the math, write to me.
Sources: MEF, press release no. 110 of 16 October 2026, guaranteed minimum rates of the BTP Valore and the BTP Valore Insieme; Treasury Department, the BTP Valore with the double placement, information sheet of the BTP Valore 27.10.2031 and FAQ updated to 6 October 2026; Treasury Department, results of the 29 September 2026 auctions of the 5-year BTP and the 10-year BTP; Italian Revenue Agency, OMI quotations database, Forlì, first half of 2026 and second half of 2025, ordinary homes in normal condition; Italian Revenue Agency, buying a home: the taxes; Italian Revenue Agency, cedolare secca; Italian Revenue Agency, ruling no. 20 of 2025, stamp duty on the securities account; Eurostat, house price index, Italy. The math is a model with declared assumptions on an example home in Forlì, not an appraisal: it’s not financial or tax advice, and cadastral income, taxes and rates have to be checked on the individual home.