Calculating the yield of a let flat correctly

Exposés often state a gross yield. It is not sufficient for an investment decision, because additional purchase costs, non-recoverable costs and vacancy are missing. This article shows how to check the figures – without any forecast of future changes in value.

Gross rental yield and purchase price multiplier

Gross rental yield = annual net cold rent ÷ purchase price × 100. The purchase price multiplier (Kaufpreisfaktor) is the reciprocal: purchase price ÷ annual net cold rent. Both indicators are suitable for quickly comparing similar properties but say nothing about the actual costs.

Use the net cold rent (Nettokaltmiete) actually agreed in the tenancy agreement, not a hoped-for market rent. In Berlin, the rent brake (Mietpreisbremse) limits the potential for increases on new lettings, and the cap (Kappungsgrenze) does so during an existing tenancy.

Net rental yield: what must be deducted

On the cost side, the additional purchase costs (property transfer tax, notary, land register, agent) are part of the investment. On the income side, all costs that the landlord cannot pass on to the tenant must be deducted.

Under the Operating Costs Ordinance (Betriebskostenverordnung), non-recoverable costs include in particular administration costs (WEG administration, rental management where applicable) and maintenance and repairs. Added to this are the contribution to the association's maintenance reserve (Erhaltungsrücklage), your own repairs in the flat and a deduction for loss of rent (vacancy when tenants change, payment defaults).

Net rental yield = (annual net cold rent − non-recoverable costs) ÷ (purchase price + additional purchase costs) × 100.

Sample calculation (assumptions, not an offer)

Flat in Berlin, 60 m², purchase price €250,000, let at €700 net cold rent per month (€8,400 per year). Additional purchase costs: property transfer tax 6% = €15,000, notary and land register 1.5% = €3,750, agent's commission 3.57% = €8,925; total investment €277,675.

Gross rental yield: 8,400 ÷ 250,000 = 3.36%; purchase price multiplier 29.8.

Non-recoverable costs per year (assumptions): WEG administrator's fee €360, contribution to the maintenance reserve €720, maintenance of the separately owned unit €480, rent loss risk (Mietausfallwagnis) 2% = €168; total €1,728.

Net rental yield: (8,400 − 1,728) ÷ 277,675 = 2.40% before financing and taxes.

Financing and taxes

If the loan interest rate is higher than the net rental yield – in October 2026, ten-year mortgage loans cost around 4.1 to 4.5% effective depending on the source – every financed euro reduces the current return on equity (negative leverage). The result then depends more on rent increases and changes in value, which nobody can guarantee.

For tax purposes, depreciation, interest on debt and income-related expenses (Werbungskosten) reduce the taxable result. How much of this remains in economic terms depends on your personal tax rate in Germany and in your country of residence; check this with a tax adviser.

Risks

Regulatory risk: the rent brake, the cap, social preservation areas (Milieuschutz) and protection against termination limit rent increases and changes of use.

Cost risk: special levies for the roof, façade or heating, rising administration and energy costs, the landlord's share of CO₂ costs.

Tenant risk: payment default and lengthy eviction proceedings; vacancy when tenants change.

Market and interest rate risk: prices may fall, follow-up financing may become more expensive. Liquidity risk: a flat cannot be sold at short notice at a specific price. Currency risk for income outside the euro area.

How sensitive the calculation is

If the flat in the example stands empty for three months when tenants change, €2,100 is lost instead of the assumed €168. The non-recoverable costs rise to €3,660, and the net rental yield for that year falls to (8,400 − 3,660) ÷ 277,675 = 1.71%.

If the association resolves a special levy of €5,000 for the flat, this corresponds to around three quarters of one year's net income in the base case. Conversely, a permissible rent increase of 10% raises the net rental yield in the example to approximately 2.70%.

You should therefore always calculate several scenarios and keep a liquidity reserve for vacancy and special levies.

Sources

https://www.gesetze-im-internet.de/betrkv/__1.html
https://www.gesetze-im-internet.de/betrkv/__2.html
https://www.haufe.de/id/beitrag/grunderwerbsteuersaetze-der-bundeslaender-uebersicht-HI3037525.html
https://www.vr.de/privatkunden/themenwelten/wohnen-immobilien/bauen-kaufen/notarkosten-hauskauf.html
https://www.gesetze-im-internet.de/bgb/__556d.html
https://www.gesetze-im-internet.de/bgb/__558.html
https://www.drklein.de/aktuelle-bauzinsen.html
https://www.baufi24.de/presse/pressemitteilungen/zinskommentar-102026/
https://www.gesetze-im-internet.de/estg/__7.html

Frequently asked questions

What is a good rental yield?

There is no universally valid figure. Higher yields usually go hand in hand with higher risks, for example in regions with vacancy or where renovation is needed.

Is the maintenance reserve part of the costs?

For liquidity, yes. For tax purposes, according to the practice of the tax authorities, it is only deductible when the association actually spends the money.

Why does one factor in a rent loss risk?

Because even well-let flats stand empty when tenants change, or tenants may be unable to pay. A flat-rate deduction makes calculations comparable.

General information, as of October 2026. It does not replace advice from a tax adviser, a lawyer or a notary.