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Rental Yield Calculator
Calculate rental yield for multi-family house online
Is your apartment building a secure investment or an incalculable risk? The answer lies in a single key figure: the net rental yield. We will show you how to accurately calculate this crucial figure online and avoid costly mistakes.
With access to Google, BORIS, and Deep Research.
The net rental yield is the crucial metric as, unlike the gross yield, it accounts for all costs such as additional purchase costs and non-recoverable expenses.
Incidental purchase costs (property transfer tax, notary, realtor) can make up 10-15% of the purchase price and must be fully incorporated into the yield calculation.
Ongoing non-apportionable costs, such as maintenance reserves (approximately €12-15/m²/year) and administrative costs, significantly reduce the actual yield.
Many property owners rely on rough estimates when valuing their apartment buildings. However, only a precise, data-driven calculation of rental yield can protect against poor investments and reveal the true potential of your property. In this article, you will learn which factors, from incidental purchase costs to non-allocable operating costs, are crucial. We will guide you step by step through the necessary calculations so that you can make informed decisions about your assets.
The first step towards correct evaluation is distinguishing between two key concepts. The gross rental yield is a quick but often misleading metric that simply compares the annual cold rent to the pure purchase price. In Germany’s top cities, gross yields often range only between 2.8% and 4.0%. The net rental yield is much more meaningful as it includes all relevant costs and thus provides a realistic picture of profitability. A good net rental yield should ideally be over 3.5% to be considered a solid investment. To determine this, we must first consider the total investment costs.
The purchase price is just one part of the total investment. The so-called ancillary purchase costs constitute a considerable portion and must be fully incorporated into the calculation. In Germany, these costs can range between 10% and 15% of the purchase price. Therefore, a detailed breakdown is essential.
The main ancillary purchase costs include:
Property transfer tax: Depending on the federal state, this is between 3.5% and 6.5% of the purchase price.
Notary and land registry fees: Approximately 1.5% to 2.0% are incurred for the notarisation of the purchase contract and the entry into the land registry.
Brokerage commission: If an estate agent is involved, up to 3.57% of the purchase price is generally payable by the buyer.
For a purchase price of €1,000,000, these additional costs alone can quickly exceed €100,000. For a precise calculation, you can use our rental yield calculator, which takes these items into account. Once the total acquisition costs are established, ongoing expenses need to be analysed.
A common mistake is underestimating the ongoing costs that you, as a landlord, cannot pass on to the tenants. These non-allocable additional costs directly eat into your returns. They are the main reason why the net return is often significantly lower than the gross return. Accurately recording these costs is crucial for realistic calculations.
You need to consider the following items:
Maintenance reserve: Experts recommend setting aside between €12 and €15 per square metre of living space annually for future repairs.
Management fees: Hiring a property management company incurs costs that cannot be passed on to the tenants.
Repair costs: Unforeseen repairs, for example to the heating system or the roof, must be borne by the owner.
Tenant default risk: Factor in a risk for vacancies or payment defaults, often estimated at 2% to 4% of the annual cold rent.
Ignoring these expenses leads to an inflated and unsustainable profitability calculation. Whether, under these circumstances, renting or selling is more worthwhile depends on the exact amount of these costs. With all numbers on the table, we can now calculate the net rental yield.
Now we bring all the puzzle pieces together to determine the actual profitability. The formula for calculating the net rental yield is more comprehensive, but it provides a reliable result. It is the central tool for assessing the economic efficiency of your apartment building.
The formula is:
(Annual net cold rent – non-recoverable costs) / (Purchase price + additional purchase costs) x 100 = net rental yield in %
An example: An apartment building costs €1,200,000 with €120,000 in additional purchase costs. The annual net cold rent is €60,000, with non-recoverable costs (maintenance, management, etc.) of €15,000. The gross yield would be 5.0%, but the net yield is only 3.4%. This difference of 1.6 percentage points highlights why the gross yield alone is not informative. There are various valuation tools for investors that simplify this calculation. For an even deeper analysis, professionals also consider the return on equity.
While the net rental yield measures the profitability of the overall property, the Return on Equity (ROE) shows how efficiently your personally invested capital is working. This metric is particularly important when financing the purchase with a loan. By using borrowed capital, the return on your equity can be leveraged—a so-called leverage effect.
The calculation is as follows:
(Annual net income – loan interest) / equity x 100 = Return on Equity in %
If the total return on capital of your property is higher than the interest rate for the loan, the use of borrowed capital increases your return on equity. A good return on equity for real estate should be above 7%. This value particularly helps Auctoa for real estate investors in comparing different financing structures. However, all calculations are only as good as the data on which they are based—and this is where external factors play a significant role.
A single number alone does not make a good investment. The best calculated return is worthless if the location's risks are ignored. The location of a property is a crucial factor for its long-term value development and rentability. A detailed location analysis examines both hard and soft factors, from transport links to the neighbourhood's image.
In prime cities like Munich or Hamburg, returns are often below 3%, but the vacancy risk is minimal. In secondary or tertiary locations, returns of over 5% can be enticing, but the risk of vacancy and value loss is significantly higher here. A high return is often a compensation for higher risk. Especially with an inherited apartment building, a neutral assessment of these risks is crucial. A data-driven analysis, as provided by Auctoa, helps you evaluate these factors objectively.
The online calculation of rental yield for an apartment building is more than a simple formula. It is a process that ranges from capturing all costs to analysing location and future risks. Only the net rental yield provides you with a clear picture of your property's true earning potential. Do not rely on estimates when it comes to your assets. Utilise precise data and professional tools to make the right strategic decisions. A well-founded analysis is the safest way to secure and increase the value of your property in the long term.
The Federal Statistical Office provides an overview of housing in Germany, including statistics and information on living conditions, costs, and construction.
The Federal Statistical Office offers detailed data and analyses on the housing market and living conditions in Germany in an Excel file.
The Deutsche Bundesbank provides an indicator system for analysing and assessing the German housing market.
The ifo Institute addresses the accuracy of infrastructure investments in a press release.
The German Property Federation (ZIA) offers market data and information on the German real estate market.
The Federal Statistical Office covers construction prices and the property price index in Germany.
The German Tenants' Association provides figures and facts on renting and housing from the tenants' perspective.
The Federal Institute for Building, Urban Affairs, and Spatial Development (BBSR) refers to the housing and real estate report.
Kann ich die Kaufnebenkosten bei der Renditeberechnung vernachlässigen?
No, absolutely not. The incidental purchase costs can amount to up to 15% of the purchase price. Ignoring them can make the yield appear artificially high and result in defective calculations, which may lead to costly mistakes.
Was ist der Unterschied zwischen Instandhaltung und Reparatur?
Maintenance refers to planned measures for sustaining the property value, such as heating maintenance or creating a reserve fund. Repairs are unforeseen actions to rectify damage, for example, a burst water pipe. Both incur costs that cannot be allocated.
Wie kann ich das Leerstandsrisiko in meiner Berechnung berücksichtigen?
Vacancy risk is represented by the rental loss provision. As a rule of thumb, you can allocate 2% to 4% of the annual net cold rent and deduct it from your income. In higher-risk areas, this rate may be set higher.
Warum ist die Eigenkapitalrendite für mich als Investor wichtig?
Return on equity shows you how profitably your deployed funds are working. If you use financing, this metric can be significantly higher than the net rental yield of the property, thanks to the leverage effect. It assists you in evaluating the profitability of your personal investment.
Welche Online-Tools helfen bei der Berechnung der Mietrendite?
There are various online calculators that assist in calculating rental yield. For a comprehensive and data-driven analysis that also includes market data and risk factors, specialized tools like Auctoa ImmoGPT offer a neutral and AI-supported evaluation.
Sind die Kosten für die Berechnung der Mietrendite steuerlich absetzbar?
Yes, many non-allocatable costs, such as maintenance, administration, and even the interest on a loan, can be claimed as deductible expenses against rental income for tax purposes. This reduces your tax burden and enhances the net return after taxes.
