Calculating Rental Yield (Mietrendite): Is Buying Worth It?
Don't just rely on your gut feeling. Learn the formula for Gross Rental Yield and understand why 3-4% is considered good in German cities.
InvestBud Team
Investment Analysts
Investors in Germany often focus on cash flow and 'Mietrendite' (rental yield). Unlike in other high-risk markets, German real estate offers lower but very stable yields. Before buying an investment property (Kapitalanlage), you must run the numbers.
1. Gross Rental Yield Formula
The basic formula is: (Annual Cold Rent / Purchase Price) x 100. For example, if an apartment costs 300,000€ and brings in 10,000€ cold rent per year, the yield is 3.33%. In top cities like Munich, yields can be as low as 2%, meaning you are betting on value appreciation rather than immediate cash flow.
2. The Leverage Effect
Why invest for 3% when a savings account might offer similar rates? The answer is leverage. You are using the bank's money to generate returns. Since interest on investment loans is tax-deductible in Germany, borrowing money to buy property is tax-efficient.
Written by
InvestBud Team
Our team of investment analysts brings you data-driven insights on the German real estate market. We combine financial expertise with local market knowledge to help you make smarter investment decisions.
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