Rental yield in Germany:
gross, net, and what actually lands on your account.

Three numbers, three different questions

The gross yield is for comparing apartments in thirty seconds. The net yield is for deciding whether one is actually good. The cash flow is for knowing what your bank account feels each month. Sellers quote the first; you decide on the second and third.

Gross yield: the comparison number

Cold rent means rent excluding utilities, and the reference base is the purchase price alone, not the price plus purchase costs. That is the whole definition, and it is worth being pedantic about: a seller who quietly blends purchase costs into the base, or uses warm rent on top, is manufacturing half a percentage point out of nothing.

Net yield: the honest number

Two corrections at once: the rent shrinks by the costs you cannot pass on to the tenant, and the base grows by the purchase costs you actually paid. One warning that most self-built spreadsheets need: the maintenance reserve already covers the upkeep of the common property. Adding a second, separate maintenance line for the building on top counts the same cost twice and talks you out of decent properties. A separate provision is legitimate only for what is inside your own four walls, bathroom, kitchen, floors, and should be labelled exactly that.

Cash flow: what the month feels like

Take the same apartment, financed with a €180,000 loan at an illustrative 3.8% interest and 2% initial repayment, a monthly payment of €870 (how that number is built). Rent €750, minus €95 non-recoverable costs, minus €15 set aside for vacancy (2% of the annual rent), minus €870 for the bank: roughly −€230 a month.

That is half the truth. Inside the €870 sit about €300 of repayment in the first year. Money that reduces your debt, not money that is gone. You pay in €230 and build €300 of equity: in wealth terms you finish each month ahead, on the account you finish behind. Both views are true, and you need both. The only disqualifying version is the one where you cannot comfortably carry the negative months, including one with no tenant in the flat.

Where the tax side changes the picture

For a rented apartment, loan interest, the non-recoverable costs and the building’s depreciation, typically 2% a year for buildings completed between 1925 and 2022, 3% for new builds from 2023, always on the building share of the total acquisition costs, reduce your taxable rental income. In the early, interest-heavy years many properties run a taxable loss while building equity, which softens the cash flow picture after your tax return. How much exactly is a job for an English-speaking tax adviser, not for a guide.

Reading a seller’s yield claim: the checklist

• ◆Which rent? Cold rent, and the actual current one, not a hoped-for rent after a renovation that hasn’t happened.
• ◆Which base? Gross on the price, net on the total outlay. Anything blended is marketing.
• ◆Where are the running costs? If manager, reserve and vacancy are missing, the calculation is missing.
• ◆Is maintenance double-counted? Reserve plus a second building-maintenance line, the classic spreadsheet error, in both directions.