A flat to let pays off when the net rental yield exceeds the mortgage rate. How to calculate gross and net yield, which costs beginners forget and which German cities deliver the best numbers in 2026.
In short
- Gross rental yield: annual cold rent divided by price. Below 3 percent is expensive, above 5 good.
- Net yield deducts closing costs, management, maintenance and vacancy; it usually sits a point lower.
- The leverage: if the net yield exceeds the loan rate, borrowed capital works for you.
- Tax: two percent depreciation, interest and costs deductible, sale tax-free after ten years.
Gross rental yield
The simplest figure: annual cold rent divided by purchase price times 100. A flat for €250,000 with €850 cold rent yields €10,200 a year, so 4.1 percent. For a first look that suffices, for a decision it does not, because closing costs and running costs are missing.
Net rental yield
To the price you add closing costs; from the rent you deduct the non-recoverable costs: property management around €25 to €35 a month, maintenance reserve depending on age one euro per square metre a month, vacancy risk two to four percent of rent, rent default, account fees. In the example: total costs €275,000, net rent around €8,800, net yield 3.2 percent. You compare that figure with the loan rate and with alternatives such as an ETF or a bond.
The leverage
If you finance 70 percent with a loan at 3.5 percent and the property yields 4 percent net, you earn half a percentage point on every borrowed euro on top of the return on your equity. If the rate exceeds the net yield you pay on top and hope for appreciation. That is speculation, not investment. Repayment builds wealth either way, but it is liquidity you have to raise monthly.
Tax on letting
Rental income is taxable, but interest, management, repairs, travel and depreciation of two percent of the building value (three percent for new builds from 2023) are deductible. In the first years a tax loss often arises that reduces your employment income. After ten years of holding, the gain on sale is tax-free. Those ten years are the most important reason property is attractive for high earners as an investment in Germany.
Where the numbers work in 2026
In Munich and Hamburg gross yields sit at 2.5 to 3 percent, below the loan rate. In Leipzig, Dresden, Hanover, Bremen and Nuremberg 4 to 4.5 percent are achievable, in mid-sized towns and the surrounding areas 4.5 to 5.5. Higher yield usually means lower appreciation and higher vacancy risk. The region with the right ratio often lies half an hour outside the metropolis.
What beginners forget
Special levies for roof and facade, tenancy law with rent brake and cap, the time for tenant changes, the owners’ meeting, the energy certificate, the heating question under the Building Energy Act. Whoever does not want that buys a property ETF or a bond and sleeps better. Whoever does gets leverage, tax advantage and a real asset.
Try it yourself
Mortgage CalculatorPrice, federal state, equity, rate and repayment: monthly payment, closing costs and remaining debt after the fixed-rate period.ETF Savings Plan CalculatorContribution, return, term: how your savings plan develops over the years, with a chart and compound interest.Frequently asked questions
What is a good rental yield?
Net above the loan rate, so above 3.5 percent in 2026. Gross from 4.5 percent counts as solid; above 6 percent you should look for the catch.
Is a flat with 3 percent yield worthwhile?
Only with high equity and expected appreciation. As a pure income investment a savings account is better then.
What about furnished letting?
It brings 20 to 40 percent more rent and partly circumvents the rent brake, but costs wear, management and frequent changes.
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