Rental Yield Calculator 2026

The gross rental yield is the annual (cold) rent divided by the total investment (purchase price including incidental costs) × 100. It gives a quick first indication but does not account for ongoing costs such as maintenance or management. As a rule of thumb, the gross rental yield should be at least 4–5% to cover ongoing costs.

The net rental yield is calculated from the net income (annual rent minus all non-recoverable operating costs) divided by the total investment × 100. Typical costs: maintenance 1–2% of the purchase price, management around 5% of the rent, vacancy 2–5%, property tax. The net rental yield is the more meaningful metric.

The purchase price multiplier shows how many years of net cold rent the purchase price corresponds to. Below 20 is considered cheap (equivalent to a gross rental yield above 5%), 20–25 is typical for the market, above 25 is expensive. In German major cities the multiplier is currently often between 25 and 35 – meaning yields below 3%.

The return on equity shows how profitable the equity invested is. It is calculated from the annual cash flow (after the loan installment) divided by the equity invested × 100. Through the leverage effect, the return on equity can be far higher than the property yield itself – provided the loan interest rate is below the rental yield.

If the net rental yield is above the loan interest rate, debt financing amplifies the return on equity. Example: 4% net rental yield, 3% loan interest rate, 80% debt financing → return on equity well above 4%. Conversely, the leverage works negatively when interest rates rise or rental income falls. At current interest levels (3.5–4.5%), positive cash flow is hard to achieve in metropolitan areas.

Incidental purchase costs increase the total investment and thereby reduce the yield. Typical costs: real estate transfer tax 3.5–6.5% depending on the federal state, notary and land registry fees under the GNotKG around 1% (€2,241.15 together for €200,000), real estate agent commission 0–3.57% (often split). In total 8–12% of the purchase price – an often underestimated yield killer.

A property is self-sustaining when the monthly cash flow is positive or at least zero – meaning the rental income covers all ongoing costs and the loan installment. At a financing interest rate of 3.5–4% and purchase price multipliers above 25, positive cash flow without a high equity contribution is barely achievable. The rental yield calculator shows you immediately whether your investment is self-sustaining.