Rental Yield

Rental yield compares a property's annual rental income to its purchase price. A distinction is drawn between gross rental yield (cold rent divided by purchase price) and net rental yield (rent after costs divided by purchase price including ancillary costs).

Typical gross rental yields in Germany have historically been 2–4% in major cities, 4–6% in medium-sized cities and 5–8% in rural areas. After deducting all costs, the net yield tends to sit 1–2% below the gross figure.

A gross rental yield below 3% is generally considered unattractive for pure income investors. In major cities, low rental yields are often offset by expected capital appreciation.