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Property yield calculator

Calculate the yield of a let property: gross and net rental yield, price-to-rent ratio, cash flow before and after financing, return on equity and total return with value development.

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Inputs

Enter values

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Kauf und Miete

EUR
iGesamtbetrag, zum Beispiel aus dem Kaufnebenkostenrechner.
EUR

Gesamtbetrag, zum Beispiel aus dem Kaufnebenkostenrechner.

EUR
iNicht umlagefähig: Verwaltung, Instandhaltung, Mietausfallwagnis.
EUR

Nicht umlagefähig: Verwaltung, Instandhaltung, Mietausfallwagnis.

Finanzierung

EUR
%
%

Wertentwicklung

iSeparates Szenario; künftige Werte sind unsicher.
%

Separates Szenario; künftige Werte sind unsicher.

Jahre
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Explanation

How Property yield calculator works

The property yield calculator determines the most important key figures of an investment property: gross and net rental yield, price-to-rent ratio, cash flow before and after financing as well as the return on equity. The value development feeds into the total return as a separate scenario.

Yield key figures

Gross rental yieldJahreskaltmiete / Kaufpreis

A quick, rough key figure.

Net rental yield(Jahreskaltmiete − Bewirtschaftung) / (Kaufpreis + Nebenkosten)

Takes purchase costs and management into account.

Cash flow and equity

Cash flow after financingKaltmiete − Bewirtschaftung − Kapitaldienst

Debt service as an annuity from interest and repayment.

Return on equityCashflow nach Finanzierung / Eigenkapital

Shows the leverage effect of financing.

Practice

Practical examples

Gross and net rental yield

Purchase price EUR 300,000, EUR 30,000 purchase costs, EUR 14,400 annual base rent, EUR 2,400 management costs.

Result: Gross rental yield of 4.80 %, net rental yield of around 3.64 % relative to a total investment of EUR 330,000, price-to-rent ratio of around 20.8.

Cash flow and return on equity

As above, EUR 90,000 equity, EUR 240,000 loan, 4 % borrowing rate, 2 % repayment.

Result: Cash flow before financing EUR 12,000, debt service of around EUR 14,400, cash flow after financing of around EUR -2,400 per year; the return on equity is negative accordingly.

Notes

Common mistakes

  • Only the gross yield considered

    The decision is made solely on the gross rental yield.

    Include the net rental yield and the cash flow after financing.

  • Purchase costs forgotten

    The yield is related only to the purchase price.

    Factor the purchase costs into the total investment; they lower the net yield.

  • Management and rent default ignored

    Only the nominal rent is applied.

    Take administration, maintenance and the rent-default risk into account as management costs.

FAQ

Frequently asked questions

What is the gross rental yield?

The annual base rent divided by the purchase price. It is a quick key figure but ignores purchase costs and management.

What is the net rental yield?

The annual base rent minus the non-allocable management costs, divided by the total investment of purchase price and purchase costs. It is more meaningful than the gross yield.

What does the price-to-rent ratio tell me?

It is the purchase price divided by the annual base rent and shows how many annual rents the purchase price corresponds to. A low ratio indicates a higher yield.

What is the cash flow before financing?

The base rent minus the management costs, without debt service. It shows the surplus of the property alone.

What is the cash flow after financing?

The cash flow before financing minus the annual debt service of interest and repayment. A negative value means that you pay extra each month.

How is the return on equity calculated?

The cash flow after financing divided by the equity deployed. Through the leverage of financing it can be considerably above or below the net rental yield.

How is the debt service determined?

As the initial annuity from the borrowing rate and the initial repayment on the loan amount - the same convention as the existing property-financing calculators.

Why is the value development a separate scenario?

Because future appreciation is uncertain. The total return with value development is shown separately and is based on your assumption.

What does the total return show?

It combines the ongoing net cash flows and the assumed value development over the period as an annual return (CAGR) and relates it to the capital deployed.

Are taxes and depreciation included?

No. Taxes, personal depreciation and individual financing side effects are deliberately not simulated in a blanket way, because they depend heavily on the individual case.

Which costs belong to management?

Non-allocable costs such as administration, a maintenance reserve and a rent-default risk. Allocable operating costs are left out, as the tenant bears them.

Is this investment advice?

No. The calculator provides key figures for orientation and does not replace tax or investment advice.

Limits

Limitations

  • Taxes, personal depreciation and individual financing side effects are not simulated.
  • The value development is an assumption; the total return is shown as a separate scenario.
  • No tax or investment advice; the key figures serve for orientation.

Sources

Sources and references

  • § 556 BGB – Vereinbarungen über BetriebskostenBundesministerium der Justiz / Bundesamt für Justiz

    Official basis for allocating operating and service charges in residential tenancies.

    View source
  • Immobilien als Kapitalanlage – VerbraucherinformationBundesanstalt für Finanzdienstleistungsaufsicht (BaFin)

    Official consumer information on the opportunities and risks of property as an investment.

    View source
  • Betriebskostenverordnung (BetrKV)Bundesministerium der Justiz / Bundesamt für Justiz

    Official list of the allocable types of operating costs as the basis of the service-charge items.

    View source