Gross yield vs. net yield

The difference between gross and net yield is particularly dramatic for property – and sellers like to keep quiet about it.

Gross yield (gross rental yield):

• Formula: (annual net cold rent ÷ purchase price) × 100
• Does NOT include: purchase costs, maintenance, management, vacancy
• Use: quick comparison of different properties

Net yield (net rental yield):

• Formula: (annual net cold rent − running costs) ÷ (purchase price + purchase costs) × 100
• Included: management, maintenance, insurance, reserves, real estate transfer tax, notary, estate agent if applicable

Sample calculation:

• Flat: €250,000. Purchase costs: €25,000. Annual net cold rent: €12,000. Running costs: €2,000
• Gross yield: 12,000 ÷ 250,000 = 4.8%
• Net yield: 10,000 ÷ 275,000 = 3.6%
• Difference: 1.2 percentage points – sounds small, but adds up to tens of thousands of euros over 20 years

Typical values in Germany 2025:

• Top 5 cities (Munich, Berlin, Hamburg): 3.0–3.5% gross → approx. 1.5–2.5% net
• Medium-sized cities: 4–5% gross → 2.5–3.5% net
• Structurally weak regions: over 5% gross – but a higher vacancy risk

Recommendation: aim for at least 4% gross / 3.5% net. However, the net yield takes neither taxes nor financing costs into account – for the real return, also calculate the return on equity.