Profitability of Real Estate in Germany

Profitability of Real Estate in Germany

Today, we will talk about an important topic—profitability and how to calculate it correctly.

? How to determine if your property is profitable?

Use the profitability calculation—it’s a simple way to assess the income potential of a property!

There are 3 types of profitability:

1️⃣ Gross Profitability (income without considering expenses).

2️⃣ Net Profitability (taking all expenses into account).

3️⃣ Return on Equity (when there is a loan involved).

Let’s break it down with examples! ⬇️

Gross Profitability (income without considering expenses)

Example:

The apartment costs €200,000.

You rent it out for €800 per month.

How to calculate:

1️⃣ Annual income:

800 € × 12 = 9,600 €.

2️⃣ Divide the income by the property value:

9,600 € ÷ 200,000 € = 0.048.

3️⃣ Multiply by 100:

4.8% — this is your gross profitability!

? Net Profitability (taking expenses into account)

Example:

✔️ The apartment costs €200,000.

✔️ Rent: €800 per month.

ℹ️ Annual expenses:

? Repairs: €500

? Insurance: €200

? Utility bills: €300

How to calculate:

1️⃣ Total expenses:

500 + 200 + 300 = 1,000 €.

2️⃣ Net income:

9,600 − 1,000 = 8,600 €.

3️⃣ Divide the net income by the property value:

8,600 ÷ 200,000 = 0.043.

4️⃣ Multiply by 100:

4.3% — your net profitability!

? Return on Equity (if a loan was taken)

Example:

✔️ The apartment costs €200,000, but you invested only €40,000; the rest is a loan.

✔️ Net income: €8,600.

How to calculate:

1️⃣ Divide the net income by your investment:

8,600 ÷ 40,000 = 0.215.

2️⃣ Multiply by 100:

21.5% — this is the return on your equity!

? Why is profitability calculation important?

✅ Gross profitability helps quickly assess a property.

✅ Net profitability considers all costs.

✅ Return on equity shows the benefit of your investments.

Do you want to calculate the profitability of your property? Write to us, and we will help you understand! ?

Or

? Schedule a consultation:

calendly.com/dominartinvest

? Our professional approach to your requests!

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