Renting an Apartment
? How to rent out an apartment to generate income without headaches? Renting out an apartment is a great way to earn passive income, but to ensure everything runs smoothly, many nuances must be considered. Here are some tips to help avoid problems and make the process as pleasant as possible.
1️⃣ Property Management Company: Trust or Manage Yourself?
If you don’t have the desire or time to handle all the details, you should consider hiring a property management company. These are real helpers who take over the most challenging tasks:
? Finding tenants and verifying their reliability
? Drafting rental agreements in accordance with German laws
? Organizing technical maintenance – from minor repairs to specialists
? Monitoring payments and managing arrears
❓ What does it cost?
✅ Typically, property management companies take 10–15% of the monthly rent.
❓ How to choose a company?
✅ Look for those that have proven themselves in the market. Read reviews and ask acquaintances.
Carefully read the contract – it should list all services and their costs.
2️⃣ How to Calculate Rent to Consider Everything?
Rental income is not just money “in your pocket.” For the apartment to provide stable income, it is essential to plan expenses correctly. Here’s what should be considered:
? Property management company – 10–15%
? Ongoing and major repairs – 5–10%
? Depreciation of furniture and equipment – 3–5%
? Reserve for unforeseen expenses – 5%
? Net income – about 60–70% of the total rent
For example, if you rent an apartment for €1200 a month, after all expenses, you will have about €750–850 left. This way, you can be sure that everything is under control.
3️⃣ Interaction with the Homeowners Association and the Community
????? Homeowners meetings (WEG) are an essential part of a property owner's life. Questions that can affect your income, such as roof repairs or facade insulation, are addressed there. It is better to attend to stay informed.
? Operating costs – mandatory payments that are used for cleaning, lighting staircases, and other communal expenses. These amounts should be taken into account when calculating profitability.
In major cities in Germany, the rent control applies – a cap on rent increases. So make sure your rates comply with the standards.
4️⃣ How to Build Relationships with Tenants?
Good relationships with tenants help avoid unnecessary problems.
? Correctly conclude the rental agreement.
? Always take a security deposit (Kaution) – usually, it is 2–3 months' rent. Keep this money in a separate account.
? Ensure that tenants are aware of and comply with house rules, e.g., quiet hours at night. This protects you from complaints from neighbors.
5️⃣ What Pitfalls Can Await You?
⏳ Vacancy of the apartment.
Even one month without tenants can significantly strain your budget. Therefore, look for new tenants in advance.
? Rent arrears.
This can happen, even though it is rare in Germany. To minimize the risk, you can take out rent default insurance.
? Damage to the property.
Include a clause in the contract that defines the tenant's material responsibility for significant damage to the apartment. This protects you in case of conflicts.
6️⃣ Do You Need to Register a Company?
If you rent one or two apartments, the status of an individual is sufficient. All profits are declared to the tax office, and expenses for repairs, depreciation, or property management services can be deducted from the tax base.
However, if you have many properties or plan to rent out income-generating real estate, consider establishing a company, e.g., a GmbH. This helps optimize taxes and simplify property management.
Renting out an apartment is not just passive income; it requires a thoughtful approach. If you organize everything correctly, the property will be a reliable source of income for many years to come.
If you have questions or want to discuss specific cases, we are here to help! Write in the comments or contact us at https://dominartinvest.com/en." target="_blank">https://dominartinvest.com/en">https://dominartinvest.com/en. Even if you are just thinking about buying a property for rental purposes, feel free to reach out for advice. We can help you choose a profitable property and calculate its profitability.
