Difference Between Gross Yield and Net Yield in Germany: How to Calculate Real Returns Correctly
Yield is the key indicator of a real estate investment’s effectiveness.
In Germany, however, “Rendite” can refer to different metrics — Gross Yield (Bruttorendite), Net Yield (Nettorendite), or even Equity Yield (Eigenkapitalrendite).
To evaluate actual income, it’s crucial to understand how each is calculated and what costs to consider.
Gross Yield – the „headline“ yield
Gross yield is the simplest and most “advertised” figure, often shown by sellers and property portals.
Formula:
Gross Yield=Annual Cold RentPurchase Price×100Gross Yield=Purchase PriceAnnual Cold Rent×100
Example:
Apartment price: €250,000
Cold rent: €900/month → €10,800/year
10,800/250,000×100=4.32%10,800/250,000×100=4.32%
This is the gross yield — it does not account for expenses, taxes, or additional purchase costs.
Typical mistake: Investors focus only on gross yield, while real returns are often 30–40 % lower.
Net Yield – the real yield
Net yield is a more precise measure that accounts for all ongoing costs.
Formula:
Net Yield=Annual Cold Rent−Ongoing CostsTotal Costs (Purchase Price + Additional Costs)×100Net Yield=Total Costs (Purchase Price + Additional Costs)Annual Cold Rent−Ongoing Costs×100
Ongoing costs (laufende Kosten) include:
- Condo fees (Hausgeld, non-recoverable part)
- Reserves (for repairs)
- Administration (property management, accounting)
- Insurance
- Small repairs and vacancy
Total costs (Gesamtkosten) include:
- Purchase price
- Property transfer tax (3.5–6.5 %)
- Notary & land registry (approx. 1.5 %)
- Broker fees (up to 3.57–7.14 %)
Net yield example calculation:
| Item | Amount (€) |
|---|---|
| Purchase price | 250,000 |
| Additional costs (10 %) | 25,000 |
| Annual cold rent | 10,800 |
| Ongoing costs (fees, reserves, etc.) | 2,000 |
| Net income | 8,800 |
| Total costs | 275,000 |
8,800/275,000×100=3.2%8,800/275,000×100=3.2%
The net yield is therefore 3.2 %, not 4.32 %.
Equity Yield – return on own capital
If you use financing (mortgage), it makes sense to calculate yield based on the equity invested.
Formula:
Equity Yield=Annual Surplus (after interest, repayment, costs)Equity×100Equity Yield=EquityAnnual Surplus (after interest, repayment, costs)×100
This shows how efficiently your capital works and can exceed the net yield due to leverage.
How to interpret the metrics
| Metric | Meaning | Accounts for Costs | Typical Value |
|---|---|---|---|
| Gross Yield | Total “on-paper” yield | No | 3–6 % |
| Net Yield | Real income after costs | Partially | 2.5–4.5 % |
| Equity Yield | Yield on invested capital | Fully | 5–10 % (with financing) |
Tip from Dominart Invest
Consider all three metrics when analyzing a property, but focus on Net Yield and Cashflow for decision-making.
They reflect the actual returns after all mandatory costs and taxes.
- Net yield > 3 % and positive cashflow → attractive for long-term rental
- Yield < 2 % → more focus on value appreciation than current incomextagstartz/li>
