Buying a let flat as an investment
A let flat brings in rent from the first month. Whether it pays off is decided by a few figures and by the documents you should read before the notary appointment.
The tenancy agreement is transferred to you
By purchasing the property, you step into the existing tenancy agreement, and the tenant remains in place (§ 566 BGB: sale does not override tenancy). The rent amount, deposit and all agreements continue to apply. You should therefore read the tenancy agreement, including any amendments, before making an offer.
How to calculate the yield
The gross rental yield is the annual net rent (rent without service charges) divided by the purchase price. For the net yield, deduct from the rent what cannot be passed on to the tenant, above all management costs and the maintenance reserve, and add the purchase costs to the purchase price.
An example: a purchase price of 50,000 euros and an annual net rent of 3,600 euros give a gross yield of 7.2%. After 600 euros in non-recoverable costs and around 5,500 euros in incidental costs, approximately 5.4% net remains.
Documents you should read
- Tenancy agreement with amendments and a payment overview for the last twelve months
- Service charge statement and budget plan
- Minutes of the owners' meetings for the last three years
- Declaration of division and land register extract
- Status of the reserve fund and resolved special levies
- Energy performance certificate
Raise the rent, move in yourself
Rent can be increased up to the local comparative rent, but by no more than 20% within three years, or 15% in areas with a tight housing market (Section 558 of the German Civil Code).
You may only terminate the tenancy with a legitimate interest, such as personal use. If the flat was converted into a condominium only after the tenant moved in, a blocking period of three years applies after the first sale, and up to ten years in some cities (§ 577a BGB).
Taxes
Rental income counts as income from letting and leasing. Deductible items include loan interest, management costs and depreciation of the building, usually 2% of the building's acquisition cost per year. Profit from a sale is tax-free after a holding period of ten years (§ 23 EStG).
Frequently asked questions
Can I buy a let flat from abroad as well?
Yes. Viewing by video, documents by email, and one person may attend the notary appointment with your power of attorney.
Who takes care of the tenant after the purchase?
On request, management that collects rent, settles service charges and reports to you.
What happens when the tenant moves out?
You can then re-let the flat or sell it vacant. Vacant flats generally achieve higher prices.
General information, as at October 2026. It does not replace advice from a tax adviser, solicitor or notary.
