What is a good rental yield — and what's realistic in Munich?

A good gross rental yield nationally is at least 4 percent, and a good net rental yield is at least 3 to 3.5 percent. In Munich, these figures are rarely achievable: the average gross rental yield here in 2026 is only 2.0 to 2.8 percent, and net yield is often just 1.8 to 2.2 percent — well below the national average of 4.17 percent across 52 German cities (2026 Mietrenditeatlas, immoclick24.de). For Munich property owners, the absolute percentage matters less than whether their own property is optimized relative to comparable units in the same location, since total return from rental income, appreciation and tax benefits is often only lifted to a competitive level through active management.

The average purchase price for condominiums in Munich in Q2 2026 was around 9,462 €/m², while average cold rent was 20.28 €/m² (davidundjacques.de market report), yielding a gross return of roughly 2.6 percent. In prime locations such as Schwabing or Bogenhausen, price-to-rent multiples reach 35 to 45 times annual rent (ftimmobilien24.com, 2026), nearly double the traditional 25x benchmark for a sound investment — a clear signal that returns in Munich come more from appreciation and tax benefits than from running rental income.

Munich's average net rental yield in 2026 is just 1.8 to 2.2 percent — lower than the effective mortgage rate of around 3.7 percent, meaning many Munich landlords are effectively losing money once financing costs are factored in, unless they actively optimize their yield.

Gross vs. net rental yield: how to calculate your true return

Gross rental yield = annual cold rent ÷ purchase price × 100. Net rental yield is more accurate: it subtracts non-recoverable operating costs (management, maintenance reserves, vacancy risk — typically 15-20 percent of annual rent) from income, and adds purchase-side costs (transfer tax, notary, land registry, agent fees — around 9-10 percent in Bavaria) to the purchase price.

Worked example — 70 m² Munich apartment

Purchase price: 70 × 9,462 € = 662,340 €

Annual cold rent: 70 × 20.28 € × 12 = 17,035 €

Gross yield: 17,035 € ÷ 662,340 € = 2.57 %

Purchase costs (∼9 %): 59,610 € → total investment 721,950 €

Operating costs (∼20 % of annual rent): 3,407 €

Net yield: (17,035 € − 3,407 €) ÷ 721,950 € = 1.89 %

Why Munich yields are so low — and where landlords still have room to improve

Three structural factors explain Munich's low yields: sustained high demand from international companies and universities that has pushed purchase prices up faster than regulated rents; the Bavarian rent control ordinance (Mieterschutzverordnung), which caps new-letting rent at 10 percent above the local rent index (Mietspiegel) through 31 December 2029; and a buyer base that is largely calculating on appreciation and tax depreciation rather than running yield. Still, landlords have real room to improve, particularly in the gap between below-market existing rents, furnished vs. unfurnished letting strategy, and cost control.

5 levers to raise your rental yield without buying a new property

  • Furnish the unit: furnished apartments achieve 20-40 percent higher rents than comparable unfurnished units (dasinvestment.com, 2026) — see our detailed guide (in German) on the new furnished-apartment surcharge rules for Munich.
  • Get utility billing right: accurate, on-time cost allocation prevents silent yield erosion — details in our German-language guide to the 2025 utility statement requirements.
  • Minimize vacancy: a single vacant month on a 1,400€ rent equals over 8 percentage points of that year's yield.
  • Adjust below-market rents: many existing leases sit well below the current Mietspiegel and can be raised within legal limits (15% cap over three years in tight markets like Munich).
  • Automate administration: digitizing tenant communication and documentation permanently lowers operating costs, directly boosting net yield.

mHomes analyzes your Munich property's rental yield

We review your current gross and net rental yield, benchmark it against the local Mietspiegel, and identify concrete levers — from furnishing to cost control to administrative automation.

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Frequently Asked Questions

What is a good return on a property investment?
Nationally, a good gross rental yield is at least 4 percent and a good net rental yield at least 3 to 3.5 percent (2026 average: 4.17 percent across 52 German cities). In cities like Munich, achievable yields are structurally lower because purchase prices outpaced rents.
How do you calculate the yield of a property?
Gross yield = annual cold rent ÷ purchase price × 100 (e.g. 17,035€ ÷ 662,340€ = 2.57%). Net yield deducts operating costs (15-20%) from rent and adds purchase costs (9-10% in Bavaria) to the price.
What should the minimum rental yield be?
Net yield should exceed the effective mortgage rate, around 3.6-3.8 percent for 10-year financing as of July 2026. Munich's average net yield of 1.8-2.2 percent falls below this, requiring active optimization.
What is the difference between gross and net rental yield?
Gross yield relates rent only to purchase price. Net yield also factors in operating costs and purchase-side fees. Munich's gross yield is 2.0-2.8 percent in 2026; net yield is correspondingly lower at 1.8-2.2 percent.
Is a property in Munich still worthwhile as an investment?
On running yield alone, Munich is among Germany's weakest-performing major cities. As an investment it remains relevant when total return — appreciation, tax depreciation and active management — is factored in.