Why renting out property is no longer worth it, or is it?

Problem: "Renting is no longer worth it" is one of the most frequently searched terms in the German real estate context. Sentiment has shifted: where renting was long considered a reliable capital investment, the numbers no longer add up for many properties today.

Cause: The shock of the interest rate turnaround coincides with structural cost increases: craftsperson rates have risen into double digits, regulatory requirements (GModG, EED, rent control/Mietpreisbremse) narrow the scope of action, and non-recoverable ancillary costs are growing faster than base rents.

Thesis: "Renting is no longer worth it" is broadly false and specifically often correct. The decisive factor is less the market situation than how efficiently the rental process is organized, and here, property management companies hold leverage that many owners underestimate.

Where the Sentiment Comes From

The narrative that "renting is no longer worth it" stems from three real changes that have intensified simultaneously since 2022:

Direct answer: Three factors have changed the calculation: financing interest rates have risen from under 1% to between 3.5 and 4.5% (Deutsche Bundesbank); craftsperson and maintenance prices are double digits above pre-crisis levels; at the same time, requirements for property owners have grown significantly due to the GModG, EED, and municipal regulations.

The result: A property that provided an adequate return on equity in 2019 often finds itself in the loss zone today with the same rent, unless the figures are adjusted.

The Market Side: What Has Really Changed

Anyone seriously examining whether "renting is worth it" must distinguish between four figures:

• Gross rental yield: Annual base rent / total investment. Provides a rough orientation.

• Net rental yield: Minus all non-recoverable operating costs. The realistic metric.

• Return on equity (ROE): After deducting financing interest on the invested equity.

• Total return: Including appreciation and amortization gains.

The statement "renting is no longer worth it" usually refers to the return on equity, and here it is empirically verifiable in many existing portfolio cases. Those who financed at low interest rates experience a real collapse in cash flow upon refinancing.

The Process Side: The Underestimated Leverage

What almost never appears in public debate: Two properties with identical gross rental yields can diverge by 0.5 to 1 percentage point in net rental yield, solely due to the quality of management.

Every month of vacancy avoided corresponds to around 0.25 percentage points of gross rental yield for a €1,200 apartment. Professional tenant screening, clean handover processes, and pre-planned tenant turnovers measurably reduce these downtime periods.

Direct answer: Process quality can typically increase the net rental yield by 0.2 to 0.5 percentage points, enough to make the difference between "worth it" and "not worth it" in many borderline cases. What this calculation looks like in detail is shown in our article on calculating the profitability of renting.

When Is Renting Worth It, and When Is It Not?

The honest answer is: It depends on four variables.

1. Location and rent level: If rent is significantly below the local rent index, the room for maneuver is limited.

2. Fixed-interest period and financing structure: Still 5+ years locked in at low interest rates? Then it usually continues to pay off. Refinancing in 2026/27? Check the break-even point now.

3. Renovation status: GModG obligations can shift the calculation substantially.

4. Process quality: Is the property managed professionally, or is the administrative burden eating up the return?

Core takeaway: "Renting is no longer worth it" makes for a great headline, but it does not replace evaluating individual calculations. Many properties remain worthwhile, others do not, and for some, only management quality determines the right answer.

Economic outlook: The next 24 months will bring numerous follow-up financings from the low-interest phase, and with them, a wave of new "is it still worth it?" conversations. Property managers who are prepared for this will retain existing clients and win new ones.

How this fits into the broader efficiency context is explained in our guide to increasing efficiency in property management. Calculate your specific process costs per lease: To the rental calculator.

Is it true that renting is no longer worth it since 2022?

Generally, no. The return on equity for many existing properties is under pressure: the interest rate turnaround, craftsperson prices, and regulatory requirements have intensified simultaneously. Whether a specific property is still worth it depends on location, financing, renovation status, and management quality.

What role do financing interest rates play?

A decisive one. If the net rental yield is above the borrowing rate, financing levers the return on equity upward. If it falls below, the opposite happens, and since 2022, that has been the case for many existing properties.

What is the most common calculation error when assessing profitability?

Confusing gross and net rental yield. In practice, the difference is often 1 to 2 percentage points.

When should I consider selling?

When three conditions coincide: a sustainably negative return on equity, a backlog of renovations with the risk of cost shocks, and personal circumstances that favor a sale.

How does good property management help with the question "is it still worth it"?

Through reliable figures rather than speculation. Professional management can increase the net rental yield by 0.2 to 0.5 percentage points, enough to tip the scales in borderline cases.