Is buying an apartment to let worthwhile?

There is no general answer: property, location, financing and personal circumstances decide. A rented apartment can combine long-term wealth, rental income and tax effects, but carries rental default, interest, value and liquidity risks. Conservatively calculated after all costs, it must fit your cash position. There are no return promises; credible calculations are cautious and explicit about risk.

What should I consider when buying an apartment to let?

First check location, condition and price relative to achievable rent, and arrange financing including equity. After purchase and notarisation, a vacant unit may need work, careful tenant selection and a legally sound agreement. Ongoing duties include service-charge statements, maintenance and sufficient reserves. Include purchase costs, non-recoverable expenses and a vacancy buffer from the start.

How is a rented apartment taxed?

Rent is taxed as letting and leasing income at your personal income tax rate. Deductible expenses such as loan interest, not principal, building depreciation (AfA) and ongoing costs reduce the taxable surplus. Only the building, not land, is depreciable. A sale within the ten-year capital gains tax period under section 23 EStG may be taxable. Check current rates and rules and seek tax advice if in doubt.

Let it yourself or buy with a tenant in place?

Buying a vacant or soon-vacant unit lets you choose the tenant and draw up a new agreement, giving flexibility but work and initial vacancy risk. Buying tenanted gives a running agreement and rent from day one, but binds you to existing terms and tenant. Choose according to time, risk appetite and the property.

Buying an apartment to let: step-by-step process • Loro

By Loro Real Estate team · Last updated: July 2026

Buying an apartment and letting it yourself combines wealth-building with ongoing rent. Unlike buying already tenanted, you handle the whole process, from a vacant or soon-vacant unit through tenant selection to your own agreement. This guide covers each step, from checking the property, financing and purchase to operations and rental taxation.

First, rented property is a long-term investment with real risks, including rental default, interest changes, value fluctuations and limited liquidity. This article deliberately makes no promises of returns, instead explaining the process and risks openly.

The basic choice: find a new tenant or take over an existing tenancy

Before searching, understand the main choice. There are two routes to becoming an apartment landlord, with markedly different effort, timing and flexibility.

Buy and let it yourself (this guide): Buy a vacant or soon-vacant apartment, prepare it if needed, choose a tenant and create a new agreement. You control rent, tenant choice and fittings, but take on work and initial vacancy risk until someone moves in.

Take over an already rented apartment: The tenancy is already running, so rent starts on day one. You are bound by existing terms and tenant. If this suits you better, see our guide to buying an already rented apartment and checking the building and tenancy beforehand.

The right route depends on time, risk appetite and the property. The rest of this article follows the first: buying and letting yourself.

The steps: from checks to ongoing management

Buying and letting is a chain of steps, not one action. Knowing the sequence avoids costly mistakes and keeps expenses visible.

Check the property and location. Start with a clear assessment: location, structure, layout, common areas and price relative to rent. Popular markets such as Rhein-Neckar and Hessen have higher prices, but generally stronger demand and value stability.
Arrange financing. Decide how much equity to use and what debt service you can sustain. For the right equity level, see our guide How much equity do you need for a tenanted apartment?. Financing is arranged through partner banks.
Purchase and notary. The purchase is notarised, followed by land register (Grundbuch) entry. Budget for property transfer tax (Grunderwerbsteuer): Baden-Württemberg 5.0%, Hessen 6.0%, Rheinland-Pfalz 5.0%, plus around 1.5–2.0% jointly for notary (Notar) and land register. Loro charges no buyer's commission. Check current rates.
Prepare it if needed. An empty apartment often needs renovation before letting. Watch acquisition-related construction costs: if net repairs and modernisation within three years exceed 15% of building acquisition costs, they are depreciated rather than immediately deductible. Check current thresholds and periods.
Select tenants. Check creditworthiness and ability to pay carefully, using financial disclosure, income evidence and credit reports. A reliable, solvent tenant is the best protection against rental default.
Draw up the tenancy agreement. Set legally compliant rent excluding service charges, deposit, operating-cost advances and, where relevant, stepped or index-linked rent under current tenancy law. Follow local limits and rent regulation.
Ongoing management. After move-in come annual service-charge statements, maintenance, building reserves and communication with tenants and management. These tasks can also be delegated, as below.

What the apartment must deliver: rental yield and cash flow

Viability is decided by calculations, not instinct. Two perspectives belong together: return on capital and ongoing cash flow.

Gross rental yield (%) = (annual net rent excluding service charges / purchase price) × 100 gives a quick estimate. More meaningful is net rental yield (%) = ((annual rent excluding service charges − non-recoverable operating costs) / (purchase price + purchase costs)) × 100 because it includes acquisition and ongoing costs and is therefore lower.

For actual liquidity, what matters is Cash flow = rental income − non-recoverable costs − debt service (interest + principal repayment). It shows what remains monthly or must be contributed. The quickest view of how purchase costs, reserves and financing affect your property is in the interactive property investment calculator. Our guide, Calculating rental yield, explains the metrics step by step.

Taxing rental income: income from letting and leasing

Buying and letting generates letting and leasing income taxed at your personal rate. The key benefit is deductible rental expenses reducing the taxable surplus.

Loan interest from the property loan is deductible, unlike principal repayments, which build your assets.
Building depreciation (AfA): Only buildings, not land, are depreciable. Straight-line rates generally are 2% annually for buildings from 1925, 2.5% before 1925 or 3% for completion from 2023.
Ongoing expenses including management, maintenance, non-recoverable operating expenses, tax advice and vacancy costs also reduce taxable surplus.

For a later sale, the capital gains tax period (Spekulationssteuer) matters: rented property has a ten-year period under section 23 EStG. Profit within it is taxed at your personal rate. Rates and rules change; check the current position and seek tax advice if uncertain. For more detail, see Letting property and taxes.

Delegating letting: tenancy and individual-unit management

Letting yourself does not mean doing every task. Tenant communication, service-charge statements, rent monitoring and arranging repairs take time, especially alongside a job and multiple properties.

Professional rental and individual property management takes over these tasks and eases ongoing work. Its non-recoverable fees belong in your calculation and net rental yield. Loro offers optional individual rental management after purchase, supporting acquisition and operation from one source.

How Loro supports buying and letting

Heidelberg-based Loro Real Estate GmbH works for private investors on the buyer side. Since 2018 it has supported over 250 clients and more than 1000 managed units across Rhein-Neckar and Hessen. We curate vetted investments, including off-market, presenting properties suited to your situation and figures.

Buyers pay no brokerage commission. On request, we arrange financing through partner banks and handle individual rental management after purchase, from selection through letting to ongoing operation. In a non-binding first consultation we assess your plans, opportunities and risks, without pressure or promises of returns.

This article is for information only and does not constitute investment, tax or legal advice.

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Buying an apartment to let: process, tenant selection and taxes