Beer-coaster calculator

What is the Bierdeckelrechnung (beer mat calculation) for property?

The Bierdeckelrechnung (beer mat calculation) is a rough estimate from three numbers: purchase price, living area and net rent. From them you get gross rental yield, price factor, price per m² and rent per m². It shows whether an offer deserves a closer look.

All three numbers are in almost every listing. Costs, financing and taxes are left out on purpose.

A factor of 20.83 means the purchase price equals just under 21 years of net rent.

How do you do the beer mat calculation?

Gross rental yield = net rent × 12 ÷ purchase price × 100. Price factor = purchase price ÷ (net rent × 12). Price per m² = purchase price ÷ living area, rent per m² = net rent ÷ living area.

In your head the factor is quickest: purchase price divided by annual rent. €200,000 divided by €9,600 is just under 21. The yield is the reciprocal: 100 ÷ 20.83 = 4.80%.

The two per-square-metre figures make the offer comparable. Hold the price per m² against other offers in the area, and the rent per m² against the Mietspiegel (local rent index) or comparable listings.

If the rent per m² is well above what is usual in the area, the yield rests on a rent that may not hold when the flat is relet. If it is well below, the rent can rise as far as tenancy law allows.

What is missing from the beer mat calculation?

Everything that lies between the gross yield and what is left at the end of the month: closing costs, non-transferable operating costs, maintenance, vacancy, interest, repayment and taxes. Two offers with the same factor can therefore turn out very differently.

Closing costs alone shift the picture. At 10% closing costs you pay €220,000 instead of €200,000 for the flat in the example, and the yield on the total outlay falls from 4.80% to 4.36%.

Use the beer mat calculation to weed out offers. For the ones that remain, carry on with net rental yield and financing.