The purchase price multiple (Kaufpreisfaktor) of an apartment building is the purchase price divided by the annual net cold rent. A multiple of 20 means the purchase price equals twenty years' rent, and the gross yield is 5% (100 ÷ 20). Whether a multiple is appropriate depends on region, condition and rent level – in Germany, official reference values are published by the local valuation committees (Gutachterausschüsse) as the "gross rent multiplier" (Rohertragsfaktor).
What is the purchase price multiple?
The purchase price multiple is the ratio of purchase price to annual net cold rent. It shows how many years the rental income – before any costs – needs to cover the purchase price. Other names for the same figure are rent multiplier (Mietmultiplikator) or income multiple (Ertragsfaktor); the valuation committees speak of the gross rent multiplier (Rohertragsfaktor).
Formula:
Purchase price multiple = purchase price ÷ annual net cold rent
The annual net cold rent (Jahresnettokaltmiete) is the rent excluding service charges and heating costs, extrapolated to twelve months. What counts is the rent actually paid (actual rent), not a hoped-for target rent.
The multiple is popular because it is quick: with two figures from an anonymous profile or exposé, you can roughly place a building and compare it with others.
How do you calculate the purchase price multiple step by step?
You need the purchase price and the monthly net cold rents of all units.
- Add up the monthly net cold rents: all apartments and commercial units, only let space at actual rent.
- Multiply by 12: this gives the annual net cold rent.
- Divide the purchase price by the annual net cold rent: the result is the purchase price multiple.
- Cross-check: 100 ÷ multiple gives the gross yield in per cent.
Watch out for vacancies: if an exposé includes vacant units at an assumed rent, the multiple looks lower than it is. In that case, calculate twice – once with actual rent, once with target rent.
How are the purchase price multiple and the yield related?
The gross yield is the reciprocal of the multiple in per cent: 100 ÷ purchase price multiple, so a multiple of 20 corresponds to 5%. The net yield additionally deducts the non-recoverable costs and the transaction costs, and is therefore significantly lower.
You can calculate both yields with formula, conversion table and calculator in the guide calculate rental yield.
Worked example: apartment building with eight apartments
Fictitious example: all values have been chosen for illustration and do not describe a real property.
Starting point: apartment building, 8 apartments, 560 m² of living space in total, all let at an average net cold rent of €7.50 per m² per month. Purchase price €1,000,000.
| Step | Calculation | Result |
|---|---|---|
| Annual net cold rent | 560 m² × €7.50 × 12 | €50,400 |
| Purchase price multiple | €1,000,000 ÷ €50,400 | 19.8 |
| Gross yield (cross-check) | 100 ÷ 19.8 | 5.04% |
A multiple of 19.8 lies within the range measured by the Senior Valuation Committee of Brandenburg (Oberer Gutachterausschuss) in the Berlin commuter belt (table in the next section). What remains after management, maintenance, rent loss and transaction costs is calculated in the guide calculate rental yield using the same building: a net yield of 3.52%.
What is a good purchase price multiple for an apartment building?
There is no nationwide „good“ multiple. An appropriate multiple is one that fits the location, condition, rent level and prospects of the specific building. Reliable reference values are published by the valuation committees, based on the purchase agreements actually notarised in their area.
An example with official figures from Brandenburg:
| Region (state of Brandenburg) | Avg. gross rent multiplier | Range | Sales 2023–2025 | Avg. net cold rent |
|---|---|---|---|---|
| Berlin commuter belt excluding Potsdam | 20.7 | 13.6 – 37.6 | 75 | €8.8/m² |
| Independent towns excluding Potsdam | 17.1 | 10.1 – 32.8 | 79 | €6.5/m² |
| Wider metropolitan area excluding independent towns | 14.9 | 6.3 – 42.0 | 265 | €6.0/m² |
Source: Oberer Gutachterausschuss für Grundstückswerte im Land Brandenburg, Liegenschaftszinssätze 2025 (German), apartment buildings with a commercial rent share of up to 20%, reference date 01.07.2024, published April 2026.
Three things stand out: the ranges are very wide, even within one region. In these figures, higher rents go hand in hand with higher multiples. And the Berlin commuter belt lies above Brandenburg’s independent towns. For Berlin, Hamburg, Munich, Frankfurt, Leipzig or Potsdam, the values of the local valuation committees apply; the regional pages of diskret.immo put them in context, for example for Leipzig or Potsdam.
Do you own an apartment building yourself? How buyers apply the multiple to your building, and which documents they want to see for it, is shown on the page sell an apartment building: estimating the price by multiple.
What does the capitalisation rate say – and how is it related to the multiple?
The capitalisation rate (Liegenschaftszinssatz) is the rate of return at which the market actually values a property – determined by the valuation committees from purchase prices and net income, i.e. after deducting operating costs and taking into account the remaining useful life. It is therefore a kind of official „net yield of the market“ and the basis of the income capitalisation method under the German Property Valuation Ordinance (Immobilienwertermittlungsverordnung, ImmoWertV).
For apartment buildings in Brandenburg, the Senior Valuation Committee determined the following averages for 2023–2025:
| Region (state of Brandenburg) | Avg. capitalisation rate | Avg. gross rent multiplier |
|---|---|---|
| Berlin commuter belt excluding Potsdam | 3.2% | 20.7 |
| Wider metropolitan area excluding independent towns | 3.5% | 14.9 |
| Independent towns excluding Potsdam | 2.8% | 17.1 |
Source as above, reference date 01.07.2024.
A low capitalisation rate means buyers accept a low ongoing return because they consider the risk to be low. If the net yield of an offer is significantly below the local capitalisation rate, ask why – or negotiate.
Which mistakes are common in the calculation?
Most misjudgements arise not from wrong arithmetic but from wrong input figures:
- Warm rent instead of net cold rent: service charges and heating costs do not belong in the multiple.
- Target rent instead of actual rent: vacancies at an assumed rent flatter the multiple.
- Parking spaces and commercial units overlooked: they are part of the rent but are valued differently.
- Transaction costs forgotten: they noticeably reduce the net yield.
- Maintenance backlog ignored: a necessary roof renovation should be mentally added to the purchase price.
- Apples and oranges: a multiple from Munich says nothing about a building in Lusatia.
Where does the purchase price multiple reach its limits?
The multiple is a quick test, not a valuation. It says nothing about:
- Condition: two buildings with a multiple of 18 can differ by hundreds of thousands of euros in renovation needs.
- Rent potential: if rents are below the local rent index (Mietspiegel), a high multiple can be justified – provided tenancy law in Germany permits increases.
- Land value: a large plot or building land reserve contains value that does not show up in the rent (standard land value).
- Remaining useful life: a building that needs fundamental renewal in 20 years must be valued differently from a renovated one.
- Tenant structure: commercial share, lease terms, rent arrears.
So always also check the net yield, the documents in the data room and the building condition. What this involves is described in the glossary under due diligence.
Note: this guide explains key figures in general terms and is no substitute for a valuation, tax advice or financing advice.
How do I check the yield of an off-market property without public comparison data?
Without listings to compare against, you check an off-market offer against the official values for the region. Four sources are enough for a sound first assessment, and all of them are public:
| Source | What you check with it | Where to find it |
|---|---|---|
| Gross income multiplier of the valuation committee | whether the asking multiple fits the local market | property market report (Grundstücksmarktbericht) of the city or district |
| Capitalisation rate | whether the net yield of the offer fits the market rate of return | same place, often as a separate publication |
| Rent index (Mietspiegel) | whether the actual rents are below, at or above the local level – and how much room tenancy law leaves | the municipality, where a rent index has been drawn up |
| Standard land value | how much of the price lies in the land | the state’s BORIS portal |
For Berlin, Hamburg, Munich, Frankfurt, Leipzig and Potsdam, we have compiled multiples and capitalisation rates with source and date on the regional pages; an overview is in the guide calculate rental yield. If an offer deviates significantly from these values, ask why and request the rent roll before you continue your review.
How do you use the multiple when searching for off-market properties?
Off-market properties often lack public comparable offers. The purchase price multiple and the official market reports therefore become even more important. On diskret.immo you can write your desired yield straight into the search, for example „apartment building in Leipzig up to €2 million with at least 5% yield“ – this corresponds to a multiple of no more than 20. The search matches the criterion against all anonymous profiles and shows the match from 0 to 100.
More on properties of this kind on the page off-market apartment buildings.
How do I calculate the purchase price multiple?
Divide the purchase price by the annual net cold rent. Example: a purchase price of €1,000,000 with an annual net cold rent of €50,000 gives a multiple of 20.
Is a low purchase price multiple always better?
No. A low multiple means a high initial yield, but often also a weaker location, poorer condition or higher vacancy risks. What matters is whether the multiple fits the property.
What is the difference between the purchase price multiple and the gross rent multiplier?
In practice, both mean the same: purchase price divided by annual net cold rent. „Gross income multiplier“ (Rohertragsfaktor) is the term used by the valuation committees in Germany, which derive it from actual purchase agreements.
Do I calculate with actual rent or target rent?
With actual rent, i.e. the rent actually paid. You can additionally calculate a target rent for vacant units or units let below market level to see the potential – as a second, separate calculation.
Which purchase price multiple corresponds to a 4% yield?
A multiple of 25, because 100 ÷ 25 = 4. This refers to the gross yield. After costs and transaction costs, the net yield is significantly lower – in the fictitious example in the guide calculate rental yield, by around a third.
Does the purchase price multiple also apply to commercial property?
Yes, the formula is the same. Commercial rents are valued differently, however, because lease terms, tenant creditworthiness and vacancy risk carry more weight. Only compare commercial with commercial.
- Oberer Gutachterausschuss für Grundstückswerte im Land Brandenburg: Liegenschaftszinssätze 2025 Land Brandenburg, Abschnitt B (Mehrfamilienhäuser) und Anlage 1 (Modellansätze, Bewirtschaftungskosten ab 01.01.2025), published April 2026, https://gutachterausschuss.brandenburg.de/sixcms/media.php/9/LIZI_2025_OGA.pdf (German)
- Bundesministerium der Justiz: Immobilienwertermittlungsverordnung (ImmoWertV), Anlage 3, accessed 26.10.2026, https://www.gesetze-im-internet.de/immowertv_2022/ (German)
René LindelaubManaging Director of IMMOBRA GmbH, estate agent since 2008. Reviewed by IMMOBRA; not legal or tax advice.