Yield Vs Multiplier (Faktor) and the best ways to Screen Your Property Supervisor

Getting property offers from Germany you probably will discover the term “Faktor” indicating multiplier. It explains the rental earnings of a property (net lease without supplementary expense like heating) through the purchase rate divided by the annual net rent

Purchase cost/ yearly net rent.

Often you will also get the figure for “Rendite” which is a portion figure and the word for yield. However this term can cause misunderstandings in between parties: Is it determined before or after purchase cost like property sales tax; is it prior to or after property management charges etc.? The meaning ought to constantly be clarified prior to discussions.

An active property management will have to look to raising the lease in a proper method which is lawfully sound and does not scare away the tenants you desire to keep. If your property supervisor is not keeping the lease for your property at least at the level of the rent table they are throwing away your money. Otherwise you can reveal the damage the property supervisor is triggering using the “Faktor” mathematics.

A 100 m home is rented for 5.50/ m each month.

The lease table specifies an average for the structure age and location of 6.50/ m.
The “Faktor” when you bought the building was say 18.

The “damage” triggered by the property manager is computed as the difference between the actual rent and the table rent 1.00/ m times the rental area 100 m times 12 months = 1,200– fairly a figure already. To arrive at the value you multiply this yearly figure by the “Faktor” and show up at a damage of 21,600 just from 1.00/ m in one home.

If you were to sell your house now you could get 21,600 more with no conversation or any investment while it definitely would be great to have the month-to-month earnings in the very first place. These facts will change your position in the discussions with your home manager

In our experience the brand-new rental rate is identified by the rental agent the property management is “associated” with. The motorist of this process is typically more for a simple rent and a fast commission rather than the best outcome for the owner.

This “Faktor” method likewise permits you to evaluate quickly the most likely market value of your house by using the “Faktor” and the annual net rent. This will give you a concept if your location value has not changed substantially, e.g. closing of an airport neighboring or major improvement or decay of your home itself.

I have actually revealed how it can be utilized to keep track of the efficiency of your property manager as well as the value advancement of your property. “the devil is in the information”, you still need to get all the details and it would most likely be more trustworthy if you don’t have to ask you property manager for it, only the actual figures need to come from him.

We will soon run a webinar on the best ways to get your info from the Berlin Rent Table even without knowledge of the German language. Simply drop me a short mail at info@falkenberg-solutions.com and you will receive an invite.