Berlin 3-bed serviced apartment at €427,800: is 7.2% gross enough?

[radar.round]

Either the Berlin unit achieves €2,565 a month with serviced-apartment costs on top, or I model a lower rent and the return becomes uncomfortable; neither case yet gives me much confidence. The purchase price is €427,800 for a 3-bed, so the advertised figures produce a gross yield of about 7.2%.

I have included routine upkeep, management, empty periods and a reserve for a major repair. What I cannot yet judge is whether owner-only building charges, furnishing turnover or restrictions on the intended rental arrangement would undermine the rent assumption. I also plan to test higher financing costs. Which documents or cost line would you verify first, and what unlevered net return would make the remaining risk acceptable to you?

 

[checkTheGlass]

I would look hardest at costs that stay with the owner: non-recoverable building charges, insurance, property tax and possible contributions for major building works. Serviced units can also have more furnishing replacement and turnover expense than an ordinary long-term rental.

Is €2,565 an achieved rent or an agent’s expectation, and does it include utilities or services? Until that is clear, the 7.2% is difficult to judge. Personally, I’d want the unlevered net figure around 4.5–5% rather than relying on the headline yield.

 

[lila_escrow]

I’m less worried about choosing a target yield than about whether the €2,565 can actually be sustained under the intended rental arrangement. A generous repair reserve will not rescue the deal if the serviced-apartment use or rent assumptions prove wrong.

Before proceeding, get the building accounts, planned-works information, current insurance and property-tax amounts, and a written management quote. Then rerun the model with lower rent, extra vacancy and faster tenant turnover. If financing is involved, also test a higher borrowing cost; that may expose a thin cash-flow margin very quickly.