Income properties: Investing successfully in real estate
What are investment properties and what makes them so attractive?
Or maybe you are just in the process of orientation and have found the scent of an investment property. investment property as a capital investment.
Especially in today's time of intense upheaval and rapid change, each and every one of us should think about what we do with our capital and how we invest it in order to increase it.
Möglichkeiten gibt es zahlreiche. Doch welche davon ist die richtige? Die Antwort darauf ist ebenso individuell wie die Person, die sich die Frage stellt.
A real estate as an investment property promises a lot in many respects. Also known under terms such as "investment property", "income property", "concrete gold", or "apartment buildings".This type of investment represents a long-term, secure and lucrative source of income. The acquired property is not used for personal use, but is rented out to third parties. The income generated by this generates a passive income in the long term.
To achieve this success, it is essential to pay attention to some factors and make some decisions correctly.
What kind of real estate is best suited as investment property?
You have now decided to invest in an investment property and the question now arises as to what type of property your future property should be.
Certainly, your financial means play a not insignificant role here, but so does your expertise with regard to what is happening in the real estate market.
But for now, back to the question: What types of yield objects are there actually?
Are you ready to take the first step towards gradually building up a diversified real estate portfolio or are you looking for the next property to add to your existing collection? Investing in a flat can also be an option for investors with a small budget. In any case, the rental flat as an investment property is a good decision.
Wichtig hierbei ist es, darauf zu achten, dass auch wirklich ein Cashflow mit der Wohnung erzeugt werden kann. Dies gestaltet sich oftmals gerade bei Immobilien schwierig, die aufgrund von Bestlage und überdurchschnittlicher Ausstattung immer teurer werden und dann den Einsatz von Fremdkapital für die Finanzierung verlangen. Die sich daraus ergebende Rendite verringert sich dementsprechend. Vielversprechender kann es sein, auf Wachstumsstandorte zu setzen und so zukunftsorientiert zu investieren. Das durch die Mieteinnahmen entstandene passive Einkommen, ermöglicht dir zum einen mehr Freiheit in Deiner Lebensgestaltung und zum anderen aber auch die Möglichkeit, weitere Investitionen tätigen zu können. Angenommen Du möchtest auch von dem ganzen Verwaltungsaufwand rund um Deine Wohnung nur so viel wie nötig wissen, so kannst Du das 360-Grad Sorglospaket von Meine-Renditeimmobilie.de buchen und Dich entspannt zurücklegen.
Also known as apartment buildings, investing in an apartment building is particularly important for wealthy capital investors. Location and future investment are of course just as important for the prospect of success in this case as they are for rental flats.
All residential units are exclusively rented out and thus generate regular and constant rental income.
It therefore promises not only a a higher return, but also has some structural advantages:
The sole power of decision lies entirely with you as the sole owner. You therefore skilfully avoid annoying disputes with other co-owners.
The management costs are lower than for an individual condominium. The administration effort is minimised as there is only one owner and therefore no distinction has to be made between special and common property.
With regard to upcoming modernisation or repair work, better conditions can be better conditions can be negotiated with can be negotiated.
Likewise, with a good credit rating there are often conditions for larger loans from banks than is the case than is the case for smaller sums.
No complete loss of rental income: even if a residential unit should be temporarily vacant, the remaining ones continue to generate rent.
Investing in entire apartment complexes probably appeals to you if you are considering a particularly high capital investment. Otherwise, it is not fundamentally different from that of apartment buildings.
Care real estate
Another variant that should not be neglected, however, is the investment in nursing care real estate.
A number of aspects make this species extremely interesting:
Security of tenureThe operator of the care facility has strong financial resources. Depending on the exact concept pursued and the provider, it is even possible, in the event of a resident's inability to pay, to receive protection from the state by having the rent taken over and thus not incurring any loss of rent. However, this subject should be treated with caution, as there are always black sheep hiding among them. Even if a unit is not occupied, the operator of the care property to which you rent is obliged to pay the rent. Also the generally long contract terms of 20 to 25 years allow you to lean back when it comes time to find new tenants. For particularly security-oriented investors it is an interesting option in any case.
Due not least to demographic change, a large growth market has emerged in the care sector, which can also be classified as resistant to economic cycles. can be classified as resistant to resistant.
It's also good to know that if you or one of your relatives needs a place in a nursing home, you are automatically entitled to it as the owner.
Commercial real estate
Another option is to invest in an investment property in the sense of a commercial property invest.
Office buildings, shopping centres or industrial plants, there are numerous commercially used properties which make particular sense for you as an investor if you have very good market knowledge or/ and are in close cooperation with real estate agents and tax consultants.
Attractive returns meet increased risk.
What should be considered when selecting an investment property?
In order to invest profitably, it goes without saying that the best possible balance must be struck, how profitable the profitable pretends to be. What do you have to pay attention to?
1. amount of the equity capital that can be used
Of course, the available equity capital provides a basic framework within which you can move in order to select your property and thus obtain a pleasing return.
2. building fabric and structural condition
But let us now turn our attention more to the investment property itself. In the best case, you should get an impression of the property in person and on site. As a layperson, you may notice more obvious defects. However, it is the general structural condition that provides information about maintenance costs as well as renovation and modernisation measures that you and your property may face in the future. This should influence your investment decision and the purchase price for which you are willing to invest in the investment property.
We at Meiner-Renditeimmobilie.de are happy to support you in this.
3. Future possibilities of use (floor plans)
After considering the location as well as the site, there are other factors that need to be taken into account.
The more appealing and versatile the property, the better the chances of consistently letting the property without interruption.
In flats, it is often the floor plan that is of great importance and creates attraction. For example, rooms that can only be accessed by entering other rooms and not through a separate door in the hallway offer little flexibility of use these days.
In the case of commercial units, the diverse suitability for various industries is particularly advantageous in order not to be tied to certain company requirements with regard to letting.
4. Future value enhancement potential due to location, region and infrastructure
Your intention is to generate constant generate constant and secure rental income from your to generate.
It is therefore advisable to pay attention to the location, region and surrounding infrastructure.
It can be interesting to focus on still undervalued growth locations. undervalued growth locations growth locations. These often offer great potential, especially from a future-oriented perspective.
Instead of exclusively investing horrendous prices for real estate in current prime locations, it is worthwhile if you position yourself a little more broadly and think about long-term investments and goals.
In this way, you can exploit an existing appreciation potential optimally exploit.
Here, it is advisable to get good advice to find out about possible locations that are still in their flourishing infancy.
Regardless of the exact location, it is always important to ensure that there is a well-developed infrastructure. Attractive shopping facilities, promising employment, education and leisure opportunities attract tenants and, above all, keep them. Of course, factors such as economic and cultural development are also decisive aspects that make a location attractive.
Calculate yield properties correctly
In order to ultimately achieve the goal of obtaining a pleasing return, it is of great importance to calculate everything correctly before buying the property. For this purpose, it may be advisable to involve an expert in the calculation.
Include ancillary purchase costs
In addition to the actual purchase price of the investment property, you will also incur various ancillary purchase costs. It is advisable to be able to cover at least this portion with your own capital. We are talking here about land transfer tax, as well as estate agent and notary fees.
Rent multiplier and net yield
But how can you assess whether your favourite property is cheap or expensive compared to other offers on the real estate market?
You can get an estimate with the help of the rent multiplier. To do this, divide the purchase price by the annual basic rent. The higher the result, the more expensive the property.
Furthermore, you should calculate the net yield or have it calculated. Both ancillary purchase costs and annual management costs are taken into account.
It is calculated as follows:
Net yield (in %) = (annual rent - management costs)*100 / (purchase price + ancillary purchase costs)
Consideration of these two factors will give you an initial estimate of the range within which you would move with your future investment property.
Develop a clever financing strategy
There are many different models for financing your future investment property.
In the rarest of cases, you will be able and willing to finance your property purely from your own capital. Nevertheless, it is an option, but it is certainly advisable to use the principle of leverage and the current low interest rate. If you are an investor who likes to take on as little debt as possible or who is particularly security-conscious, the trick is to find the right balance between debt and equity capital in order to still benefit from an above-average return.
However, from the point of view of your desire to achieve the highest possible return, it is wise to at least pay the ancillary purchase costs out of your own pocket.
The future conditions of the bank financing naturally have a great influence on the development of the return. The more equity you can bring in, the lower the interest rates you can expect.
But even if you have little or no equity capital, there is little to prevent you from acquiring an investment property under certain conditions. The basic prerequisite for this is a good credit rating or, for example, the receipt of a timely inheritance. Especially if you are in the starting blocks of your career, you have a good chance of generating a great passive source of income in the long term with real estate as an investment.
Consider future costs
Of course, a real estate investment also requires a certain amount of foresight. Repair and maintenance measures as well as extensive renovation measures that may be required in the future must be taken into account in the calculation.
However, not all work is the responsibility of the owner. Certain modernisations can be passed on to the tenants in the form of a modernisation rent increase. These include, for example, the installation of new windows that lead to energy savings.
Tax advantages and disadvantages
Last but not least, we should take a look at tax aspects.
Depreciation (AfA): As a landlord, you can claim tax relief for acquisition or production costs. In the case of residential property, this is two per cent of the purchase price per year; in the case of listed buildings, it is even higher.
Three-object limit: As soon as you sell more than two properties within 5 years, you run the risk of being classified as a commercial property trader. The trade tax exemption is now nullified. You have to pay trade tax in arrears.
Finally, if we take a comprehensive look at current world events, especially in view of the continuing rise in inflation (link to article on real estate and inflation/inflation in 2021), we can say that investments and investments in tangible assets should be a very serious consideration.
There are numerous possibilities: Investment in shares, cryptocurrencies, ETFs or real estate. Those who decide to buy an investment property now, for example, are betting on a future-oriented and lucrative investment opportunity.
In any case, it is advisable to get good advice from people with excellent market knowledge in order to be able to ensure the best possible calculation with the help of detailed analyses.
Have we made you curious or have you already made up your mind? We at meine Renditeimmobilie would be happy to accompany you individually on your way to your own investment property.