Buy First Real Estate

Letzte Aktualisierung am 21.04.2022

Your interest is aroused: You would like to buy your first property and rent it out. You have thoroughly researched the various investment opportunities and have come to the conclusion that real estate as a capital investment is the most most sustainable and rewarding investment investment.

But where to start? "Investing in Real Estate for Beginners" would be the perfect title for this guide. Here you can acquire real estate knowledge and build up basic real estate knowledge. 

You want to start investing in real estate. You just don't know how yet. Our advice to you: Start small with real estate. Don't buy a large apartment building at the beginning that still needs to be renovated. Keep things simple instead. If you are starting out in real estate, you should first buy a flat and rent it out. There are good properties for beginners that won't burn your fingers. However, you need to keep a few things in mind. Thanks to our years of experience and the development of hundreds of income properties, we know all the possible stumbling blocks. This way, starting your real estate business won't be a complete flop.

Buying a flat first steps

Buying your first property - an exciting undertaking for all real estate newcomers. To ensure that your first property is not a flop, there are a few things to bear in mind. Before you start with real estate, you should acquire some basic real estate knowledge

The principle of real estate as an investment is basically simple: You buy a property and have the purchase financed by a bank. The property is then rented out so that you have monthly rental income that covers the financing costs. The financing expenses consist of interest and repayment.
Ultimately, your tenant pays off your bank loan indirectly for you in this way. You have no or only a very small financial outlay, but a few years later you own a paid-off property.

Buying real estate first steps: To get started with the topic, you should inform yourself extensively about the following topics:

If you are a beginner when it comes to investing in real estate, you will certainly have some unanswered questions. It is better not to do anything on your own, but to seek advice from an experienced expert (e.g. from our team). We offer our clients offmarket properties that we have developed ourselves. We support you with financing and find the bank with the best conditions for you. And we accompany you, if desired, to the notary appointment and are available for all concerns in the months afterwards.

In our blog you can read up on the topic of real estate as an investment in advance. Our guidebook articlewill give you a good overview of the topic. Feel free to browse through the other articles on our site. You will also find topics such as cash flow real estate, retirement planning and comparisons with other investment opportunities. Buying and renting out your first property is not a walk in the park - but it's not rocket science either, as long as you are well informed.

Starting a real estate business: tips

The three most important tips for real estate as an investment

  1. Location
    Choosing the right location for your property is crucial to the success of your investment. Several factors play a role here: micro-location, macro-location, development of a neighbourhood, etc. A trained eye can see at an early stage how a neighbourhood will develop. Don't worry, you don't have to be able to do this yourself. We can help you find the perfect location. We have tools at our disposal that provide us with information on different locations and their future development to avoid the risk of buying a property in the wrong location.
  2. Financing
    There is a lot of potential here. If the interest rate is only 0.1% cheaper, that already makes a considerable difference. There is also the question of how the property should be financed. Should the ancillary purchase costs be financed as well? Should you bring in more equity capital? We will be happy to advise you on these questions. We have a large network of more than 300 banks and know the best financing concepts.
  3. Mietrendite
    Eine Immobilie als Kapitalanlage hat ein großes Ziel: eine attraktive Mietrendite zu erzielen. Diese sollte – je nach Lage – mind. 3,5 % betragen. Besser wären natürlich 4 % oder mehr. Je schlechter die Lage ist, desto besser muss die Mietrendite sein. Beispiel: In München ist eine Mietrendite von 3 % ein guter Wert. Auf dem Land sollte sie deutlich höher liegen. 

Real estate as an investment without equity capital

Many newcomers to real estate investment ask themselves: How much money do you need to invest in a property?
It is usually required that at least the ancillary purchase costs are covered by equity. This is what is known as 100% financing.

With 110% financing, the ancillary purchase costs are also financed. This form of financing is suitable for people who have a good income but no equity capital. In principle, however, we cannot recommend this approach, as the interest rate is usually higher with this type of financing.

Where to invest in real estate?

We are also often asked where in Germany is the best place to invest in real estate.

This question can be answered generally like this: 

  • Investments are worthwhile in those locations that have a positive economic outlook
  • This means: no dependence on a single, large company; at best, many small and medium-sized enterprises that provide jobs; no regions that lag behind in technological and infrastructural development.
  • Invest where the population balance is positive, i.e. where more people move in than out.
  • In addition to these macro-factors, the micro-location in a particular neighbourhood is of considerable importance

We are therefore currently developing properties in the regions of Stuttgart, Nuremberg, Hanover, etc. 

Start investing in real estate Step by Step 

All beginnings are difficult - as hackneyed as the well-known phrase may sound, that's exactly how it is with real estate in the beginning. How can you start with real estate if you have no idea and have to start from scratch? There are two alternatives:

a) Acquiring the theory: learn, learn, learn

The learning starts with the basic functioning of the asset class of investment real estate (purchase of an apartment/house, financing options, use of debt leverage, refurbishment if necessary, renting or fix&flip, tax basics, ...). 

If you have the staying power, you can gradually work your way through the various topics. If you want to cut corners, you can read summaries by well-known authors from the real estate sector such as Thomas Knedel. 

If you have studied the theoretical material intensively for at least half a year, you can start with practical research into locations, banks/financing partners, tax advisors, etc. There are many different tools for each area. There are many different tools for each area. 

Realistically, it takes at least one year from learning the theory to the first steps in practice to the first purchase of a property as an investment.
For those who cannot or do not want to have that much patience, b) is an option:

b) Taking the shortcut: Benefiting from the knowledge of others

If you do not want to take this admittedly long route, but would like to start with real estate promptly, you should look for an experienced partner. A partner who, in addition to the necessary theoretical knowledge, above all has practical experience in order to be able to quickly assess...

  • ..whether an object has potential,
  • ..how future financing conditions are likely to develop,
  • ..which locations have a positive perspective from a macro perspective etc. 

Objective, balanced real estate advice, such as that offered by Meine-Renditeimmobilie.de, is valuable for every newcomer to the real estate sector. More experienced property investors also make use of properties from Meine-Renditeimmobilie.de, which are usually sold off-market.

Real estate as an investment: advantages and disadvantages

Starting a real estate business has huge advantages over other ways of investing money. But as always, there are also disadvantages, which we would like to discuss below: 

Advantages:

 

Disadvantages:

  • Rent default risk 
  • Possible administrative expenses (tenant management)

The bottom line is that there are many advantages that other forms of investment cannot offer. Moreover, no other investment takes advantage of the low-interest phase as well as an income property. Find out more about flats as an investment in a free information session (by phone, Google Meet or in one of our offices). Make an appointment now.

 

Does real estate as an investment suit you?

The first real estate investment: How?

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