Opinion on All-Inclusive Providers in Real Estate Investments

“Returns Compared to ETFs”

“Can such a real estate investment, given the current interest rates (4–5%), achieve a similar or even better return than an ETF savings plan, e.g., based on the MSCI World?”

Answer

Returns like those of the MSCI World—and beyond—are achievable with income properties, especially when comparing long-term equity returns after the property has been paid off.

P.S.: As of 15/11/2024, mortgage rates were not 4–5% but rather 3.3% for 10 years and 3.4% for 15 years.

“What realistic returns can one expect after deducting costs like management, maintenance, and potential vacancies?”

Answer

Delegating management doesn’t cost much. Maintenance is factored into every financing plan and isn’t the bogeyman it’s sometimes made out to be in online forums. Vacancies are rarely an issue with well-chosen properties in metropolitan areas.

Unlike ETFs, real estate is a highly individual investment with unique returns. These can certainly exceed ETF returns—especially in the long term. We calculate these individually for each client and property, considering leverage and tax factors.

“Can you expect an investment through such providers to be self-sustaining?”

Answer

Yes. We’ve already realized over 200 properties for our clients, sometimes with initially positive, sometimes neutral, and sometimes negative cash flow. Over the years, cash flows become more positive as rents rise while loan payments remain nominally constant, with an increasing repayment share.

“These types of properties are in high demand and likely not what’s being offered here.”

Answer

We interpret this statement as implying that, in the questioner’s opinion, sought-after properties are not typically available through professional providers.

It raises the question of why this would be the case and how sought-after properties would otherwise change ownership.

Essentially, the questioner seems unclear about the benefits of a provider like Meine-Renditeimmobilie or underestimates the effort involved in searching for, acquiring, financing, renovating, furnishing, renting, and managing a property.

Those confident in their abilities and willing to take on the effort can certainly acquire and manage an income property on their own. This can work wonderfully if the conditions are right.

The question perhaps implies that a self-managed investment would be more profitable, assuming a provider incurs unnecessary costs or absorbs returns that the investor could have achieved independently.

At Meine-Renditeimmobilie, we coordinate all stakeholders, work closely with banks to secure financing, personally accompany you to notary appointments, and handle contractors, furniture, and tenants if desired.

Additionally, Meine-Renditeimmobilie doesn’t push any specific property onto you; instead, you can select from our portfolio or opt out, just as you would when buying without professional assistance.

“Provider Profit Models”

“These providers must make money somehow. Where are the typical costs for investors?”

Answer

With Meine-Renditeimmobilie, you incur no costs—no broker fees, commissions to us, or similar charges. See below for how we generate revenue.

“Are there hidden fees or markups (e.g., through commissions, high margins on purchase prices, or expensive management fees)?”

Answer

At Meine-Renditeimmobilie, we purchase the properties ourselves, and you buy the finished, fully-equipped property (apartment or house) directly from us. Our profit comes from the difference between our purchase price plus our costs (e.g., renovation and furnishing) and the sale price to you.

We’ve already completed the selection, structural checks, renovation, and furnishing for you. The idea that you could do all this better or cheaper yourself seems highly unlikely.

Moreover, broker fees are waived with Meine-Renditeimmobilie. In regions like Bavaria, for example, you’d have less than 6% ancillary purchase costs.

“Tax Benefits”

“It’s often emphasized that real estate investments are tax-advantaged. How significant are these benefits?”

Answer

A rented property in a good location generates three types of returns:

• Rental income
• Capital appreciation
• Tax savings

Among these three, tax savings contribute the smallest share to the total return. The higher your personal tax burden, the more significant the tax savings. However, even with a high tax burden, the monetary impact of tax savings usually lags behind rental income and capital appreciation.

“If the goal is to find a property that fully finances itself through rental income, aren’t the tax benefits relatively minor?”

Answer

Even with rental income significantly exceeding costs, tax benefits remain unaffected. Otherwise, you’d have to pay more tax on that rental income without deducting costs.

The limit on tax savings isn’t rental income or other revenues but rather the tax burden itself. The depreciation (AfA) for the property’s building portion and other property-related costs form the tax savings potential, which you can “unlock” by offsetting it against rental income.