28.10.2024 – 11:00
LBS information service building and financing
Berlin (ots)
Is a property currently worth investing in? More people are asking themselves this question again now that prices have fallen, at least in the used market, and interest rates have remained stable at less than four percent. How do I check whether a rental property is right for me?
LBS real estate expert Roland Hustert recommends checking your own motivation first: “A pure investment property can look completely different than an apartment that I would like to use myself now or later.” In the first case, it is often about investing an inheritance or building up additional retirement provision from current income. In the second case, for example, a student apartment is bought for the next generation, a holiday apartment for one’s own use or one secures a barrier-free place for the third phase of life at an early stage.
Due to rising rents and normalized prices, an apartment is ideally self-sustaining again. Without equity, a property for 100,000 euros with 4 percent interest and 1 percent repayment incurs monthly financing costs of 417 euros, which are recouped through rental. For a larger apartment, like a self-occupied property, at least 20 percent equity should be contributed. Interest and repayment are then also covered by the rent.
The federal government currently wants to boost new construction with improved depreciation: currently, rented new properties can be depreciated on a declining balance basis at an annual rate of 5 percent. This results in significant tax advantages in the first few years. The date of acquisition or start of construction must be between September 30th, 2023 and October 1st, 2029.
Real estate investors think long-term
Purely mathematically, the example apartment mentioned above results in a return on investment of 4 percent. However, the maintenance and administration costs still have to be deducted from this. Hustert: “A return of 2 to 3 percent is realistic, but anyone who invests in real estate usually thinks very long-term as a private investor.”
Holiday home providers like to advertise a 5 percent return – but then everything has to be right, warns Hustert: “A holiday property can be a sensible alternative. However, you should consider the risk of occupancy as well as the higher maintenance and management costs.” And so that there are no disputes during the most beautiful weeks of the year, personal use should definitely be regulated contractually.
Press contact:
LBS state building societies
Tilman Sanner
Telephone: +4989 41113-6263
Email: tilman.sanner@lbs-sued.de
Original content from: LBS Infodienst Building and Financing, transmitted by news aktuell
