Why do you invest in property??

176 posts in this topic

Oh dear me, Thanks everyone for sharing your experience. 

So what do you guys think about buying a much bigger flat, living inside yourself and then *subletting* a part of it?

i am talking about property that can be properly divided for privacy for each side.

like a well separated Maisonette or a flat that has a separate entrance

and i would build a separate kitchen/bathroom on its other side.

 

This way, i can be in control of what's going on in the flat and the rent-income could help out with the mortgage.

How's that for a plan?

 

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11 hours ago, Tim Hortons Man said:
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  4. Tax free after 10 years

 

Just to clarify, THM means that there is no capital gains tax to be paid on the sale of a property that's been held for at least 10 years. 

Don't interpret this to mean that rental income is tax free after 10 years!

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13 minutes ago, KimKim said:

So what do you guys think about buying a much bigger flat, living inside yourself and then *subletting* a part of it?

 

This has the advantage that, as far as most of the furnishings are provided by you, you have the right to give notice to a tenant for no particular reason (for example because you just don't fancy living with them any more). 

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...but it has the disadvantage of having a stranger living in your home, all day every day. I guess this depends on what sort of a person you are and where you are in life - for example, if you currently house share it may not seem such a big deal. If you're over that phase though, or just value your own time/space, do you really want to buy a house and have to feel that you need to manage your behaviour so that you aren't too loud etc for a tenant - in your own home? 

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I think that you would be hard pressed to find a large flat with two entrances to begin with. You can't just put in a kitchen and bathroom anywhere. All of the plumbing must already exist in the place where you want them. Plus, in the end, you would wind up with a flat with 2 kitchens.

 

Your idea will work if you can find one with 2 bathrooms and be willing to share your kitchen/laundry. That is what most people do when letting out a room. If your tenant has a big enough room, you can forbid her/him from using your living room so you will have it to yourself. That's what a friend of mine does.

 

As for the tenants from hell horror stories, I reckon there are thousands of good stories for each one of those.

 

As I said earlier, we renovated our small studio for € 5 k. We figure that no matter what a tenant might do, it won't cost more than that to repair it. No huge worries. We have, however, had 3 excellent tenants over the years.

 

Screening prospective tenants for their work records, salaries, etc. is very important. For example, would never rent to anyone on the dole.

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I agree, the horror tenant stories are a massive exageration. The chances of getting a horror tenant are certainly not higher than losing thousands by investing on the wrong shares or fonds. Chances are that the tenant is normal, and even if he complains more than average at least he's paying, and the house can be sold. I have a rental in Munich besides my own place, and so far no regrets. Yes, sometimes unexpected expenses occur, and sometimes I need to put in some extra work, but I'm doing it for myself, I consider it a small side-business.

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7 hours ago, jeba said:

Or not finding a tenant. 

 

 

9 hours ago, LeonG said:

 In Germany tenants have loads of rights.  You could have a tenant who starts cutting rent claiming that there is something wrong with the place even when there isn't.  

 

Yes you’re absolutely right. From my personal own personal experience, going on 15 years I’ve never had an issue. Same with many of the landlords I’ve talked to. The nature of a forum is to find answers to problems so it tends to be skewed to the negative and that breeds an unconscious basis in that direction.

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The arguments from the guys who say property is a bad investment because you can do better investing in [insert whatever here] remind me of the non-smokers telling me if I had not spend my money in cigarettes I would have a Porsche. I stopped smoking many years ago and I still do not have the Porsche.

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34 minutes ago, Krieg said:

The arguments from the guys who say property is a bad investment because you can do better investing in [insert whatever here] remind me of the non-smokers telling me if I had not spend my money in cigarettes I would have a Porsche. I stopped smoking many years ago and I still do not have the Porsche.

You probably hadn´t smoked enough.

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1 hour ago, Tim Hortons Man said:

From my personal own personal experience, going on 15 years I’ve never had an issue. Same with many of the landlords I’ve talked to. The nature of a forum is to find answers to problems so it tends to be skewed to the negative and that breeds an unconscious basis in that direction.

 

My parents rented out their basement for decades and only had 2 problem tenants and those weren't even that bad.  However, if you own only one condo and you are dependent on the rent to pay the mortgage, if it does happen to you that you get the really bad tenant, you are in deep shit.  

 

35 minutes ago, Krieg said:

The arguments from the guys who say property is a bad investment because you can do better investing in [insert whatever here] remind me of the non-smokers telling me if I had not spend my money in cigarettes I would have a Porsche. I stopped smoking many years ago and I still do not have the Porsche.

 

Other investments can go bad too.  There's no guarantee.

 

The reason you don't have a Porsche though is because it's not a priority for you.  If it were, you would have one.  Save up your "smoking money" and you'd have 5€ per day,  That's 1825€ per year.  Say you stopped smoking 10 years ago, you'd have 18k.  You could get a Porsche for that.  However, because you had other priorities, you've probably spent your "Porsche money" on some other things you'd rather have :)

 

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15 hours ago, Krieg said:

The arguments from the guys who say property is a bad investment because you can do better investing in [insert whatever here] remind me of the non-smokers telling me if I had not spend my money in cigarettes I would have a Porsche. I stopped smoking many years ago and I still do not have the Porsche.

I think they meant lifetime smoking + costs for lung cancer treatment. And not in Germany where chain smokers are covered by Krankenkasse. Somewhere in the US this treatment can indeed cost a Porsche...

 

With interest rates record low property is not a bad investment in Germany. It doesn't bring fortunes, but you will also not lose everything in a busted bubble...

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1 hour ago, yourkeau said:

I think they meant lifetime smoking + costs for lung cancer treatment. And not in Germany where chain smokers are covered by Krankenkasse. Somewhere in the US this treatment can indeed cost a Porsche...

 

With interest rates record low property is not a bad investment in Germany. It doesn't bring fortunes, but you will also not lose everything in a busted bubble...

 

well...1 pack a day at €7 for 25 years is a little over 63K, which is enough for a new boxster. Or you can buy an old porsche for a few thousand euros,. Whether saving up to buy a porsche, if you then can't afford its maintenance, is a good idea, is another matter

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5 minutes ago, msam said:

 

 

well...1 pack a day at €7 for 25 years is a little over 63K, which is enough for a new boxster. Or you can buy an old porsche for a few thousand euros,. Whether saving up to buy a porsche, if you then can't afford its maintenance, is a good idea, is another matter

Still a better choice than paying $ 187000.- for a triple bypass operation (that was the bill of a poster in another forum). Not even counting the discomfort.

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Well, my point was more in the direction that those people giving you investment advice do not have either any property nor the investments. Going back to the Porsche analogy, my answer to that would be: Where is your Porsche?

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11 minutes ago, Krieg said:

Well, my point was more in the direction that those people giving you investment advice do not have either any property nor the investments. Going back to the Porsche analogy, my answer to that would be: Where is your Porsche?

My pension insurance is my Porsche.

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19 minutes ago, Krieg said:

Well, my point was more in the direction that those people giving you investment advice do not have either any property nor the investments. Going back to the Porsche analogy, my answer to that would be: Where is your Porsche?

 

A car is not a good investment anyway unless maybe that you have a vintage car and keep it inside.  However, for me, it kind of defeats the purpose of having a car if you can't use it.

 

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I am not sure if I am not been clear, the Porsche is just an analogy. My point is that people give you advice about something they do not do or have.

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17 hours ago, LeonG said:

 

My parents rented out their basement for decades and only had 2 problem tenants and those weren't even that bad.  However, if you own only one condo and you are dependent on the rent to pay the mortgage, if it does happen to you that you get the really bad tenant, you are in deep shit.  

 

Other investments can go bad too.  There's no guarantee.

 

 

Been following the housing/condo market in Canada specifically Toronto and amazed the number of people who have bought cash flow negative properties is amazing. House prices have soared and people are using their HELOCs (home equity line of credit) to buy and flip properties. It's gonna end badly, My sister brother in law are what I expect will be typical baby boomers. Their investment mortgage is coming up for renewal just as he's about to retire so he's not only going to get hit with a reduced income but increased mortgage payments. It's very early but I'm kind surprised at the negative reaction of Germans when you talk real estate, very different from how other countries view it!

 

The other thing in investing is mitigating risk, you can't avoid it you can only manage it. Interesting for us baby boomers facing retirement the real risk ins't a stock market crash or bad tenant but running out of money! Read far too many stories of seniors getting whipsawed by the stock market, pulling everything out and moving to cash only to run out of money a decade or so later. Andrew Hallman wrote a great column on that. Ran the numbers on someone who retired just prior to Black Monday,or a strong bear market what would happen if they keep up the systematic withdrawals. Thing is 20 years on the markets recovered and the investor did fine. But it would take nerves of steel to do that. 

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