Why do you invest in property??

176 posts in this topic

When I bought in Edmonton, the housing price was still low and even as an apprentice, I could afford to buy an old house.  A couple of years later, the price had almost doubled and it would no longer have been possible.  A coworker bought then and said it's no problem.  He got his mortgage for 40 years.  But he'll still be paying when he's 70.

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to the op: I purchased my flat here in Berlin 8 years ago, primarily to live in as I thought if I am going to pay rent I might as well pay my own mortgage! My flat has significantly increased in value, I have a lovely place to live that I can do as I wish as I own it and can choose if I wish to have a flatmate or not. I have done so at times and that helped with the mortgage. Sometimes though I have enjoyed to live on my own. Overall it has been a great investment. I would not buy a flat to make a short term return or to make an income I am dependent upon. I would see buying a flat as being a longer term investment and like any investment needs consideration of many factors before investing. I did a lot of homework and bought/invested accordingly. Good wishes with your choices!

 

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7 minutes ago, kirakay said:

to the op: I purchased my flat here in Berlin 8 years ago, primarily to live in as I thought if I am going to pay rent I might as well pay my own mortgage! My flat has significantly increased in value, I have a lovely place to live that I can do as I wish as I own it and can choose if I wish to have a flatmate or not. I have done so at times and that helped with the mortgage. Sometimes though I have enjoyed to live on my own. Overall it has been a great investment. I would not buy a flat to make a short term return or to make an income I am dependent upon. I would see buying a flat as being a longer term investment and like any investment needs consideration of many factors before investing. I did a lot of homework and bought/invested accordingly. Good wishes with your choices!

 

 

Buying to live in yourself is a different story. If what you pay in Kaltmiete (not warm - you still have running costs!) would be enough to pay the loan, you have some initial capital (initial fees, taxes etc), have enough extra income to pay for necessary repairs which accumulate over the years, and do not plan on moving in the short-to-mid term, then buying a flat to live in is very well worth considering.

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I think what you're looking for is what we call in Chicago a "two-flat".  It's basically two apartments stacked.  You buy the building, live in one flat and rent out the other.  If bought right, the rental income pays the mortgage, or a large share.  The building is/was built just for this purpose and they are many places throughout the city.  Berlin is not Chicago.

Want one?  Build one.

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Just like buying a Zweifamilienhaus then and living in half of it. 

 

(@catjones I have a friend in Chicago who recently bought a house with a flat upstairs where she lives. Her daughter's family lives in the larger part.)

 

The property linked by the OP is very old and I wonder about upkeep and restrictions on renovations.

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Yes, that is the direction i am aiming for, finding a "stacked up" property.

The link i gave was an example for one.

i haven't seen it yet.

Here is another:

https://www.immobilienscout24.de/expose/101245374

 

I am more and more drawn to this concept - 

buying a more expensive property that can be divided in a way that it doesn't feel like a WG,

Then the rent income will pay for (at least some of) the mortgage, and i will be be living close enough to know what's going on.

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1 hour ago, fraufruit said:

Just like buying a Zweifamilienhaus then and living in half of it. 

 

(@catjones I have a friend in Chicago who recently bought a house with a flat upstairs where she lives. Her daughter's family lives in the larger part.)

 

The property linked by the OP is very old and I wonder about upkeep and restrictions on renovations.

Would that be a Haus-im-Haus-Konzept?

 

Asking as was looking at a apartment building today and it was listed as Haus-im-Haus-Konzept, but I've never hear of that before.

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33 minutes ago, KimKim said:

buying a more expensive property that can be divided in a way that it doesn't feel like a WG,

Then the rent income will pay for (at least some of) the mortgage, and i will be be living close enough to know what's going on.

 

You can buy a cheap property too and split it up.  A friend bought a 50k house in a village.  The main house is on two floors with a basement and there was an addition where they had a "party room" and there was an upstairs to the addition which was unfinished.  He made the first new apartment in the addition downstairs.  It already had a private entrance so no problems there.  Now he's started on the 2nd new apartment which will be a little bigger, take up the upstairs of the addition and half of the upstairs of the main house.  It also has a private entrance with the stairs on the outside.  The main house has around 60 sqm downstairs and still half of the upstairs and the basement.

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1 hour ago, Tim Hortons Man said:

Would that be a Haus-im-Haus-Konzept?

 

No, "Haus im Haus" just means that your flat goes over two levels, with a staircase connecting the two levels, just like it would in a house: https://www.architektur-lexikon.de/cms/lexikon/41-lexikon-h/141-haus-im-haus.html 

A more common name is Maisonette-Wohnung, see here for an example: http://www.wewobau.de/site/wohnungen_beispiele5.php

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a friend of mine bought two flats side by side in Neukölln about 3 years ago, she and her family live in the bigger one and they rent out the smaller one - all together is 165m2. The smaller one is a one room apartment with its own bathroom/kitchen. They have separate entrances. There is a linking doorway between the two flats that can be securely blocked. The location is ok, not my preference but they like it and have two young children and feel safe/relaxed with the area. The total cost including fees was about €220,000 if I recall. Dont know what the haus geld is. Her folks helped with a bigger deposit and they have a mortgage that the rent of the small flat covers. they have not had any tenant issues. The smaller flat they rent it furnished and short-medium term, which I understand allows them to get a higher rental.  I looked at something similar in Prenzlauberg when I was looking to buy, same thing that the flats were side by side with a linking doorway - but I decided on my current place instead. So I would say to the op that such places exist - I have not seen them one on top of another but have these two direct experiences of side by side flats. @KimKim I would suggest before you really decide what to do check in with an accountant so you know what you may benefit best from financially/tax wise and I think a few people here have highlighted the purchase and set up costs to keep in mind. And as others mentioned real estate is not really a short term investment. Personally I think Berlin is a good place to buy!

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4 hours ago, PandaMunich said:

 

No, "Haus im Haus" just means that your flat goes over two levels, with a staircase connecting the two levels, just like it would in a house: https://www.architektur-lexikon.de/cms/lexikon/41-lexikon-h/141-haus-im-haus.html 

A more common name is Maisonette-Wohnung, see here for an example: http://www.wewobau.de/site/wohnungen_beispiele5.php

Thanks that's what I thought!

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Well we still have a long way to go, but we bought our rental property with the intention to make it as retirement income. We took a mortgage which is paid by the rents, and hopefully when we retire in 30 years time the property will be mortgage free and we could continue to enjoy the rental income as an addition to our pensions. 

I did a lot of reading on retirement income in Germany and came to conclusion that the best way to optimise my money for retirement is by investing it myself, not through pension funds and the like. Thus the rental property.

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10 hours ago, desdemona said:

Well we still have a long way to go, but we bought our rental property with the intention to make it as retirement income. We took a mortgage which is paid by the rents, and hopefully when we retire in 30 years time the property will be mortgage free and we could continue to enjoy the rental income as an addition to our pensions. 

I did a lot of reading on retirement income in Germany and came to conclusion that the best way to optimise my money for retirement is by investing it myself, not through pension funds and the like. Thus the rental property.

At the risk of going off topic I would add a Rurup to the list as well. The big advantage beyond tax break is it converts to an annuity in retirement meaning you not only have a guaranteed income but you get statements showing projected income. This is a huge help in retirement planning (T minus 8 for me). It also helps remove some of the risk as well

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21 hours ago, KimKim said:

 

Then the rent income will pay for (at least some of) the mortgage, and i will be be living close enough to know what's going on.

 

just my thoughts based on the most recent link

 

you would buy a 688k apartment with 200+ qm with the mind of having the tenant pay part of the mortgage

 

With a property like this (which magically has no makler provision, not sure how common that is in Berlin), would the tenant(s) be paying enough each month that you could effectively and substantially save over the cost of buying something smaller and just paying the mortgage on that cheaper place all by your lonesome?  Factoring in the difference in closing costs and ongoing nebenkosten that you can't pass onto the tenant of course.   Note the rent on that particular property is only about 2k per month now.

 

That is A LOT of money to sink into a venture like this.  Personally I don't see how you possibly could come out ahead on a deal like this but egal, the question is one you should answer for yourself. 

 

Have you done the math and where would it leave you?

 

 

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6 hours ago, lisa13 said:

 

Have you done the math and where would it leave you?

 

 

 

That is a very good question. No, I have not done the math at all.
Mind if i do it in public?

so - I currently rent a flat in Berlin for 2.000 Euro (Cold).

I could pay more than that, say 3K cold per month. i could do that.

 

That's what got me thinking to switch that monthly rental amount to a mortgage payment.

I dont have savings. (i could squeeze out somehow maybe 20k for a down payment.)

I need a place that is big enough for me to Live, to work (I'm a visual artist and entrepreneur)

and hopefully to rent out *a part* of the property for a few years.

 

I have no clue where to go from here.

I have been reading TT all week now and feel i understand less now.

 

I WILL get professional counselling before purchasing anything, but first i want to understand it myself!

 

What kind of property can i afford? is 500k above my means?  

what would be an average mortgage interest? would it be like 25.000 euro a year?

in that case, wouldn't i be better off just continuing renting???

sooo confused now!

 

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13 minutes ago, KimKim said:

so - I currently rent a flat in Berlin for 2.000 Euro (Cold).

I could pay more than that, say 3K cold per month. i could do that.

(...)

I dont have savings. (i could squeeze out somehow maybe 20k for a down payment.)

(...)

What kind of property can i afford? is 500k above my means?

 

500k? With no savings/equity capital? You are joking, aren't you? You can't even afford the additional costs as Grunderwerbssteuer (6%), Notargebühren and Grundbucheintragung, roughly 10% altogether. 

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no, i wasn't joking, i was asking.

So let's say i come up with 50K for the taxes. what then?

 

is 500k above my means on a monthly basis?  

what would be an average mortgage interest? would it be like 25.000 euro a year?

in that case, wouldn't i be better off just continuing renting?

 

 

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a very easy way to do some basic reality checking is to click the link on any immobilienscout listing that says "Kann ich mir dieses Objekt leisten"

 

it will let you put numbers in for a down payment, etc and show you an ESTIMATED monthly payment.

 

But please don't stop there...for instance look at how much you will still owe after the initial loan period.  

 

You have to your own calculations and you have to decide how you are better off.  Come on. 

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11 minutes ago, KimKim said:

no, i wasn't joking, i was asking.

So let's say i come up with 50K for the taxes. what then?

 

Then you still have 0,00€ equity capital/cash/Eigenkapital and no German bank would give you a mortgage/loan. Expect at least 20% Eigenkapital to be necessary, probably more, maybe much more.

 

 

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