Why do you invest in property??

176 posts in this topic

@KimKim you claim to have a very supportive bank

 

instead of continuing with this nonsense why don't you talk to them and find out exactly how supportive they intend to be with you?!

2

Share this post


Link to post
Share on other sites
8 minutes ago, KimKim said:

So nobody in Germany has ever bought property with under 20% Eigenkapital?

 

 

German banks have always been VERY reluctant to finance without Eigenkapital, that's a reason why Germany didn't see a housing crisis as the US did. And no one wants to this that kind of thing here. 

 

There are cases where ppl finance 100% - with a stable financial background, high income as an employee, securities like debt-free property ... but those days most brick and mortar banks expect rather 30-40% than 20%. Do yo have NE btw?

3

Share this post


Link to post
Share on other sites

I dont know what NE stand for...

I took Lisa's suggestion and calculated on Immobilien24

 

So i could pay  3.350 euro monthly for 5 years - that is fine with me.

and after that i will have to pay 315K without interest?

not sure i understand that one

immo.JPG

0

Share this post


Link to post
Share on other sites
2 hours ago, KimKim said:

I dont know what NE stand for...

1

 

NE = "Niederlassungserlaubnis".

 

It's roughly equivalent to what a "green card" in the US is, or what the UK calls "indefinite leave to remain."

1

Share this post


Link to post
Share on other sites
7 hours ago, Smaug said:

 

 

9 hours ago, KimKim said:

I dont know what NE stand for...

I took Lisa's suggestion and calculated on Immobilien24

 

So i could pay  3.350 euro monthly for 5 years - that is fine with me.

and after that i will have to pay 315K without interest?

not sure i understand that one

immo.JPG

You should be so lucky.

That is the fixed interest period for the rate quoted. After that you renegotiate. You are quoted a high interest rate because you're not putting in Eigenkapital.

Since you are earning well, don't understand the language and seemingly clueless, I think you'd be well advised to book a session with an English speaking advisor. (speaking as a clueless person who often learned the hard way .)

3

Share this post


Link to post
Share on other sites

Thanks Feierabend !

Yes i do plan to get an adviser, not just for one time -  For the whole process.

Before that, i want to do some homework and understand by myself and learn from others as much as i can.

 

What i want to understand now - 

Currently, I pay 24.000 a year for cold rent

and that is more or less the interest i would pay every year if i would buy property - correct?

before even paying for the mortgage itself.

 

The only way it would make sense is pay 5k every month for the mortgage and the bank interest.

 

So HOW do people do that?? how do people manage to pay these amounts if they are not extremely wealthy.

Is everyone here on TT that owns property very wealthy?

and also Why do people pay mortgage AND the bank interest if they could live in a really nice flat for the price of the interest alone?

What do you think?

0

Share this post


Link to post
Share on other sites

With a net monthly income of 8k, it is a wonder if you haven't saved a lot of money for a down payment.

 

As for other people, most don't start off buying a 700k property. Some people get an inheritance and use that as a down payment. Most simply save their asses off until they have enough or they start with a smaller property and move up gradually.

 

Now you are talking about making a 3,500 monthly payment but won't you be getting rent for part(s) of the property to offset your cost?

 

I believe it is time to get that adviser. 

3

Share this post


Link to post
Share on other sites
39 minutes ago, KimKim said:

Currently, I pay 24.000 a year for cold rent

and that is more or less the interest i would pay every year if i would buy property - correct?

2

 

The screenshot you posted gives 23,389 euros as interest paid over five years, not each

41 minutes ago, KimKim said:

So HOW do people do that?? how do people manage to pay these amounts if they are not extremely wealthy.

Is everyone here on TT that owns property very wealthy?

 

 

I've bought two properties since I moved to Germany almost 17 years ago. I am not, nor I have ever been extremely wealthy. The way most people do it is by first saving money over several years and then using those savings as a deposit for their first property. If your net monthly income is 8,000 euros a month and your rent is 2,000 euros a month, the question that's begging to be asked is "how do you spend 6,000 euros a month?". I am assuming that's your monthly expenditure since you don't have any savings.

 

So, the typical thing for someone like you to do would be to save money first, in order to have at least 10-20% of the property value, and then start thinking about buying. 

 

You are planning to become an investor, even though you have no money to invest. That can sometimes work (when you borrow the money to invest) but it's an odd plan to have, and can easily go south is, for example, property prices or rental incomes go down.

 

 

4

Share this post


Link to post
Share on other sites

With your income you could plan retirement very easily. You just have to save money (rule #1). Then with that money you spread your risk with various approaches: low fee index stocks (eg. Vanguard mutual funds), bonds, real estate, pension schemes (Rurup+Riester) and 5-10% gold (on paper or in a safety deposit). 

 

I make a little over 7k/month with wife and two kids as dependents. After tax that leaves me close to 4600k/month. To buy a house, I'm shoot for a minimum of 20k/year in cash savings (30% on my income). And I'm not even happy with that savings rate. 

 

You might want to visit the Mr. Money Mustasche (https://www.mrmoneymustache.com/) to see others who are saving for retirement and many of them have the goal of early retirement (one of my goals). I have a colleague at work who just gave his resignation, at 53 years old to retire early. Of course, he had the advantage of 1) no kids 2) no wife 3) buying a house in a low cost town.

 

 

2

Share this post


Link to post
Share on other sites
On 1/15/2018, 8:17:25, KimKim said:

Thanks everyone, so this confirms my understanding that buying a flat for "investment" is just not worth it.

Can anyone tell me otherwise from personal experience?

 

 

I can only tell you mine and from what ive heard from my wifes father. We just bought a house with a small apartment attached. We inherited the original tenant, an 80 year old lady. She causes no fuss, we never hear her and she pays her rent on time. We bought the house outright from money from the sale of our house in the states. We profit 500euro a month from our tenant due to no mortgage. Now we only just bought the house and count the money not as profit but as savings, assuming the house needs a new roof or a pipe breaks in the wall hopefully saving this rent money will help cover it down the line. We have not done our taxes yet for the new sale and the 500 is hardly enough to live on or buy a new car with but its money we get for doing basically nothing. I doubt we will rent to anyone again once she moves (or more likely dies in the apartment) but its passive income more or less. I would not rent to a college student or a family of 4 but an 80 year old lady isnt bashing holes in my walls or playing Slayer at 0200 so im not too concerned.

 

My wifes father is quite the real estate guru He started out owning one home outright. He used the home he owned as leverage to get a loan from the bank to buy an apartment to rent out. basically as he sums it up, he gets a loan for 100k ish against his original home, buys an apartment for 100k and rents it out. after the mortgage is paid along with all fees and he collects his rent he profits about 250 euro a month. He does this again and again until he owns 8-10 apartments and profits about 2000-2500 a month. He says the money is not in one apartment but in owning a dozen. I think its a pain in the ass to deal with tenants and fix stuff and do all the paperwork but he does not care and has a dozen people basically paying his mortgage with their rent money. He bought cheap apartments and after however long, 10-15 years, he now owns a dozen apartments outright that have appreciated in value and his rent collection profit goes up due to no mortgage. Eventually he can sell some or all and profit maybe a million euro and buy a house on the beach somewhere.

 

Take it for what its worth. I dont think one apartment is really worth it if you have a full time job but if you dont mind paperwork and being a slum lord I think you can make a decent profit if you are smart about it.

3

Share this post


Link to post
Share on other sites
1 hour ago, fraufruit said:

With a net monthly income of 8k, it is a wonder if you haven't saved a lot of money for a down payment.

 

As for other people, most don't start off buying a 700k property. Some people get an inheritance and use that as a down payment. Most simply save their asses off until they have enough or they start with a smaller property and move up gradually.

 

Now you are talking about making a 3,500 monthly payment but won't you be getting rent for part(s) of the property to offset your cost?

 

I believe it is time to get that adviser. 

I was about to query - with this salary, how is it Kim has no savings for down payment?!

 

1

Share this post


Link to post
Share on other sites

It's not a salary. Maybe she has to put back for the months she has no income and/or invest in her business. Still, it's a lot of money not to be saving.

0

Share this post


Link to post
Share on other sites
40 minutes ago, fraufruit said:

It's not a salary. Maybe she has to put back for the months she has no income and/or invest in her business. Still, it's a lot of money not to be saving.

 

She called it "average" and "net", so I am assuming that this takes into account the months in which she has little or no income, and that this is take-home pay after, taxes, health insurance and social deductions (if any). That's a fantastic net income, especially for Berlin.

1

Share this post


Link to post
Share on other sites
1 hour ago, fraufruit said:

Good points, Petro.

 

And yet we really enjoy our extra € 500/month.

I wont complain at all. 

1

Share this post


Link to post
Share on other sites

If she's a freelancer, then no. I am in the same boat and I know my income might dry up from one day to the next. I absolutely agree with you that it's a lot of money not to be saving, especially considering that one's income as a freelancer is potentially volatile and she has a pretty steep rent to pay. Freelancers should also keep 3-6 months' worth of income saved up to be prepared for a rainy day.

2

Share this post


Link to post
Share on other sites

The day i retire is the day i will die.

What do you do all day long when you retire?

Tend to the garden? hobbies? reading?

Also- the word "Retirement" is quite problematic. 

I like the idea of not *having* to work, but with my profession i *want* to work.

i like working very much, i love it

 

And as for not having any saving - The high income was not always there, it's fairly recent.

Plus - i am funding with it a business that i started a few months ago. i hired people and i have to buy stuff and it will take a few more months till this business will start kicking off.

 

I was just thinking that instead of putting 2K a month on (cold) rent, i might be able to pull up a mortgage.

my supportive bank - i mean literally supportive personally, i even have coffee with 2 of them sometimes, 

they have seen me grow from broke to great, so this is what i meant.

0

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now