Buying a condominium together to rent it out

Hello house construction forum,

the following situation: A good friend and I (both late 20s, employees) have considered buying a condominium together in our city to rent it out. We are mainly speculating on the increase in value, want to take advantage of the low interest rate environment, and achieve a very good equity return with a lot of borrowed capital / leverage.

Most important data points:

Purchase price approx. 300k + almost 30k additional costs
Equity each 25k, so together 50k
Loan: results in approx. 280k
Fixed interest period 10 years, then sale of the condominium

We would set the repayment rate so (low) that the structure is approximately cash neutral overall. So we want to cover the interest rate + repayment rate roughly from rental income minus costs / maintenance. After about 10 years, the plan is then to sell at a (hopefully) significantly higher price and pay off the remaining debt.

We would like to ask the forum the following questions:

1) We want to buy a condominium together and practically share the loan. We explicitly do not want to guarantee for the other person, but the liability should each be limited to 50% of the total loan. How is this best arranged with the bank? Should we each take out half of the loan separately? What would the bank do if there is only one collateral? Would forming a GbR help here?

2) Although we are friends, we obviously want to protect ourselves somewhat against possible exceptional situations. How is this best legally represented? How can it be determined what happens if one of us wants / has to leave?

3) We are both childless and unmarried, but one earns about twice the net income. Are there any problems regarding our plan due to unequal creditworthiness or unequal overall tax burden?

Thank you in advance for the answers and best regards

Calculate that exactly, I don't think you will achieve the desired return after 10 years. Grunderwerbsteuer, Notar, gebundenes Kapital, laufende Instandhaltungskosten, Einkommensteuer auf die Mieteinnahmen,... I'm almost sure that you will be better off with conventional saving in 10 years.

330 thousand. Of that, 6% per year is about 20. That would be the achievable KM. To earn a little. But really just a little! Is that possible? Karsten

I definitely wouldn't do that. If anything, buy something for yourself alone Stress is guaranteed. When it comes to money then........

Classic case of a harebrained idea.

The risk would be way too high for me given the expected return (somewhere between minus 10 and plus 10 percent). There is currently no tax savings, and the bank will not like your construction either. Generally: renting out with the intention of making a profit only works with risk diversification. And for that, you don't need half an apartment, but at least ten.