Condominium as a capital investment - Which loan?

  • Erstellt am 2017-09-13 13:05:44

Planar

2017-09-13 13:05:44
  • #1
We, my partner and I, have been wondering for a long time – from when does it make sense to buy a condominium that you want to rent out?

Everywhere you only read the word “investment.” So, from when does such an investment pay off? Currently, real estate prices in the Rhine-Main area range between 4500-6500 euros/sqm for a new building apartment. We recently received an offer to purchase a 2-room, 74sqm, condo (kitchen, bathroom, floors included) for 350,000 euros (including underground parking space). The apartment is 3 years old and is located in a newly built district in Frankfurt, and the infrastructure and surroundings are perfect.

At this point, we would like to know:


    [*]How much equity is needed for this project?


    [*]Who determines the rent price for the future tenant?


    [*]What costs would we have to expect as buyers monthly/annually?


    [*]What risk would there be in the event of an interest rate increase or other unforeseen costs that might rise?


    [*]How long would it take to pay off the debt with the amounts mentioned above and equity of 40,000 euros?

Thank you in advance for the answers
 

Nordlys

2017-09-13 13:14:47
  • #2
380 thousand for the apartment including ancillary purchase costs. Return at least 5% gross before taxes. You must achieve 19-20 years of cold rent. Is that possible? Otherwise, leave it!
 

chand1986

2017-09-13 13:17:18
  • #3
Basically, the return on investment of a rented apartment does not keep up with, for example, a reasonable stock portfolio, provided you buy at market prices and do not make one of the very rare bargains.

Usually, people try to maximize their equity return by financing with a lot of credit and letting the tenant pay it off - in that case, the equity return is fantastic, but you have to wait a long time to enjoy the benefits.

If you have money lying around, in my personal opinion, an apartment is not the first choice as a long-term investment.

A stock portfolio based on the buy & hold method, or just turning your money very slowly, yields significantly more.

And the idea that this is only for professionals and totally difficult is marketing nonsense by those very professionals. After all, they want to make money from the fools...
 

RobsonMKK

2017-09-13 13:26:29
  • #4
And 1 (in words ONE) apartment is not an investment but rather a risk. You can speak of an investment when you buy a house.
 

Nordlys

2017-09-13 18:39:36
  • #5
There is only 40 capital, the rest is supposed to be on credit. This is not meant to be an investment, but rather a property to be paid off through rent.
 

Caspar2020

2017-09-13 18:56:30
  • #6
Does not reduce the risk. An apartment alone is a high cluster risk.

@te: how high are the purchase incidental costs?

And what is the current cold rent?

Many banks would like investors to have 10-20% "free" equity to be able to absorb certain disruptions, etc.

If the 40K is the only means you have, most will decline.
 

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