Construction costs and financing for apartment or house

That is the logical effect of cheap money/low interest rates and in many places limited demand.

: I am basically open to any option, but if you consider the model of renting out to others/renting yourself, you usually buy an apartment in a highly sought-after location, for example in the area where you want to live - and then live cheaply renting in the middle of nowhere, so the apartment in M covers the house in Hintertupfingen - roughly speaking. The other way around doesn’t work - you can’t rent out a house in the Munich south with an apartment in the middle of nowhere, for that you’d have to buy an entire apartment block with at least 6 units.

In your scenario, however, both properties would be in the high-price segment, I don’t think that pays off. Plus, you also have the risk and effort of individual renting there: it can work out well, but it doesn’t have to.

Best regards
Dirk Grafe

If you really consume around 7000 euros, then I would be interested: For what? Pure curiosity

I don't want to shed too much light in the dark. But here is an example: lease and maintenance for the hunting grounds. If I can't afford that anymore, it will be given up. So I don't save much either, but private insolvency would still be quite far off And there are a hundred other hobbies like that.

One must also distinguish between "total return" and return on equity. You can easily achieve over 10% if the financing is long-term.

I would like to see the calculation for testing purposes.

Best regards
Dirk Grafe

If you earn relatively a lot, you also have to invest more than others in the . You need an appropriate wardrobe that needs to be updated regularly. That alone can easily be mid three-digit amounts per month. Then you also can't show up in a Golf V, and you don't unpack your lunchbox at lunchtime.

Spending €7000 income per month can happen very quickly for a family.

That also goes pretty quickly without children. I usually go to the cafeteria, don't drive an expensive car, only spend 200 euros per month on clothes, and still I go through my income every month. Most of it goes to eating out in the evenings, vacations, and spontaneous purchases like furniture or technology. Personally, I don't want to give that up and therefore build more down-to-earth. If I had to completely change my life and drastically lower my standard for several years just for a house, I would continue renting.

I would like to see the calculation for testing purposes.

Best regards
Dirk Grafe

Just as an example, the rate for a full financing is lower than the rent.
You do a 99% financing with only 1% equity.
This one percent equity is then offset by the entire surplus of the rent.
You buy a property for 350,000 that yields 1,500 in rent.
You borrow 330,000 from the bank and pay about 1,150 over 30 years.
For the 20,000 equity, the rest of 350 remains, i.e. 4,200 per year, which makes over 20% equity return.
Of course, this does not work for every property, but it is quite possible.
Or why do you think investors still take out loans?
The equity return is almost always higher than the total return.

: I am basically open to any option, but if you consider the model of renting out to third parties/self-renting, you usually buy an apartment in a highly sought-after location, for example in the area where you want to live - and then live cheaply in the sticks, so that the apartment in M subsidizes the house in Hintertupfingen - roughly speaking. The other way around doesn't work - you can't rent out a house in the south of Munich with an apartment in the sticks, for that you would have to buy an entire apartment block with at least 6 units.

As far as I know, rents in Munich do not increase as quickly as prices. In this respect, the rental yield is likely to be abysmal. Only through price appreciation would the whole thing become profitable. For that, the property would have to be sold at some point. However, the price increase is unpredictable. Besides, the rental yield of a single-family house is generally lower than that of apartments or multi-family houses.
The 6-unit apartment block is therefore likely the better choice and additionally spreads the default risk. It also gives you more independence in investments compared to a homeowners' association in a condominium.