"Construction project with a 'special' initial situation"

To rent out, you simply have to have a professional attitude, otherwise it doesn't pay off or you take a high risk. It’s also work if you don’t want to hire a property management company.

Best regards
Dirk Grafe

What do you mean by professional attitude? How can I test the feasibility mathematically?

This is beyond the scope here. But first, you would need to know:

1. approximate market price of the property
2. rent index, expected rental income
3. backlog of repairs, mortgage burden in relation to value
4. rental potential/default risk/turnover
5. location and development of the neighborhood
6. distance to your residence / time required for viewings
7. ...

And just as a small hint: you are then operating in a market where there is extremely tough competition, which runs this professionally – and also earns no more than about 4% net yield. 6% and more only exist in premium locations or in commercial real estate.

Legally, you also have to be on top of things, statements have to be prepared annually, etc., long story short: individual properties are critical, especially if they are not around the corner from your own apartment/workplace etc., I would always keep my hands off them. Selling the house and investing in your own four walls immediately offers you (almost) the same – or even more! – financial freedom. If all goes well, you might get 2% more yield than you pay for your bank loan on your own house ... ask yourself whether the effort and risk are worth it for 2%!?

2% corresponds to a rental loss of 1 week per year, i.e., if you expect an average rental loss of 0.5 months/year and the house actually stands empty for 1 month – then your yield for that year is already in the clock. You can have fun calculating what 3 months of vacancy including an eviction lawsuit will cost you and here comes the crucial point:

if you have 10 apartments, an extreme case won’t throw you off track. But if you have only one (!) rental property, then the entire default risk rests on this one object! Think about that if it depends on whether you can pay off your own house loan ...

Regards
Dirk Grafe

Ok renting out is no longer an issue....obviously makes little sense

Back again to the bridging finance...will the expected profit from the sale of my current house be paid out to me in cash so I can use it like equity and for example pay the notary etc., or does it all remain just virtual on paper?

Can someone help me with the type of disbursement for the bridging loan?


...from Eiphone

For the bridge financing, you will likely need a mortgage on the new property.

And you need to clarify with the bank whether they cover acquisition incidental costs with the bridge financing or if the bridge financing is only available for the actual purchase price/construction.

My problem is that all my equity is tied up in real estate and apart from small reserves in the [Tagesgeld], I have nothing available.

...from Eiphone