Financing | Single-family house | Feasibility | 2nd rank

Maybe I made things a bit confusing in my thread with rough details.
- A condo with 85m2 in Berlin was a good deal for the price. Don't you think?

It depends for me on the location, year of construction, condition, and what I intend to do with it. At the moment, you are effectively paying for the apartment.

At that price and size, I don’t assume it’s a new building or new building standard. Also not upscale equipment or prime location. So a renovation will likely be due in the next few years, for which you have no reserves on your part.

Low rental income, which you also have to pay taxes on, and due to the rent cap in Berlin, the rent won’t really increase in the near future.

Currently increased tenant protection in case of unpaid rent, at the same time no reserves to ride that out for a while.

Hardly any repayment since purchase, as the annuity roughly corresponds to the net cold rent. Tax aspects not taken into account yet, since you have to declare the rent as income tax. With your income, you will probably be in the marginal tax bracket above 35%. Because the repayment > interest, taxes will definitely be due here.

If you sell at the current time, since you have had the property for less than ten years, speculation tax will also be due. In combination with the real estate transfer tax and incidental purchase costs at acquisition and your income tax, not much remains.

All in all, the apartment is not a good investment for you.

I cannot judge that. I lack the overview in Berlin for that. Condition of the apartment etc etc. The question for me is always: how does the original poster come by the supposed bargain? They are usually obtained informally from family. Almost no one voluntarily gives up a lot of money. Therefore, I am always skeptical about that, and not just with you.

If you sell today, since you have owned the property for less than ten years, speculation tax would still apply. In combination with the property transfer tax and incidental purchase costs at acquisition and your income tax, there isn’t much left.

Don’t forget the prepayment penalty. At 2.7% interest, it won’t be a small amount either (although tax-deductible).

Do not forget the prepayment penalty. At 2.7% interest, it will not be a small amount either (although tax-deductible).

Among other things, a sale before the 10-year period is therefore not planned.

Unfortunately, I have to sound the same alarm: You are now short on money that you have tied up in the apartment and now have to pay higher interest on a much larger amount. You want to do a 110% financing now. Compare the total interest costs with, for example, a 90% financing.

The default risk is very low since the rent is completely paid by the authorities.

Yes, the positive thing is that your rental income is constant. But that's where it ends. Financially strong tenants are not attracted by such a "social housing" apartment. Termination due to personal use could quickly fail due to hardship regulations, and the key figures don't sound rosy as an investment property either. No matter what you think the apartment might be worth, it definitely cannot be simply sold at top prices.

So... but enough about the rental apartment. The positive thing is your income and you already have children, so the income will not later decrease due to part-time jobs. It will tend to increase rather.

I unfortunately have to blow the same trumpet: You are now missing money that you have tied up in the apartment and now have to pay higher interest on a much larger amount. You now want to do a 110% financing. Compare the total interest costs with, for example, a 90% financing. Yes, it is positive that your rental income is constant. But that's where it stops. Financially strong tenants are not attracted by such a "social housing" apartment. Termination for personal use could quickly fail due to hardship regulations and the key data also does not sound promising as an investment property. No matter what you think the apartment could be worth, simply selling it at top prices it definitely is not. So... but enough about the rental apartment. Positive is your income and you already have children, so the income will not decrease due to part-time jobs at some point. It will tend to rise.

For a rental apartment, you also have to have reserves to withstand possible losses. I also do not see that with the OP. Everything on credit.