Help with buying an apartment in Munich

Dear members,

First of all, I would like to introduce myself. My name is Lisa, I am 28 years old, a student, and I live in Munich. Currently, my parents (already retired) and I are looking for a property (apartment) as a capital investment or possibly also for my own use. Since this is more or less new territory for all of us, I hope to get a few nice tips or help from knowledgeable members here. Thank you in advance to everyone who supports me in their answers...

My parents already own a fully paid-off relatively large apartment on the outskirts of Munich and are now looking to buy another property. From an investment, we have equity of about 100,000 (I know, not much for buying an apartment, but as an investment, the real estate market here currently simply represents a very interesting form of investment). The goal is, of course, to finance the loan installments as much as possible from the rent and pay with a monthly additional amount of about €300 on top of the rental income.

Everything of course looks very simple at first (layman’s) glance: buy a property, the tenant finances the loan installments, and 10 years later sell the apartment again at a profit from the increase in value... But I know it is by far not that simple; factors such as reserves, inflation, special payments that arise, possible rental defaults from vacancies, the fixed interest rate often only for 10 years, etc., make the whole business a not so easy undertaking and will certainly quickly lead to many (debt) traps!

If you ask banks and brokers, they currently advise buying immediately at the "wonderful" interest rates, but they probably do this more out of self-interest than from carefully considering the exact situation and circumstances of the buyers and really looking for the best solution.

Therefore I thought I would ask in an independent forum what you would do under the given circumstances, what tips you have. I would be especially interested in what you would spend at most for a property with the given equity plus loan amount. It should be noted that bargains on the market are not really widely available in Munich.

Well, I've never heard such a great idea before!!! The plan is perfect and you will make a lot of profit and become very rich. It’s best if you buy 2 or 3 apartments right away. And don’t tell anyone.. wouldn’t want more people to come up with this great idea :)

Really? You think so? ...:confused: Thank you very much, I actually thought more about tips and a bit of help instead of you making fun of it. Especially to find out if all the considerations make sense, I posted it here. I am also aware that this is not a new idea, so I don't quite understand your irony...

Really? You think so? ...:confused: Thanks a lot, I was actually thinking more of tips and a little help instead of you making fun of it. Especially to find out if all the considerations make sense, that's why I posted it here. I am also aware that this is not a new idea etc., so I don't quite understand your irony...

I just wanted to respond to your funny post with an equally funny post :)

Seriously: Do you really believe that in 2017+ you can generate a return with a externally financed property (in the Munich area!!!)? No... you will probably incur a big loss because the market is completely empty or overpriced. There is tons of money looking for real estate (NOT externally financed!). Real estate is scarce and not money.

Only if you build a large (really large!!!) multi-family house or office building and invest a few million or a few tens of millions... that is still interesting.

Your idea is so naive that I wonder if the last 6..7 years were missed? :p

Ok, thanks anyway for your answer. Maybe it is also good that you want to make that clear to me and save me from a mistake, but I have a few questions about it: Can you briefly explain to me why I cannot generate a return with, let's say, a 2-room property, purchase price 250k in the Munich suburbs. The rents here are about €750 cold...

I don't really see the market as overheated, at least there are still plenty of offers which are indeed already expensive, but in the next few years I am not sure if a decline in prices is to be expected. More and more people want to move to Munich... New buildings are constantly being constructed here, the demand is increasing proportionally, of course, but you can still get properties

There are clearly better experts here who can explain to you why that doesn't work. Especially not with external financing. If you have money left over... invest it in the stock market. There you can spread the risk nicely and access the money daily. Now putting a few peanuts (for yield reasons) into a property (concentrated risk!)... is really the worst idea.