Multi-family house as a capital investment in an aging city

Sorry, for me renting out is a much higher risk due to the unknown tenant (nomad). That significantly reduces my return. This cannot happen with a self-used property. Job loss or misfortunes are the same with owner-occupied or rented property. However, I am just repeating myself in circles. From experience within my circle of acquaintances, those who become landlords are those who have the necessary capital stock (have a good income, an owner-occupied property, and take the risk), landlords through inheritance (house from parents), or self-employed people who build up their pension through renting. But it may also be that I have the wrong acquaintances.

I come from the Ruhr area and also want to buy in this region. Of course, when buying a property, just like on a nice vacation, I want a good price-performance ratio. At first glance, you can find that in Herne, for example, where you get properties without maintenance backlog with easily 7% net annual rental yield. In my opinion, this great yield is related to the fact that Herne is not an attractive city, for any age group. I have looked at all population forecasts I found on the internet, and Herne is aging above average and is expected to lose up to 10% of its inhabitants by 2040 according to forecasts.

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I have never bought a residential property and really find it hard to estimate. I look forward to your opinions!

Let me put it this way: if you have correctly calculated the net yield and accurately assessed the repair backlog or the condition of the property(ies), then you should buy it immediately. However, the 7% does not fit with your other information – such a yield is only achievable in top locations, if at all. If Herne is indeed shrinking, then demand will also decrease. The crucial thing then is where exactly the city is shrinking, where your micro-location is, and how it is developing compared to other districts.

Best regards Dirk Grafe

you get properties there without maintenance backlog with easily 7% net annual rental yield.

What are you waiting for? Do it!

With an owner-occupied property

... it is consumption and should not be confused with an investment.

Necessary consumption, because most people do not prefer a life as homeless. And once it has been defined as necessary, it can be simply calculated. As written above: loan installment plus/minus wealth accumulation vs. rent.

Thank you for your participation, but it's a pity that my thread here has turned into a general discussion about the sense of real estate investments. For me, they make sense, even though I rent.

Let me put it this way: if you calculate the net return correctly and correctly assess the backlog of repairs or the condition of the property(ies), then you should buy it immediately. However, the 7% does not match your other information – because such a return is only achieved in top locations, if at all.

I would say you are wrong here. I read the following in a real estate book, which has been confirmed by my return research: In top cities and/or top locations, you have less net return than in poor locations! Why? The enormous purchase prices of the properties! Rents do not grow with purchase prices! You pay the high purchase prices in top locations like downtown Düsseldorf also because this property has the potential to appreciate in value. On the outskirts of Herne, you don't have that. You buy the high (currently still existing) rental yield with the risk that the value of your property and the rents may decrease.

If Herne is actually shrinking, then demand is also declining. The crucial point is then where exactly the city is shrinking or where your micro-location is or how it is developing compared to other districts.

And exactly that I find very difficult to predict, no matter the city.

In top cities and/or prime locations you have less net return than in poor locations!

This corresponds with my dangerous half-knowledge. But I also know that nowadays 7% return is only possible with considerable risk.