Save more or buy???

Problematic about the story is that taxes are due for a rented and paid-off apartment. This again reduces your available capital. So it is actually pointless to perhaps pay off the apartment early with available equity and then take out a loan again afterward, where the interest is no longer deductible as an expense in the profit and loss statement, unless the interest rate decreases enough to offset the tax payment.

For the bank, it actually makes hardly any difference, but for the seller. They want money and not a piece of paper on which someone has scribbled "I have an apartment!" ;-)

You are right, I confused principal and interest, both were low amounts :D That certainly improves the initial situation, but I would still not be sure if it also pays off for you. However, I know too little specifically about the apartment and generally too little about property valuation to be able to assess that with certainty. Definitely have that checked.

Which "garage" now again?! If I were you, I would stop "subsidizing" all sorts of stuff in your head, that distorts the view of the actual profitability of things. The apartment incurs costs and those must be covered by the income from this apartment. If in this setup only the garage generates money, just buy more garages, but no apartment as well ;-)

If you sell the apartment, you definitely save on interest initially, yes. But you also improve your equity ratio and receive a better interest rate for that, which saves money again. And in the end, you are debt-free faster or can agree on a lower monthly payment, which increases your flexibility. And, of course, you avoid the risk of even making a loss with the apartment; with the low profit it generates (if at all), even a single "tenant from hell" will ruin your balance sheet for years.

The garage was included with the apartment.

One does wonder a bit...

and @venban: You know neither the location nor the features of the apartment, you don’t know the city, the surroundings, or any details of the financing – basically, you know ABSOLUTELY NOTHING about the property, which can already be seen from the fact that suddenly a garage appears. In central city locations, these are often rented out alone for 80-100€.

Moreover, the ECB recently decided to lower key interest rates to a historic low, which will have consequences in the real estate market. Prices are likely to rise; rents are not necessarily going to do so accordingly. This can already be nicely seen in the development from 2007 (Lehman Brothers financial crisis, the older among us will recall vaguely) until today.

The next catastrophic statement building on this: that a one-room apartment should be sold because no increase in value is expected.

Anyone making such a statement has no idea what is happening in Germany. The largest group of households in Germany are... simsalabim... single-person households. Depending on the statistics, these constitute 35-40% of the apartments/households in Germany, with a rising trend. This naturally goes hand in hand with a corresponding demand directly targeting the one-room apartment under discussion here.

Anyone who sells such an apartment in a suitable location (!) today just based on a forum statement should think twice about it. Although I do not want to rule out that a sale can make sense, it cannot be judged from a distance. Personally, I have other reservations regarding such individual property risks, keyword “tenant fraud,” but even that does not have to be a decisive criterion for or against a sale.

No offense intended, but in my opinion, this must be considered from multiple perspectives.

Best regards
Dirk Grafe

One is a bit surprised, really ...

and @venban: You know neither the location nor the features of the apartment, you don’t know the city, nor the surroundings, nor any details of the financing – basically you know absolutely NOTHING about the property, which is also evident from the fact that suddenly a garage appears. In central locations it is often rented out alone for 80-100€.

We know the market value and the rental income, from which it can at least be inferred that we are not talking about the luxury segment in the best downtown area. The garage seems to be independent of that for now, since neither it nor the resulting income (which apparently seems to accrue additionally) was mentioned initially.

In addition, the ECB recently decided to lower the key interest rates to a historic low, which will have consequences on the real estate market. Prices will probably rise, rents not necessarily. This is already clearly visible in the development from 2007 (Lehman Brothers financial crisis, the older among us will vaguely remember) until today.

The ECB lowered the key interest rate from 0.05 to 0.00, which will probably have no noticeable effects anymore, especially since interest rates for mortgage loans tend to orient themselves rather to other values (e.g. German government bonds).

The next catastrophic follow-up: the statement that a one-room apartment should be sold off because no increase in value is expected.

Anyone making such a statement has no idea what is going on in Germany. The largest group of households in Germany are ... abracadabra ... single-person households. Depending on the statistic, that is 35-40% of the apartments/households in Germany, a rising trend. Along with this naturally comes a corresponding demand, which is fully targeted at the 1-room apartment under discussion here.

Yes, singles may represent the largest group of households. But even a single person does not like to live in only one room, most probably prefer a separate bedroom. This shrinks the circle of interested parties to students and employees with a second residence, who generally rent rather than buy. This means for the owner of such a property that he can actually only sell such an apartment as an “investment property” and there are simply no exorbitant value increases to be expected here, since every “investor” then makes the same calculation as the original poster currently does.

Apart from that, I only wrote that “I can’t imagine that”. One can agree with that, see it differently, or simply ask a professional. But a forum is probably not the right platform for that.

No offense, but in my opinion you have to consider this from multiple perspectives.

Best regards
Dirk Grafe

Needless to say!

: You neither know the size of the apartment nor the purchase price in 2014. The statement of the market value is from the current owner, who obviously has no relevant experience/knowledge in the real estate sector.

How one can assess this apartment and make a statement (or want to) about whether it should be disposed of or not without these numbers/information from the keyboard remains unclear to me.

Best regards
Dirk Grafe

Hello,

in 2014 we paid €42,000 plus additional costs. Currently, a similar apartment is being offered for €59,000.

Johann