Use of Credit vs. Equity

He has no place in a tangible asset appraisal.

Alright, but shouldn't one rather discuss the market value instead of the tangible asset value?

It is quite logical that if the rental agreement has existed for a longer time, not the current rent is applied but the rent is significantly lower. Nothing unusual about that. It is also not uncommon for several expert reports to be created when you want to sell a property and talk to different real estate agents.

Likewise, most ancillary costs such as property tax mentioned here are fully transferable. So they can be deducted. Since you are talking about a five-figure net income monthly, renting alone makes sense for you from a tax perspective. If necessary, you can have part of the financing for your planned owner-occupied new building run through the apartment and then also claim the interest for tax purposes.

Exactly. The rent is so low because of the graduated rent increase and the fact that the tenant has been living here for over 10 years – that was incredible luck with the graduated rent.

So at least I can't see any absolute malice; a lot of negativity was interpreted here...

Of course negativity is interpreted, because who likes to give away money? Real estate bargains are rare. And with missing information, one must always assume a malicious seller. Anything else would be foolish. But if everything makes sense, maybe you could actually have the luck of a real estate bargain. Then only one question remains: Does this purchase endanger your actually desired project? If yes, then don't buy, otherwise just go for it.

Then there is only one question left: Does this purchase endanger your actually desired project? If yes, then don’t buy, otherwise just go for it.

Whether I want to call it a bargain, well :) rather "fair"...
It does not endanger the project if the market does not crash, since I could definitely sell or pledge without loss and possibly even with profit.

In the end, the question is what the best option is:
Buy with equity... buy on credit... mixed model... but the conversation should be held with the tax advisor.

Alternatives like a bank account (zero interest with 8% inflation) or the stock market certainly do not seem better to me at the moment.

Let's say you finance completely:
- Purchase price below market value: profit
- Interest costs equal current rent: +/- 0
- Ancillary purchase costs: loss
- Market development: neutral to loss (my crystal ball says interest rates will continue to rise)

I stick to the fact that you can currently only use your actual rent. Because first, a private person would have to buy your apartment and evict you for personal use. That takes time.

Buying with equity... buying on credit... mixed model... but the conversation should be held with the tax advisor.

Of course, with credit for the mentioned tax reasons. Personally, I would put in 10-20% equity so that a forced sale below value wouldn't bring less money than the remaining loan plus early repayment penalty on the property.

I believe that if you don't take out a loan for the purchase now, you won't be able to do so later and also won't be able to offset it against rental income for tax purposes. Hence also the offsetting of interest versus purchase price in the calculation above.

You could only sensibly buy and sell again in the short term if the market value > purchase price + ancillary purchase costs.
Now tell me, how much is the property worth according to the appraisal.

All very simple ;)

I am not sure if real estate prices will fall as sharply as some people are writing here in the thread. At first glance, it would be logical since construction interest rates are rising, but many factors speak against it as well. In some regions, such as the Stuttgart metropolitan area, some experts even expect further increases (I think this was also stated in the current Postbank Housing Atlas). However, the big price surge of recent years is certainly over, I think so too. But this does not necessarily mean that prices will collapse by 30 percent everywhere and that in three years we will have the same real estate prices as ten years ago. I myself live in southern Germany (Stuttgart metropolitan area) and rather believe that prices will trend sideways, or if they fall, only slightly. I also do not have a crystal ball. But if we assume that your property has lost 10 percent in value in three years: then it would still be worth about 540,000 euros. However, interest rates will probably continue to rise or at least not fall, so the overall burden on the financing is hardly likely to change.
As an owner-occupier or landlord, this can be irrelevant up to a certain point. Because even if the apartment is only worth 540,000 euros in three years, you do not have to sell it but can rent it out. Rents will definitely not fall, but rather rise. If you are paying off a loan, the rent should at least cover the loan installments (observe tax issues!).
It only becomes problematic if you pay for the apartment entirely from your own equity now and speculate that you can sell it at a profit in three years to get your own equity back. That would be too uncertain for me. I would try to find a solution in which you factor in this uncertainty and keep all options open. For example, finance the apartment partly with a loan, with the option to possibly transfer the loan to another loan (restructure, although banks do not always agree to this in the end).
In any case, I would not invest all your equity in this apartment if you already know now that you want something bigger later.[/QUOTE]