Where is the return on the property hidden?

What do you expect? Someone who owns undeveloped land and just lets it lie around is no poor church mouse.

Thank you for the answers, but so far no one has been able to help me with a return calculation. Assuming a personal tax rate of 30% (estimated), a loan of €200,000 under the mentioned conditions, expected rental income of €3,600/month, no rent increase, including depreciation, excluding renovation costs (for the time being), I come to a return of 1.4% in my Excel sheet. Adjusted for inflation, so basically nothing. In case of doubt, with rental loss during tenant change or other factors, renovation costs, rather a loss than preservation of value, which is at least the issue.

Is this calculation realistic? If yes, it is obvious that this option is nonsensical.

Don’t be offended, initially I am not concerned about alternative investments, there are several (I also do not consider 5% return on leasehold land realistic, do the math, rather 1.5%). Actually, I am not a fan of real estate; if I had the courage, my investment strategy would be clear, a global ETF-based portfolio. But we are self-employed, no pension, 50 years old, and this capital must be preserved. So no luxury problem :), we live down-to-earth and reasonably.

Martin

The investment decision for just under a million is more of a luxury problem.

Regardless, it is important to examine all parameters of all variants.

But are you expecting to find the [Ei des Kolumbus] here with a final yield >= 5%? If that existed, then everyone would probably do it.

It is actually the case that the return on such small properties is very low. Therefore, there are only very few private investors who invest in 1/2/3 family houses. This is done more as a value appreciation investment - not to achieve a high ongoing return. Therefore, my hereditary building right proposal. Firmly calculable return over 80-100 years including an increase in the hereditary building rate due to indexation. Almost no risk, as reversion can also be agreed upon. For such a sought-after plot (it must be, given the land prices), the developers/general contractors will be lining up with you. In Munich and the surrounding area, everything that means "living" is currently selling like hot cakes - builders are happy to pay a corresponding interest.

Toxic, that depends on the perspective. Of course, it is nice to have, but you can't really get anything out of the property right now. Of course, we can sell it and blow everything, but it was inherited and we should also handle it that way with our children. Trying to live off equity alone for the rest of your life is unrealistic, but that is our situation as freelancers.

All I wanted was an assessment and review of my amateur calculation.

Your calculation is probably correct, or even calculated positively, since the construction and rental of a single-family house simply does not pay off. If you could build a large multi-family house with at least 10 units, it would surely look somewhat different.