Deal trading with real estate: what is it?

Earning money with real estate without investing yourself sounds like a dream. With the job as a deal trader this becomes reality! As a deal trader, you are one of the most sought-after authorities in the real estate industry, as you always have top deals and offers at your disposal. As a nice side effect, you’ll also gain some expertise and gain a foothold in the real estate industry.

A deal trader brokers real estate to investors without using equity.

What exactly does a deal trader do? Simply put (source: Deal-Trader / immobilien-erfahrung.de): You broker real estate or land to investors who buy the property. You yourself do not need to invest any equity capital, which means that the whole thing is associated with little risk. However, since you are involved in the purchase as an intermediary, you still make a considerable profit.

You are probably wondering now if deal trading is not circulating as another term for brokers. However, there is an essential difference. Here briefly the explanation!

Work on the go.

Deal trader and broker: is there a difference?

Even though you now know what the job of a deal trader entails, many still wonder what exactly the difference is between a deal trader and a real estate agent.

The answer here is simple. The deal trader for real estate, specializes in a niche and additionally brokers properties in which he will participate, for example, if they are resold (often at Fix & Flip).

The real estate agent, on the other hand, is broadly positioned and usually acquires all types of property types in order to pass them on for a pure brokerage fee.

The difference at a glance:

• Deal trader: brokers objects in a niche, in which he gets a share if they are resold
• Real estate agent: mediates all types of real estate for brokerage commission

Advantages and disadvantages of deal trading

You always win as a deal trader as long as you know how the business model works. However, it takes some time to gain enough expertise in this field to work as an indispensable partner of investors. The many advantages and good prospects of this profession, you have probably already read from the previous section. However, every profession has certain disadvantages or challenges that you have to face. Take a look at the advantages and disadvantages of deal trading below.

Advantages of deal trading: High earnings with low stake

Deal trading offers you a great opportunity to enter the world of real estate without much expertise or a specific degree. Since you can do this without any equity, this opportunity is open to any age and earning bracket. Earning without risk – Sounds tempting? We think so too!

Here is a brief overview of the benefits that deal trading brings you!

• You do not need any expertise or degree
• You enter directly into the real estate industry
• You are in high demand in the real estate industry
• You do not need equity capital
• You have no risk despite high profit

All good things come with bad things as well. Let’s look at the disadvantages and challenges that can come your way.

Disadvantages: Problems and challenges

Even though the job of a deal trader seems rosy, every profession has its drawbacks. So, there can also be challenges that you have to face as a deal trader. What are the most common problems or challenges in deal trading?

These are the challenges you have to face:

• You need to acquire enough knowledge
• You must learn to analyze the market and real estate prices
• You need to find business partners
• You need to learn negotiation tactics
• You need to build a network
• You need to know where to find the best deals

It doesn’t matter if it’s a small town or a big city.

With the right contacts to sellers, you can earn good and fast money.

Clients of a deal trader: partner and commission

You are interested in the deal trader job, but you do not know who to address? Who exactly is the target group or the customer of a deal trader for real estate?

You, as a deal trader, need decisive investors who want to buy real estate and have an appropriate credit rating and equity to finance real estate quickly. Let’s take a quick look at who you can broker your real estate to!

The main clients of a deal trader are:

• Real estate investors who prefer to invest rather than research
• Buyers who buy properties, renovate them and then sell them again quickly (Fix ‘n’ Flip)
• Developers (new construction) who are interested in land to build new buildings
• Developers (existing) who want to convert multifamily buildings into condominiums
• Real estate agents who broker exclusive off market properties with commission participation
• Deal trader, you yourself are your client if you can raise the necessary equity capital

After these good prospects, surely many would like to become deal traders. But for whom exactly is the job suitable? Is one target group particularly well suited? First of all, the job is suitable for almost everyone, so read for yourself whether the job Deal Trader is for you or not!

Become a Deal Trader: Part-time or Full-time?

Deal trading is a great way to get started in the real estate industry. You are interested in real estate and would like to sell real estate as your main profession later on? Then the deal trader employment is to get acquainted with the real estate world. But also for the less interested, who wants to earn some extra money on the side, this job is perfect.

The job is for anyone who…

• … has an affinity for real estate
• … would like to expand his real estate knowledge
• … would like to earn money with real estate
• … would like to secure his assets with real estate
• … would like to buy his first property
• … would like to build up real estate holdings
• … would like to get started in the real estate industry
• … would like to learn the real estate trade
• … would like to switch to self-employment
• … would like to build up a 2nd mainstay
• … would like to earn more money on the side

suitable.

With this risk-free business model, it doesn’t matter if you are a student, retiree, employee, self-employed or entrepreneur. It is suitable for all.

Even if you don’t have much time and stress, deal trading know-how is valuable. With the knowledge, you can quickly train people who perform deal trading for you. In parallel, valuable contacts are generated automatically – through the emerging network!

Source: Deal-Trader / immobilien-erfahrung.de

Rental yield & purchase price factor: calculations

A property can be evaluated in terms of its profitability by two factors – the rental yield and the purchase price factor. The rental yield indicates the amount of costs generated by the rental income. The purchase price factor indicates how many years one would have to pay off the property to be purchased. These two values can be used to decide which real estate offer to accept.

Here you can learn more about the calculation of rental yield and purchase price factor/ Immobilien-Erfahrung.de

Rental yield: Does the rental income cover my costs?

The rental yield is an amount generated by the rental income of your property. This must always be checked before buying a yield property. 2 factors tell whether a property covers the monthly costs through rental income. If this is above 6%, the monthly costs are covered at current interest rates. Anything above that means additional capital accumulation for you.

A good rental yield:

From 5% upwards at current interest rates

A simple formula can be used to calculate the gross rental yield:

Annual yield (rent) / investment x 100 = rental yield

Purchase price factor: How long do I have to pay off?

The purchase price factor puts the purchase price in relation to the annual rental income. The result indicates in how many years the purchased property will be paid off. In this way, you can make a comparison between offered properties, which shows you the most profitable property.

The formula for calculating the purchase price factor is as follows:

Investment / annual net income = purchase price factor

The next step: minimum rental yield

How high must the rental yield be at least so that I can let my tenant pay off the purchased property without worrying about having to pay interest and repay the principal? This is a question that capital investors in particular ask themselves when they want to invest in an income property and thus achieve efficient asset accumulation. Here you will learn everything about the minimum amount of the gross rental yield.

Buying real estate: What can I afford?

In order to buy a property of a certain value, it is usually necessary to take out a loan from the bank in addition to the equity capital. The bank determines the amount of credit it will pay out to certain people, which in turn is tied to factors.

Factors to narrow down the amount available:

• Credit rating & self-disclosure
• Mortgage lending value of the property
• Equity in relation to credit rating
• Monthly load

Step 1: Creditworthiness and self-disclosure

In order to finance a property, your creditworthiness should be established for the first time at the bank with the help of a structured self-disclosure.

Self-disclosure: decision support of the bank

The self-disclosure is an overview of your financial situation. It gives the bank an insight into your current financial situation and is therefore an important basis for decision-making. The amount of the loan and the conditions of the financing depend on it.

Creditworthiness: The company’s own assets

Creditworthiness must first be checked by the bank. For this purpose, assets and liabilities are compared. Important: The asset balance must always be positive! If this is the case, one is creditworthy. If this is not the case, it means that the lower the creditworthiness, the more equity capital must be raised.

Creditworthiness therefore means:

• The higher the credit rating, the lower the equity ratio
• The lower the credit rating, the higher the equity ratio

Step 2: The mortgage lending value of the property

There is a market value (market price) and a mortgage lending value (market value less 20%).

Market value

The market value describes the expected achievable sales price of a property, under the current market conditions.

Collateral value

The mortgage lending value is usually about 20% below the assessed market value. Banks value real estate deposited as collateral (financing) lower than the market price. Simply put, this is the amount the bank would get in any case in the event of a sale or even a forced auction.

Step 3: Equity in relation to credit rating

In principle, 20% equity is required when financing a property. The fact that creditworthiness and credit standing play an important role was made known in step 1. However, the 20% does not always apply, because the amount of equity primarily depends on the creditworthiness and the determined mortgage lending value.

• Standard is 20% equity
• Credit rating: reduces equity
• Purchase price: reduces equity (if below market price)

Step 4: Monthly charge

Here the bank is interested in your monthly income and expenses. The available income is crucial for the repayment of interest and principal. If this is too low and the expenses too high, this can lead to a poorer credit rating.

• Monthly income and expenses
• Decisive for repayment of interest and principal

Conclusion: How much real estate is it in the end?

As an employee with regular income and a well-structured self-disclosure, it should be no problem to come to an equity ratio of 10%. The amount of the purchase price then results from the following calculation:

• Equity x 10 = Purchase price of the property

Here you can find out even more about the maximum purchase price of a property/ Immobilien-Erfahrung.de

8 mistakes when buying real estate: location, owner-occupancy &resale value

Mistakes always like to creep into the purchase process of a property. Whether it’s a bad location of the property, reasons against self-interest or a purchase out of emotion – mistakes cost you a lot of money. In order to avoid this, we have put together a guide for you, with which you are guaranteed never to make a mistake again when buying your next property.

• Mistakes when buying real estate

The next step: rental yield and purchase price factor

How do I find good yield real estate? This question is mainly asked by capital investors, as they are mainly looking for positive and fastest possible cash flow. With a sufficient return, you are lucky that the tenant pays off the property you buy. Here you’ll learn all about how to earn the best rental return.

Self-disclosure for the bank: buy house & apartment

You want to buy your first apartment or house and the bank wants a self-disclosure from you? Learn here what a self-disclosure is, what it says and download a free PDF template that you can use to convince your bank!

• Self-disclosure

Expensive housing: Self-interest becomes a disadvantage

Financially, the personal use of a property is certainly not the best idea. In order to secure one’s financial situation with real estate, it is better to consider the property as an investment – unless a property has a special emotional value for you for personal use! Why this is so, you will learn here.

Disadvantage Self-interest: Negative cash flow

To begin, what does self-interest mean to me?

• As an owner and owner-occupier, you always pay 100% of the operating costs yourself.
• You get neither money from the tax office, nor from potential tenants
• So self-interest means constant expenses and no income
• Credit rating decreases due to higher risk

Advantage of real estate as an investment: Positive cash flow

Real estate as an investment brings you clear advantages. Find out what they are here:

• All costs and expenses are borne primarily by the tenant and the tax office
• With a good return, the investment property almost pays for itself
• Interest is tax deductible
• Credit rating increases already after the 1st year

Buy and rent real estate: Security for old age

You have bought your first property and decided to invest. Great, then almost everything runs by itself! Here we have an example for you.

Example: Purchase of a condominium for 250,000 euros

• Property is purchased with financing from bank
• Tenant pays 1,000 euros a month
• Tenants pay thereby: Interest, redemption, modernization
• Tax office helps through deductible costs and tax relief
• Gross rental yield (annual rental income divided by purchase price) becomes a steady source of income
• This increases the credit rating, which favors the purchase of a 2nd and 3rd property

Still not quite convinced? Read more about owner-occupation and capital investment here/ Immobilien-Erfahrung.de

Conclusion: Personal use vs. real estate as an investment

In this article, you have learned a lot about what it means to invest in self-interest or in a capital investment. Here we’ve put together our conclusion on what we think is the sunniest way to invest in real estate.

• Self-interest – Negative cash flow; you pay all ongoing operating and maintenance costs yourself, no one participates in them
• Capital investment – Primarily tenants and the tax office pay off your expenses, your credit rating increases and thus provides you with a basis for your real estate portfolio.

On both sides, increases in value can be seen, but once the purchased real estate is paid off, you have a constantly running source of income with it. For you, this means a carefree and, above all, rent-free life in old age!

Next step: return on investment or investment property?

You have decided: Finally buy your first own property! But am I buying an income property or an investment property? But what is it anyway? What is the basic difference between these two types of investment? And what exactly is an A, B or C location? The most important thing is that both types of investment generate profit for you. In which form, you can read here. Here you will learn everything you need to know about the return and the investment of a property.

find installment credit: Loan comparison, providers and banks

The most important thing: Don’t be rushed! You pay off a loan for a long time, so you should prepare yourself well to avoid paying hundreds or thousands of Euros too much later.

How important is a credit comparison before the conclusion of a contract?

The most important tip: Don’t just go to your house bank. Of course you would expect to get the supposedly local, best financial product here. According to a current calculation by the portal Smava, we spend over 3 billion euros too much on interest in Germany every year! To be even more precise, it is even 3.5 billion that are paid too much each year by instalment loans. Mostly because you go directly to your house bank and believe that my advisor will already recommend the “best” products to me.

The best alternative to the house bank are:

• comparison portals > direct banks

3.5 billion euros every year! The comparison is worthwhile. Direct banks in particular often offer lower interest rates. For example, because they do not maintain a costly network of branches like the typical banks you know from the city centre.

In the end, it’s like buying a car, nobody would buy the first best model. Of course you drive to different dealers, look online and compare. You do the same on holiday. Countries and regions are compared, flights, hotels and much more.

But where can you find serious installment loans online?

Online you will find a large selection of comparison portals. We have selected top 4 for your installment credit.

Installment credit online: comparison portals

Our recommendation for your research:

Top 4 comparison portals for installment credits (Germany):

1. Smava
2. Verifox
3. Check24
4. Finanzcheck

On the portals you have to enter your desired conditions. It is important that you provide honest information so that the portal can give you a realistic assessment. In general, you should never let yourself be rushed when signing a contract, think, reflect and take your time. After all, you will be paying the installments over a long period of time.

We also have a great tip for your creditworthiness (keyword Schufa): If you apply for the instalment credit with a second borrower, your creditworthiness will improve and you will get lower interest rates! It is also important to always place your Schufa inquiry on the comparison portals as a “condition inquiry”. Because if you send too many inquiries, your creditworthiness will also suffer here due to frequent requests.

Here once again the most important tips summarized:

1. Request as “condition query”, otherwise creditworthiness will be worse

Are banks in portals reputable?

Many of the banks on portals such as Smava, Verifox, Check24 and Co. are unknown! This makes many people sceptical and quickly raises the question: Are the unknown banks on the portals even reputable? The simple answer is: Yes. On all 4 portals you will find serious partners. Many of the banks are so-called direct banks, without branches. They mainly work online and via app on their mobile phones. Therefore these providers are less known. But they are subject to the same rules and laws and are serious providers.

Tip! First places are often advertising

It is important for you, the first places are usually awarded as advertising places. Just like in search engines, the first places are of course coveted, everyone reads them. Accordingly, an advertising partner is often in 1st or 2nd place, not the most favourable conditions for your instalment credit.

Savings Tip: Personalized price

If you need an installment credit quickly, online, you want to treat yourself and afford something! Here we are quickly back to the new smartphone, the chic designer dress or the annual holiday. But, did you know? Prices vary according to the user and the device you are online with!

price difference by device, location & Co

Suppliers have an extremely large amount of information from us. Depending on the device you use to order a product (technology, fashion, flights), sometimes the prices differ. Our data is stored by so-called “cookies”. They tell the provider where we come from, whether we are on the road with the smartphone, tablet or notebook. They also know which operating system is used.

Comparison: Airfare and technology

If you have a new iPhone now, it’s safe to assume that you’re going to enjoy it. Accordingly, the flight will quickly increase by 5 euros.

An example, you see a flight to Palma, Mallorca.

If you take 10 or 15 minutes and actively watch the prices, you will notice that they sometimes differ.

On your mobile phone the flight costs 152.60 and on your notebook at the same time, same destination, airport and co. for only 147.60 – a whopping 5 Euros saved, or 5 Euros spent too much.

+ 4 % more expensive

For technology, the difference is even greater. Here you sometimes find products for 23 Euros and the next device for 37 Euros.
+ 60% more expensive</block quota>
But how does it work? Everything is saved, from where you surf, what you put in the shopping cart, which device you use. Of course we have a few tips on how you can protect yourself a little better.

What can I do against price personalization?

Companies would actually have to inform about the fact that they can set their prices on the basis of price personalization. But the information is then in the small print. Your data will be stored by “cookies”, as mentioned above. So you have to disable them specifically, for example in the “security settings” of your browser. Here you can delete your “browser history”, for example. This makes it more difficult to create profiles. The same also works for research. Don’t use your normal browser window but simply an “incognito” window. Already you surf more anonymously and the tracking of your data is not so easy for companies anymore.  Google also stores a lot of data, because over 90% use the search engine for information. There are many good alternatives to Google that do not store your data, like DuckDuckGoGo.

Tips:

1. Delete browser history regularly in the “Security Settings”
2. You should do research anonymously, for example in the “Incognito window” (always in the upper right corner of the settings, no matter if app, tablet or notebook)
3. Switch search engine! DuckDuckGogo for example, instead of just using Google.

Conclusion: Compare instead of committing immediately

You pay off loans over a long period of time. “Dispo” sounds nice, but it means constant liabilities. This restricts your freedom in the future. So make sure you check whether you absolutely need the installment credit or not. If you need an extra 3.000 Euro to surprise your treasure with a trip to the Maldives, how about La Palmas on Gran Canaria? Beautiful, 30°C all year round, sun and only 3 hours by plane. Saved!

If you do want to take out an installment loan, compare providers and banks. Do not fall back directly to place 1, 2, here, there is often advertising in comparison portals.

Consideration, selection, comparisons – only at the end you should decide on a provider!

Back to the Capital Investment editorial.

Risk assessment personal loan: advantages and disadvantages

What are the advantages of a personal loan from my bank? Can I get the loan without SCHUFA? There are many questions, we have the first important answers. For all other questions, it is best to contact your bank advisor or a reputable comparison portal for loans.

Questions about the personal loan

• What are the advantages of a personal loan from my bank?
• Is a given personal loan earmarked for a specific purpose?
• Is a prior credit check obligatory in Germany?
• Can you take out a personal loan without a SCHUFA query?
• What loan amounts are possible with a personal loan?
• Is a personal loan cheaper than dealer financing?
• What are the requirements for a personal loan?
• Can a loan be tax deductible?

Risk assessment

Personal lending is available through various lending portals. The current return of Privat-Kreditvergabe is medium and the risk of Privat-Kreditvergabe is therefore not high. Private lending allows for easy participation opportunities through various lending portals. Of course, there are also disadvantages in the private lending, because when taking detailed information about the providers are necessary to avoid mistakes.

Advantage

• Easy participation via credit brokerage portals

Disadvantages

• Detailed supplier information should be obtained in advance

Application procedure

Applying for a personal loan from the bank is fairly quick if you have a good credit rating.

1. Determine credit amount and term
2. Fill out credit application online
3. Sign a credit agreement
4. Obtain credit

Comparison

Sources: Auxmoney, Giromatch (as of November 2018) via IHV: Personal Loan

Costs

depending on creditworthiness and term
Sources: Auxmoney, Giromatch (as of November 2018).

Statistics

Instalment credit agreements concluded in Germany

Number of new instalment loan contracts concluded in Germany from 2006 to 2018 (in 1,000)

Over-indebted private households

Number of over-indebted private individuals* in Germany from 2004 to 2019(in millions)