Checklist: Goals and criteria of the first condominium

When buying your first property, you should make a well-considered decision. You should set a goal for yourself, which criteria play the biggest role for you in a property and in no case buy for emotional reasons. Make your decision based on business facts and figures that compare well.

In the following post, we’ve broken down for you the points for setting goals when buying a property. Here are our eleven points summarized in short questions:

1. Self-interest or capital investment?
2. What is the maximum purchase price?
3. How low is the maximum gross rental yield?
4. Should I buy rented or unrented?
5. Which cities are eligible?
6. What is the perfect location?
7. Invest in existing or new buildings?
8. How old can a property be?
9. How big does a property need to be?
10. Ground lease?
11. Social binding or post-binding?

Step 1 – Self-interest or rather capital investment?

As already explained in our article on the subject of owner-occupation vs. capital investment, it is always better to use the first property as a capital investment. Because, with owner-occupancy, you always pay 100% of the running costs yourself. Capital investors, on the other hand, primarily let the tenant and the tax office pay.

• Here you will find everything on the topic of self-interest vs. capital investment

Here in brief what self-interest and capital investment mean:

• Self-interest: 100% responsible for costs
• Capital investment: Tenant and tax office pay

Step 2 – What should be the maximum purchase price?

This question depends on many factors. However, the most important criterion is probably the creditworthiness in terms of assets, as well as the monthly balance of assets and equity. These are all decisive factors for your bank when it comes to deciding on financing.

• Read more about maximum purchase price here.

Here is a brief overview of the most important factors:

• Credit rating
• Monthly balance sheet
• Equity

Step 3 – How low can the minimum gross rental yield be?

You want to make the biggest possible profit from your apartment. How high must the rental yield be at least so that the tenant ideally pays off the property and you yourself do not have to pay for repayment and interest?

• Read more about minimum gross rental yield here.

Here, in brief, is the formula for calculating the gross rental yield:

Formula: Annual rent / purchase price x 100 = gross rental return

This goal is also called efficient asset accumulation. Accordingly, the gross rental yield of an investment property should also be high.

Step 4 – Buy a property rented or unrented?

When buying an apartment for personal use, it is always advisable to buy unrented. The exception: notice of termination for personal use. For capital investors, however, an unrented property would be much more time-consuming, since you have to look for new tenants.

• Read all about buying rented or unrented here.

Buy unrented as an investment:

Here in brief the advantages and disadvantages!

Advantages:

• Renovation work: Immediately feasible and deductible
• Use of own lease
• Market rent

Disadvantages:

• Vacancy at the beginning: loss of rent
• Renovation expense

Buy rented as an investment:

Advantages:

• No time required for new leasing
• Payment behavior and behavior of existing tenants is known
• Low risk of vacancy

Disadvantages:

• Rental mostly below current market value
• Existing rental agreements must be taken over

Step 5 – Which cities are eligible?

A-, B- or C- location, where is the best place to buy my property? The central question here is whether I choose an investment property or a yield property.

• Read more about layer types here.

A, B or C position

Here is a brief overview of how which of the three layer types is defined:

• A-location (simply: metropolis)
• B-location (simple: large city / city with positive development)
• C-location (simple: small town / country in stagnation)

Where do I buy which property?

The different location types compare areas. Higher yields go hand in hand with lower appreciation. Therefore, depending on the location, one chooses between yield or investment property.

• Investment property: Only to be found in A-location
• Yield property: Good B- or also C- location

Macro, meso, micro location

After the comparison of the A-, B- or C- location, districts and the concrete neighborhood are compared.

• Read all about macro- meso- micro- location here.

Here is a brief overview:

• Macro location (A, B and C location, i.e. where in the country / which city?)
• Meso location (where in the city)
• Micro-location (exact location)

Step 6 – What is the perfect location?

Where exactly should I buy my first property? Owner-occupiers and capital investors, as well as yield properties or investors with the goal of value appreciation, accordingly, the decision of the perfect location is different. Here we go into the analysis again to help you find the best location for your goals!

• The perfect location

Step 7 – Invest in existing or new buildings?

When buying a home, in addition to the question of owner-occupancy or capital investment and return or investment property, one wonders whether to invest in existing or new construction. Both forms have their advantages and disadvantages. In this article, you will learn what they are.

• Read all about existing or new construction here.

Advantages of new construction

• Current state of the art
• Low risk for maintenance and repairs
• Co-determination in interior design

Disadvantages of new construction

• Higher purchase price and incidental purchase costs
• Lower rental yield
• High value loss at the beginning
• Other costs for public development

Step 8 – How old can a property be?

You want to invest in an old building? Then you need to consider a few things before buying. Old properties have some advantages, but also disadvantages. We have compiled a brief overview of all the facts of the different construction years in comparison.

The age of a property is a decisive factor when it comes to buying a property. But what are the differences and defects depending on the age and year of construction of a property? Is it worth investing in an aging house or apartment?

• Year of manufacture and condition

Step 9 – How big does a property need to be?

How big should my first property be? Micro-apartment, 2, 3 or even more rooms? This question is answered here by comparing living space for owner-occupancy and investment. In general, the number of square meters and the room layout is particularly important.

• Read all about the maximum size of a property here.

Here is a brief summary of the criteria for owner-occupants:

• Well-being has priority
• Plan sufficient living space for the future, e.g. family planning
• Area not too oversized > Purchase price, ancillary costs
• Equipment can be improved later

Here is an overview of the three goals for capital investors:

1. High rental yield
2. Good rentability
3. Few vacancies

Step 10 – Is a ground lease necessary?

When dealing with the topic of ground leases for the first time, many questions arise. What is a ground lease and does it make sense? Also one wants to know whether one can deduct the costs of the ground lease, the ground rent from the tax? All your questions will be answered here.

• Read more about ground leases here.

Here is the ground lease summarized in brief:

• Ownership and usage rights permanently separated
• 2 parties: ground lease giver and ground lease taker
• Leasehold lender cedes a plot of land for development
• Leasehold owner receives ground rent for it

Step 11 – Social binding & post-binding?

Before looking for housing, you should know everything about the topic of social commitment in housing. Here you will learn all the pros and cons and what you can do everything from low-interest loans by public authorities for social housing, to obligations, to the grace period.

• Here you will find everything else about social binding and post-binding.

Social binding summarized in brief:

• Affordable housing through public funding
• Very good conditions for loans or grants
• Rent for persons with a certificate of eligibility for housing

The rebinding in a nutshell:

• Commitment to social housing until loan is repaid

Commercial audit: criteria of a property

Before buying a property should be checked in any case. The commercial examination is based on the data with which one can compare real estates, like the rent yield and the purchase price factor, own use or capital investment or in which situation one should buy. For the examination one should absolutely make a checklist with all negative points, in order to be able to sort out better.

Audit for capital investors

The commercial audit is particularly concerned with the existing rental agreements if you buy an apartment unrented or rented. This point is particularly interesting for capital investors, because if you are buying for your own use, then you should rather invest in an unrented property.

The test in steps:

1. Lease contracts check
2. Rent arrears and rent increase
3. Non-allocable costs
4. Reserves and arrears

Step 1: Checking leases

Operating costs can be passed on to the tenant, which you should definitely check in an existing lease.

• Is it possible to pass on all current operating costs to the tenant?
• Is there a deposit?
• Are there any special features in the lease agreement?

Step 2: Rent arrears or rent increase

These peculiarities occur when it was agreed that tenants must return the apartment renovated when moving out.

• Are there any outstanding rent arrears?
• Are there active rent reductions?
• When was the last rent increase?

Step 3: Non-allocable costs

Here one should carry out a quick market analysis for comparative rents. If the building in which you invest in an apartment has an elevator, you should be careful. An elevator must be repaired or maintained every few years. These high costs usually have to be borne by the tenant and cannot be passed on to the tenant.

• Are non-apportionable costs expected?

Step 4: Reserves and arrears

For this purpose, it is essential to check the maintenance reserve of the condominium association on the basis of the last statement of condominium fees, as well as the amount of the total amount of condominium fee arrears. If there are individual condominium owners who have been in arrears for more than four months, then the probability of a default is high. Accordingly, special assessments may be the consequence.

• How much is the maintenance reserve of the homeowners’ association (WEG)?
• Are there any house money arrears of the WEG?
• Has the collection of resolutions been reviewed?

The next step: operating costs in the house

You want to buy an apartment, but the operating costs are too high for you? There is a solution! The operating costs of a property, such as a condominium, can be apportioned to the tenant. But which of these operating costs can be apportioned and what do you have to pay yourself as a landlord? Read all about the operating costs of your next property here!

Bungalow: What is it anyway – more than a holiday home?

Many people know the word bungalow from the context of holidays. But bungalows are not only popular holiday homes, but also a possible choice for your own home. A bungalow is one thing above all: practical – and modern. This type of house is especially popular with young families, as it combines all living spaces on one floor and, especially due to the absence of stairs, does not pose a danger to children or senior citizens. Choosing the right house is certainly not easy, because it is an important decision that may affect your whole life. Here you can find out everything you need to know about bungalows.

Tip! You want to buy, build or rent a house, but you still lack the necessary know-how? Then check out our article Real Estate Tips! Here we have collected videos from professionals and experts for you, who talk about taxes, financing & Co.

Special features of a bungalow: bright, open and friendly

The most important features of a bungalow are that it is detached and the entire living space is distributed on one floor. Most of the time, the house still has a developed basement or attic, but these are not normally used as living space, but rather as storage space or for heating. Traditionally, the bungalow has a flat roof. However, this is no longer the norm, as many bungalows now have a different roof shape. Other features include an open living space, floor-to-ceiling windows and large doors. The aim is to make the living area in particular appear as open and bright as possible.

Room layout: rooms and all on one floor

Since potential rooms in a bungalow are only distributed on one floor, there are not many possibilities to arrange them in a special way. However, most bungalows are divided into two sections. On the one hand the private area with the bedrooms or children’s rooms and the bathroom and on the other hand a living area, which includes the living room, kitchen and guest toilet. Of course you have the possibility to design your bungalow according to your wishes and requirements, but this division is the normal case. Most of the time you can see the classical distribution of the rooms directly when entering a bungalow. On one side is the open living space, on the other side is usually a hallway, which leads to the private rooms.

Advantages & disadvantages of a bungalow

As with any type of house, there are many advantages & disadvantages that you have to weigh up personally. Above all, the financial question plays a large and decisive role. Here it is first of all unimportant whether you would like to build yourself, buy a house or perhaps think about renting first. We have done some research for you and have compiled and written down the most important plus and minus points. Think about it and decide for yourself whether you can live with the disadvantages.

Advantages: no annoying steps and lots of light

One of the biggest advantages is above all the absence of the step and the accessibility. For children but also for seniors, this is not only very practical, but also reduces dangers. You also have mostly very large window fronts and access to the garden could be possible from every room. Your children would have the possibility to get fresh air at any time and you could also add a second terrace to some rooms. Especially for older children this would be ideal. If you decide to build a house, you would also have the possibility to take a prefabricated house. Since you don’t have to consider any load-bearing walls in a bungalow, you can design your individual room distribution.

• Barrier-free, no steps
• Large window fronts
• Access to the garden possible from every room
• Individual room distribution

Disadvantages: large property for a lot of money

Especially the cost factor of the land is a big disadvantage. Since you are not building in height, but in width, you are dependent on a larger plot of land, whereby you must not disregard the garden, garage or parking spaces. But you can learn more about that in the course of the article. Another minus point is that you have to rely on a larger hallway and it takes up square meters. In addition, due to the large roof and the many walls, more insulation is required, and especially in older bungalows, the thermal insulation is usually insufficient. You also have to take into account that due to the many window fronts, the entry possibilities for burglars are greater.

• Property very expensive due to large area
• More square meters through corridor
• More about insulation
• Older bungalows usually worse thermal insulation
• More entry points for burglars

Source: Bungalow (Lukinski.de)

Bungalow: Who can live here best?

A bungalow is certainly not for everyone. Especially for singles or single people, this type of house would be very large and you would have an unnecessary amount of space. We now present two groups that we think would fit perfectly into a bungalow.

Families: Paradise for children

Especially for families with children a bungalow would be ideal. As a parent, you have everything in view and under control, as all life in the house takes place on one floor. Also, the absence of stairs reduces common sources of danger for children and you do not always have to keep an eye on the fact that the stair gate is closed. Having access to the garden from all rooms can also be very handy.

Seniors: practical and barrier-free

A bungalow is also ideal for pensioners and seniors. In addition to the risk of falling on the stairs, the structure of the house also offers certain free spaces. It is also beneficial that you no longer have to lug heavy groceries up or down the stairs and get hurt. Since you also usually have a separate living area, you can convert old children’s rooms in the private area, for example. You could build a hobby room or a small library.

Bungalow as a prefabricated house: Is that possible?

You can also buy a bungalow as a prefabricated house. There are some providers who have this type of houses in their repertoire and some who specialize exclusively in the construction of single-storey houses. A prefabricated house offers several advantages. On the one hand, you have the opportunity to see your own home before it is built because of the show houses. On the other hand, this does not mean that you do not have the possibility of an individual design. You can also redesign finished houses according to your wishes and have them built differently. There are no limits to your creativity.

Proper planning is the most important thing

It all starts with initial ideas and planning. Think about your future house and look for suitable inspiration. You should write down important questions and look for answers to them. Here are a few examples. How big do I want my house to be? How many rooms do I need and how will they be used? What kind of construction do I prefer. More open or more private? Will I like the room layout in 10,20,30 years? These are basic aspects that you should clarify for yourself and keep in mind.

Perfect provider for your dreams

Once you have answered all your questions, you can start looking for a suitable provider. Not everyone will have your dream house with your requirements in their repertoire and some things will have to be modified. With the house type bungalow there will most likely be less choice. Nevertheless, you have a decisive advantage. Your house will not need load-bearing walls, which means you can move them as you wish and create your own personal room layout. Take a look at show houses and get advice. If your wishes are not covered, you will have to find another supplier.

Perfection down to the smallest detail: floor plan & co.

Once you’ve planned the layout of your home and it’s all right for you, you should worry about the little things. What kind of floor would you like, how should the walls be plastered or how should the bathroom look like? The show houses of the providers offer you inspiration, but in most cases they are interchangeable. Find what you like and plan down to the smallest detail according to your wishes.

Energy rules for homeowners, builders & Co.

The CO2 balance and the climate are increasingly important issues in today’s world. Every person is obliged to make his personal contribution to protect our environment. Also with houses there are some energy rules, which one must consider with the building in addition, with a reorganization of an old building. We have compiled the most important rules around your future bungalow to inform you perfectly.

Tip. Take a look at our article on energy efficient houses: Low-energy house, zero-energy house, passive house

Climate-friendly building and renovation

Bungalows in particular must be particularly well insulated due to their large surface area and detached nature. In order to do this in a climate-friendly way, there is the Energy Saving Ordinance from 2014, which states, among other things, that the thermal insulation of the building must be 15% more efficient than before. In addition, night storage units that are more than 30 years old must be replaced with more efficient units, as they are expensive and create a poor indoor climate in addition to a poor CO2 balance. The entire energy demand calculation is recorded in the energy certificate of your building.

Land: selection and characteristics of the right plot

To find the right plot, especially for a bungalow, you need to consider some factors and do not forget about them. One should not disregard the length and width of the building for this type of construction. It is true that living area is not the same as plot area. The condition of the plot and the historical background is also important for you. We recommend that you consult an expert, especially when it comes to building ground investigations or contaminated sites. How stupid would it be if you start building and find something unexpected? We have summarised the most important points for you here so that you don’t forget anything.

What size property do you need?

If you are planning to build a bungalow, you should first consider the right size of plot. Since you cannot build in height with this type of house, but only in width, your plot must be correspondingly large. What most people forget are green spaces, storage areas, a garage or, if desired, a driveway. These things take up the most space. So there is much more to a plot of land than just the house and that is why the price of land for a bungalow is comparatively high. So consider this in your planning and think about whether it fits into a budget.

Checklist: What do you need to look out for?

Before you buy your chosen property, there are a few things you should consider and have checked. First of all, start with the development plan. Here you should make sure that the property is already developed. That is, whether it is connected to the public road network, as well as to the supply (water, sewage, electricity, possibly gas). If this is not the case, high sums can be added.

Next, check rights of way or mortgages in the land register. Can a third party enter your property without your consent to get to something specific? And what about the mortgage? All this is recorded in the land register and you should definitely check and know about it.

Next, do a ground survey, if you haven’t already, and check out what it looks like under your property. Since your bungalow will only have one floor, a basement is very popular. However, if the groundwater level under your property is too high, this could increase your costs.

Contaminated sites are also an important issue before you plan to buy a property. Who knows what you will find when you start building your house? There could be scrap metal, oil or chemicals under the surface. It’s best to talk to the previous owners of the property or find out about the history of the property. Old maps could help with this. If there are signs of possible contamination, we recommend that you have soil samples analysed, but this could be expensive if you have to pay for it yourself.

• Development plan
• Land Register
• Soil investigation
• Legacy

Your environment: how do you feel?

Last but not least, don’t forget about your surroundings. Talk to your potential neighbors, check the infrastructure and scout out your surroundings. Where is the nearest school? How far is it to work? Are the neighbours nice and is the area suitable for your needs? These are all soft location factors that you should consider. Especially if you are young and want to build something new with your family, you should feel comfortable in your new home.

Interior: What should your bungalow look like from the inside?

If you have decided on your dream house or if your bungalow is ready, you now have the opportunity to furnish it according to your wishes. Here we show you a few useful tips and tricks to design your dream home and give you the perfect inspiration.

Tip. You can discover all trendy interior styles in our comprehensive guide and gather inspiration: Interior Styles XXL

Use your free space: space, light & no stairs

Especially the living space in the bungalows is mostly open and freely designed. Use this fact and make it to your advantage. Since you will have a lot of daylight through the large window fronts, you can design your room a little more gaudy. Let yourself be inspired by fancy furniture or paint a wall in a modern, bright colour, for example. There’s no limit to your creativity. Get interior input from Roberto Cavalli Home or Armani Casa, for example: Furnishings – Designers & Brands.