Interview: This is what it’s all about

As an entrepreneur, it is important to think from the outset about how one’s own assets and business can be secured and maintained in the long term. A family foundation can be an interesting option here, as it not only offers asset protection and inheritance planning, but can also have potential tax advantages. By establishing a family foundation, for example, entrepreneurs can reduce their tax burden and thus achieve tax savings.

We talk in the interview about:

1. What is a family foundation, why and when do you “need” it
2. What are the 3 central advantages of a foundation
3. What about taxes? Corporation, donation, inheritance & Co.

We conduct the interview with Immobilien-Erfahrung.de (in conversation “IE”).

What is a family foundation?

FIV: Let’s start with an overview:

IE: To ensure that family assets are preserved in the long term, it is important to protect them from various risks such as inheritance disputes, creditors and the tax office. One possible option here is to set up a family foundation, which can provide the founder and his family with economic security over generations and protect the assets from being broken up. This is a legally independent foundation that manages real estate, company shares and other assets.

So in a nutshell:

• Protection of family assets over generations
• Avoidance of inheritance disputes and break-up of assets
• Possibility to manage assets such as real estate and company shares in the foundation
• Tax advantages due to the taxation of the foundation with corporate income tax
• Possibility to avoid the right to a compulsory portion of family members

Well-known family foundations in Germany

FIV: Strong, because we have many articles on the subject of first capital investment buy & Co. So that it does not become too abstract for our readers, what are the most well-known family foundations in Germany? Who do you know? Can you tell us 3 examples?

IE: Yes, of course, there is the Bertelsmann Foundation, for example, founded by Reinhard Mohn, is one of the largest foundations in Germany and is involved in the areas of education, society and culture.

There is also the Robert Bosch Stiftung, founded by Robert Bosch, promotes projects in the fields of health, science and technology, and international relations. Another flagship would be the Krupp Foundation, founded by the Krupp family, is involved in the areas of culture, education and science as well as in the promotion of social projects.

Then there is:

• Aldi Nord and Aldi Süd Stiftung Stiftungs GmbH
• Otto Group Foundation
• BMW Foundation of Herbert Quandt
• And many more!

When does a family foundation make sense?

IE: Roughly speaking, very roughly speaking:

It only really makes sense to set up a family foundation with a capitalization of around 1 million euros.

Protection of family assets and businesses

FIV: Now let’s get to the core of the interview, the why and wherefore! What does protecting assets mean, from whom and why should I protect my assets – once I am a millionaire?

IE: Even though the family foundation is not tax-exempt, several factors can make it worthwhile to establish:

Raising a family is often a long and arduous process of hard work and hardship. It is therefore understandable that entrepreneurs are concerned that their legacy will not be carried on in their spirit after their passing.

One way to alleviate these concerns is to establish a family foundation.

Divorce, inheritance, family dispute – examples

Establishing a family foundation ensures that the entrepreneur’s assets remain in the family and are not fragmented by divorce or inheritance.

A foundation can also help avoid the breakup of the company, as foundations do not issue shares that can be bought out. This provides effective asset protection, as the foundation retains control over the assets and manages them in accordance with the wishes of the entrepreneur and his family.

In addition, family foundations can also help preserve family peace by providing a clear structure for the management and distribution of assets.

However, the foundation can also play an important role in supporting charities and non-profit projects, which can be of great importance for entrepreneurs who want to engage in social responsibility, of course also in the point of self-PR.

Inheritance: taxes and protection

FIV: According to the Hans Böckler Foundation, the annual inheritance volume in Germany, including gifts, will amount to up to 400 billion euros in the period up to 2027 – per year. Inheritance is an important topic. Therefore the question, what can a family foundation do in terms of inheritance?

To illustrate this, here are the figures for the number of taxable inheritances and gifts in Germany from 2008 to 2021.

400 billion per year

180,000 inheritances per year

You can find more statistics at Statista

IE: By establishing a family foundation, family members can be provided with binding security during the founder’s lifetime. The clear structure of the foundation can help to defuse potential inheritance disputes in advance. This can be of great advantage, especially in the case of large estates or complex family structures.

Inheritance and mandatory shares

Another advantage of setting up a family foundation is that the founder can avoid the claim of children or parents to his inheritance (so-called claim to a compulsory portion) if he transfers the assets to the foundation ten years before his death. This can be particularly important if the founder intends to concentrate his assets on certain family members or if he wishes to support a charity, for example.

In addition, the establishment of a family foundation can also help to protect the assets from creditors. As long as the assets remain within the foundation, they cannot be seized by the founder’s creditors. This can be important for entrepreneurs who have a high personal liability risk or who operate in a particularly high-risk business field.

Tax advantages: Only 15% tax

FIV: Now to question that everyone is most interested in, what is it about “saving taxes” when you set up a family foundation?

IE: In Germany, the establishment of a family foundation can bring tax advantages. The foundation is subject to corporate income tax, which can lead to a lower tax burden compared to other types of companies such as a GmbH, which have to pay trade tax. In addition, donations to the foundation may be tax-deductible under certain conditions.

FIV: Can you explain that in more detail?

IE: Simply put:

You can legally lower your tax burden to 15% with a family trust.

FIV: With a family foundation you can legally reduce your tax burden in Germany to 15%, ok. How does that work and what does a “normal” GmbH pay?

IE: The establishment of a family foundation can indeed help to reduce the tax burden in Germany to 15%.

This is the corporate income tax levied on the income of the foundation.

In contrast, a “normal” GmbH must pay trade tax, which can vary depending on the municipality. In addition, there is corporate income tax, which is levied on the income of the GmbH and is usually higher than for a family foundation.

However, the 15% corporate income tax for family foundations only applies up to a certain exemption amount and depends on various factors such as the size of the assets and the structure of the foundation. But it pays off, especially over the years.

But we don’t want to go into too much detail!

Inheritance tax and gift tax

FIV: As far as I know, you also have advantages in terms of inheritance tax and gift tax, especially through the allowances, which are taxed more favorably and can thus be paid in year after year. Can you tell us something more about this?

IE: Unlike charitable foundations, the family foundation does not enjoy any automatic tax benefits – that’s just in advance. Nevertheless, it can offer great potential for tax optimization compared to other corporate forms.

Transfer of assets to the foundation

When assets are transferred to the foundation – in particular when they are established – gift or inheritance taxes are incurred. In the case of a “normal” private foundation, the unfavorable inheritance tax class 3 is generally applied. In the case of a family foundation, on the other hand, the relationship between the founder and the entitled family members (beneficiaries) is decisive. If only the spouse and the descendants (children, grandchildren) are beneficiaries, the favorable tax class 1 applies.

Here’s a tip on the side, we also have a handy gift tax calculator. Here you can calculate what typically has to be taxed.

However, in the case of family foundations, a fictitious inheritance is assumed every 30 years, on which inheritance taxes are incurred. Here, an allowance of 800,000 euros applies, the so-called double child allowance. Otherwise, the general regulations for inheritance and gift taxes apply. However, if there are favored business assets, the corresponding exemption discount can lead to significant tax savings.

If you would like to learn more about this, please visit our blog. I can recommend, among others, the articles Asset Protection and Vermögensschutz durch Familienstiftungen by our foundation expert.

FIV: Thank you for the insight into family foundations!

Summary: 10 Learnings on the Family Foundation

Let’s briefly summarize the most important facts for you.

	Learning foundation
1	A family foundation provides asset protection and estate planning for family assets and businesses.
2	A family foundation can protect assets from divorce, inheritance and break-up, thus avoiding inheritance disputes.
3	A family foundation provides a clear structure for managing and distributing assets and can preserve family peace.
4	By establishing a family foundation, family members can be provided with binding security during the founder’s lifetime.
5	A family foundation can circumvent the claim of children or parents to the inheritance (claim to a compulsory portion).
6	A family foundation can protect assets from creditors.
7	A family foundation can be used as an instrument of social responsibility.
8	A family foundation is subject to corporate income tax and can thus reduce the tax burden to 15%.
9	A family foundation offers great potential for tax optimization compared to other corporate forms.
10	In the case of a family foundation, the relationship between the founder and the beneficiary family members is decisive for the tax classes for gift or inheritance taxes.

If you want to know which home savings provider offers the best conditions, you can immediately compare the current offers in the Immobilien-Erfahrung home savings calculator.

Building savings contract for young people: saving for housing projects

Whether a building savings contract is interesting for you as a young person depends on various factors, such as your financial possibilities and future plans. A building savings contract can be useful if you plan to buy a property or carry out renovation work. By taking out a building savings contract, you can save money over a fixed, longer period of time that you can use for these purposes.

Home savings for young people at a glance:

• Saving early for housing projects later
• Also useful if there are no concrete plans
• Financial cushion for unforeseen events

A building savings contract can also be useful if you don’t have any concrete plans yet, but you want financial security for the future. By taking out a building savings contract, you can build up a financial cushion that provides financial security in the event of unforeseen events.

Youth bonus: Offers and discounts

Some Bausparkassen offer special rates or discounts specifically for young customers, known as “youth bonuses”. These offers may vary from one Bausparkasse to another and may include, for example:

• Increased repayment subsidies when contracts are signed
• Lower minimum deposit amounts
• Special conditions for housing finance
• Discounts on other insurances

However, there is no universal youth bonus in Germany. It is advisable to compare and check the various offers and providers.

Age recommendation: building savings under 18 years of age

As a rule, you can take out a home savings contract from the age of 18. However, there are also offers from building societies that are aimed at young people under 18. In such cases, the contracts are usually signed by the parents or guardians. The parents also pay the premiums.

There are several reasons why it can make sense for parents to take out a building savings contract for their children.
Reasons for concluding a building savings contract before the age of 18:

• Support future planning
• Financial support
• Build a solid financial base
• Lower repayment rates for later projects
• Formation of savings and redemption discipline

It can be difficult for young people to save regularly and think about the future. A home savings contract can help develop a savings and repayment discipline early on and get them used to regular savings behavior.

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6 tips for young building savers and those who want to become one

If you want to take out a home savings contract, there are many things you should consider. In this checklist, you’ll find our top 6 tips for young home savings customers and those interested in home savings.

Our tips:

1. Compare conditions before signing
2. Date of completion
3. Consider residential earmarking
4. Consider contract duration (long-term commitment)
5. Compare costs of the contract
6. For questions: Advice from experts

Conditions: It is important to compare the offers of different building societies to find the best offer for your own situation. In doing so, the conditions such as redemption subsidies, interest, acquisition and administration costs as well as the services offered should be taken into account.

Time of conclusion: It is advisable to conclude a building savings contract early in order to benefit from the advantages of long-term savings and repayment.

Earmarking: The building savings contract is usually tied to a specific purpose, primarily for financing a home, it is important to ensure that the contract meets one’s wants and needs.

Contract duration: Building savings contracts usually have a longer duration of 15-25 years, it is important to note that you are committed to paying monthly contributions in the long term and take into account possible changes in your financial situation.

Cost: It is important to fully understand the risks and costs of the contract to ensure that you benefit financially from the contract in the long run.

Advice: It is advisable to seek advice from a financial advisor before taking out a building savings contract to ensure that the contract meets your needs and that you understand all the risks and costs.

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

Crowdinvesting: basics and rental yields

Invest in real estate instead of the next sneaker? Sounds strange, but that’s no longer a problem with crowdinvesting. Crowdinvestment means as much as real estate investment for everyone. But what exactly is crowdinvesting?

Here in short, before we go into details, the most important summarized on the subject of crowdinvestment:

• Many shares of a property divided to private individuals
• Only a small outlay of equity
• Loan is not paid to developer, but only participation in property

What does crowdinvestment mean exactly?

Crowdinvestments are very similar to a corporation that sells many company shares to private individuals and institutions in order to obtain the necessary financing for the company’s growth. So too, with crowdinvestments, individual shares of a property are sold to private investors. The advantage? You can invest in such real estate even with a small amount of equity and thus secure your pension.

• Comparison: stock corporation
• Many shares of a property divided to private individuals
• Only a small outlay of equity

How does crowdinvestment work in the first place?

Let’s stay with the example of the stock corporation. When a property is newly built or renovated, it is published on a special crowdinvestment platform. This is responsible for the distribution of the real estate shares to capital investors. Through the platforms, the owners are considerably relieved.

Differences from a normal investment:

• No targeted partners for financing, but division of the property by platform
• Loan is not paid to developer, but only participation in property
• Share is not used for personal use, one obtains the part of a yield

How do I find profitable real estate?

In order to know which property is worth investing in, one should know what the return on investment of the respective property is. Here you can use a simple formula to calculate this.

Formula Rental Yield:

Annual rent / investment x 100 = rental yield

If you want to know even more about rental yield, read our article Rental yield and purchase price factor here.

Financing real estate yourself? Equity

When you’re young, you often don’t have the equity directly available to invest in a property. Thus, equity probably plays the biggest role in real estate purchases for first-time investors. Many ask themselves the question, how much equity do you need at all for a regular property?

Equity depending on the situation

The answer is always related to the location of the property. If your property is in an A location such as Munich, Cologne or Hamburg, it is unaffordable for most people. In a B – location or good C- location, however, the prices fall. Depending on the micro-location, prices can also vary depending on how far into the city center you want to live.

• A- location (big city) extremely expensive
• B- location and good C- location moderate prices
• Microlocation is crucial

Equity investment depending on financing

No matter what the final purchase price of a property, the bank usually always requires an equity contribution of 15%, especially for first-time investors. In addition, one must always reckon with the addition of the ancillary purchase costs, brokerage costs (if commissioned) and the land transfer tax.

• 15% equity investment

Real estate as an investment: Provision for old age

Our pension is getting smaller and smaller and our money in the bank is subject to inflation in any case. So we are left with real estate as a good way to invest our money, as it neither loses its value due to inflation nor is it always in demand. Moreover, after a few years we benefit from the increase in value of the property.

The great advantage of a property as an investment is that it is rented out, unless you want to buy your property for your own use. The income from the rent generates a constant cash flow, with which the property and all costs incurred can be covered. By earning a high return at best, you build wealth on top of that. In addition, real estate always remains fairly constant on the market, which means that you minimize risk when you buy.

• Real estate is stable in value
• Real estate offers inflation protection
• Real estate provides constant cash flow
• Asset building

Crowdinvesting: Videos

To better illustrate crowdfunding, we have two videos here for you to illustrate the point.

What is crowdinvesting?

Here, crowdinvesting is explained to you with the help of graphics and drawings.

Equity: Use for own benefit and capital investment

To finance a property, the bank requires a certain amount of collateral. The better your credit rating, the less equity you have to put up. When buying the first property, two basic rules apply for personal use and capital investment.

• Self-interest = As much equity as possible
• Capital investment = As little equity as possible

The equity subtracted from the total investment sum results in the loan sum required from the bank. This loan is paid back by a monthly repayment, including interest.

What is important in the repayment?

• Capital investors: Interest can be deducted for tax purposes
• Owner-occupier: interest cannot be deducted for tax purposes
• Repayment: Repayment + interest for loan amount

Owner-occupiers: High equity

With this type of real estate purchase, the interest on the financing cannot be deducted from taxes. To keep the interest as low as possible in the end, it is worthwhile to bring in as much equity as possible. So the bank has a lower risk with your financing and the lower the interest is calculated.

• More equity, the better the conditions
• At least 20% equity for owner-occupiers

Cost per month for own use

In general, for financing a property, the cost of the loan should not exceed 40% of disposable income. In addition, one should keep in mind that the costs and interest rates can change. Just as quickly as the interest rate can change the cost of managing the property, such as water, electricity and gas.

• Self-interest < 40% of income (net, after tax)
• Interest and management costs may change

Capital investment: Lower equity

If you buy a property as an investment, you can fully deduct the interest on the financing from your taxes. If the rental yield is sufficient, even the tenant pays off almost completely on his own. However, surpluses generated from the return must be taxed, which is a major disadvantage.

• Interest is deductible
• Tenant pays interest through sufficient return on investment
• Less than 10 – 15% equity for capital investment

Rolling equity

Simply explained, rolling equity means that you get your investment of equity paid out as soon as the repayment at the bank is paid off. So in short, how do you get your invested equity out of a real estate investment as quickly as possible? To achieve this, there are two ways.

Two options:

• Restricted equity
• Full financing

Restricted equity

With this equity investment option, the equity is tied up until the property is sold, which means that you cannot access the equity during this time.

Sample calculation:

• Investment costs (purchase price plus ancillary costs): 250,000
• Equity after bank (15%): 37,500
  _____________________
• Loan amount: 212,500
• 32,500 euros committed as equity

Full financing

In this case, it is agreed with the bank that the purchase price including ancillary costs will be financed in full. The equity capital is invested in an extra account or securities account as collateral, which is released as soon as the repayment of the loan reaches the level of the equity capital.

Sample calculation:

• Investment costs (purchase price plus ancillary costs): 250,000
  _____________________
• Loan amount: 250.000

Additionally:

• Assigned collateral (account or deposit): 37,500

The next step: commercial examination

You have determined your maximum purchase price and are now faced with the commercial check, so that the previously determined and determined budget is adhered to. This audit is particularly important for the purchase of the first property such as apartment or house, that thus unnecessary costs and mistakes in the purchase of real estate are avoided. This audit includes not only the cost, but also the inspection and defects by year of construction and maintenance of a building. Read everything about the purchase audit here!

Self-disclosure for the bank

Before determining the required equity capital, you should provide the bank with a self-disclosure about your financial situation. You can find out what this means here!

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

Buying new construction: Is New Always Better?

New construction refers exclusively to completely, newly built objects. On the one hand, they are uncomplicated because everything is state of the art, resulting in a low risk of maintenance and repair costs. On the other hand, you have to expect significantly higher investment costs here, which means a low return on investment and a higher incidental purchase price payment.

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

Buy stock: Old also has its advantages

Existing real estate has many advantages. In addition to a lower purchase price, you only have to pay a low amount of incidental purchase costs. However, due to the age of the building, there is a higher risk for maintenance and repairs.

Advantages of stock

• Low purchase price and incidental purchase costs
• Low use of equity capital
• Higher rental yield
• No costs for public development

Disadvantages of stock

• Higher risk for maintenance and repairs

Read more about existing or new building/ Immobilien-Erfahrung.de

Conclusion: Invest in new or existing buildings?

Whether new construction or existing depends on your individual goals. Nevertheless, existing properties with a higher return and a low purchase price and ancillary purchase costs are the more sensible investment to buy your first property.

The next step: Year of construction and condition of a property

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.

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

Real estate as an investment: book tips & recommendations

Getting started in real estate as an investment isn’t easy: Buying your first property means first of all having to learn and understand a lot – whether it’s a penthouse, apartment, maisonette, terraced house or even a detached house. Here you’ll learn: How to get started in real estate (buying your first property)? We always refer to real estate for investment. Here, you’ll be guided through six steps that suggest a structured approach to getting started in real estate. So that buying property is soon no longer just an investment idea for you – but something that you successfuly implement alongside your everyday life. So we’ll help you become a landlord or buy a condo and rent it out.

Here’s another tip for you! Online you can find a lot of articles and tips on Lukinski.de. Here you can learn everything: from tax basics for asset accumulation, to real estate as a capital investment through renting, to saving taxes with real estate (external). Everything free of charge from the expert.

Tip! Overview Real Estate XXL

The world of real estate is complex and multifaceted. If you want to keep an overview and avoid making mistakes, you should prepare well and clarify as many open questions as possible in good time. No matter whether you want to build, buy and rent out a property or live in it yourself, or even use a property as an investment to generate passive income: The preparation is the A&O. Here you will find articles, as well as book and video tips with successful and helpful books and videos on the subject of real estate – including tips and tricks from professionals and experts.

• Book & Video Tips Overview: Real Estate

Buy real estate, rent & earn money

Rating: 4.5 / 5.0 (147 ratings)

The ultimate advisor for passive income from residential real estate.

• With a real estate yields of up to 8 % are possible (if the investor manages cleverly).
• Real estate is a stable investment – in the long run, an increase in value can even be expected.
• Who invests correctly, builds up a lucrative additional source of income, an optimal old age provision or even a completely new professional mainstay!
• The demand for housing is growing and there is no end in sight. Due to the housing shortage, higher and higher yields can be achieved, especially in cities.
• With a real estate investment you can save a lot of taxes
• Buy at Amazon

Tax Guide for Real Estate Investors

Rating: 4.3 / 5.0 (233 ratings)

The ultimate tax guide for private investments in residential real estate. Secure maximum tax advantages through superior knowledge!

• Maximum recognition of income-related expenses
• Realisation of tax-free capital gains
• Tax advantages for listed properties
• Holiday real estate at home and abroad as an investment property
• Inheritance and gift tax (tax-optimised transfer to spouse & children)
• Bonus material: Excel tool for calculating return, financing costs and cash flow
• Buy at Amazon

A real estate millionaire in five years without start-up capital

Rating: 4.2 / 5.0 (387 ratings)

The ultimate guide to entrepreneur basics, investing, equity and managing money.

• 43 timeless laws of success, with which you become financially, professionally and privately more successful and achieve your goals.
• Precise step-by-step guidance to financial freedom so you can avoid frustrating mistakes while following your passion.
• In total, the book contains 668 Learnings that specifically help you enjoy a happier and more fulfilling life
• Proven strategies, tools and techniques to help you build passive income and a fortune (with real estate), even without any start-up capital.
• The secrets of rich, happy and successful people, presented in such an inspiring and practical way that you will be able to put them into practice even without any previous knowledge.
• Buy at Amazon

The 1×1 of the real estate millionaire: your precise guide to investing

Rating: 4.3 / 5.0 (257 ratings)

• The ultimate guide on how to become a millionaire in real estate.
• How do I build wealth with real estate and generate equity returns of over 30%?
• How to achieve high returns with very little risk?
• How do I choose the right object and how do I find it?
• How is real estate financed correctly and what mistakes should be avoided?
• How do I choose the right tenant?
• How do I deal with sellers and brokers?
• Buy at Amazon

How to successfuly invest & get drastically closer to financial freedom.

Rating: 4.6 / 5.0 (110 ratings)

The ultimate guide on how you can successfuly invest as a beginner or advanced investor to get closer to financial freedom.

• Learn to master passive investing and make high profits!
• You will achieve strong returns with the lowest possible risk and the highest security!
• You learn to be an investor and finally walk the path to financial freedom.
• You will learn everything about passive investing and will no longer be afraid of retirement!
• You develop a successful mindset and understand the difference between stocks, ETFs and funds.
• You’ll really get started with the detailed step-by-step instructions!
• And last but not least, you’ll learn how to enjoy life while saving and approach the subject the right way.
• Buy from Amazon.

Understanding finance: 100 graphics from Finanztest – Investment, law, finance

Ratings: 4.8 / 5.0 (15 ratings)

The ultimate guide to the visual explanation of all things financial.

• Immediately see what matters in everyday finance: With the 100 best infographics from Finanztest, complex relationships around money and finance can be easily understood.
• When does the airline have to pay for flight delays?
• How does crowdfunding work?
• Under what conditions can I retire earlier?
• Who inherits according to intestate succession?
• Any number of financial questions that you encounter in everyday life, from retirement planning to investments and taxes to supplementary insurance are explained here in a visually appealing way.
• In this way, the dry subject matter comes to life and you quickly see what is important in the respective topic.
• Buy from Amazon.

Investment strategy, tax strategy & tax-optimised choice of legal form

Rating: 4.8 / 5.0 (72 ratings)

The Secret to Rising from Middle Class to Millionaire – The ultimate guide to becoming successful through investing.

• Many middle class people fail to make it to millionaire status only because they lack the critical information to reduce their tax burden and build wealth through smart investments.
• This is particularly true for highly qualified workers and smaller medium-sized entrepreneurs.
• To achieve financial freedom and economic independence, the accumulation of greater wealth is essential.
• To this end, three crucial building blocks need to be adressed:
  • Increase in revenue
  • Intelligent investment of capital to generate passive income
  • Limitation of the tax burden

• This guidebook provides the critical knowledge needed to create a sophisticated investment and tax strategy that anyone can implement, paving the way to financial freedom and independence.
• A self-made millionaire and best-selling author, Goldwein is a trained lawyer specializing in real estate and tax law.
• He has inspired numerous readers with his books of advice and led them to economic success.
• Buy at Amazon

Related links about the topic Real estate

Have you ever wondered how to invest successfuly? What are your options, what is the best way to invest and what are the tips for successful investing? You can find out all this in our other book recommendations!

Wealth creation

Have you ever wondered how to invest successfuly? What are your options, what is the best way to invest and what are the tips for successful investing? Find out in our other video and book recommendations!

• Video Tips: Wealth Building
• Book Recommendations: Wealth Building

Finances Basics

Finance is a very important topic in today’s society and basically every citizen comes in contact with it in one way or another. We will show you our book recommendations about finance, show you the best reviews and give you tips and know-how about finance.

• Video Tips: Finances Basics
• Book Recommendations: Finance Basics

Sell property

Selling real estate – You have already invested in real estate or inherited a house, and now you want to sell it for a profit? In this article we give you book tips on the subject of selling real estate! In this article you will find all the information about selling real estate – packed in book tips with which you can not go wrong.

• Video Tips: Sell real estate
• Book Recommendations: Selling real estate

Overview real estate XXL: Investment, broker, renting & Co.

Here you get back to the overview of book and video recommendations on the subject of real estate in Germany. Investment cases, capital investment, passive income, house or apartment buy and rent and much more is explained to you here by experts and understandable. In this XXL guide you will find information and articles on the most diverse questions on the subject of real estate.

• Back to Book & Video Tips Overview: Real Estate

Real estate as an investment: This is how you succeed!

Real estate is becoming increasingly popular as a capital investment, as it generally has a significantly higher return than traditional forms of investment – regardless of whether it is a penthouse, apartment, maisonette, terraced house or bungalow. However, whether an investment in real estate pays off in the end depends heavily on the development of the property and the long-term development of its location. Therein lies the real risk when you invest in a property as a financial investment. In addition, there are other aspects such as the condition of the building or the tenant structure that you should consider before buying.

Tip! Overview Real Estate XXL

The world of real estate is complex and multifaceted. If you want to keep an overview and avoid making mistakes, you should prepare well and clarify as many open questions as possible in good time. No matter whether you want to build, buy and rent out a property or live in it yourself, or even use a property as an investment to generate passive income: The preparation is the A&O. Here you will find articles, as well as book and video tips with successful and helpful books and videos on the subject of real estate – including tips and tricks from professionals and experts.

• Book & Video Tips Overview: Real Estate

Real estate as an investment: Tips & tricks for beginners

This video gives you a comprehensive look at how you can get started in the real estate world and use your property as an investment. Here, the path to real estate is explained to you in many steps. Check it out:

Experiences & tips for beginners and advanced

This video explains why you should invest primarily in smaller residential units in real estate as an investment. The advantages and disadvantages of this investment strategy are presented.

https://www.youtube.com/watch?v=Dt5sJ1fkHoQ

Real estate as an investment: purchase price factor & return on investment

In the following video, an expert will explain to you which important formulas you can use to check a property as an investment with regard to its profitability. Interested? Then watch it!

https://www.youtube.com/watch?v=Q0SSps1ZHcA

Calculating real estate as a capital investment: Saving ancillary costs & taxes

What does a detailed real estate calculation look like. Here we show you a calculation, how you can show it to your banker. In practice, bankers usually make their own calculation, but the calculation can help you to show your banker the attractiveness of the property.

Real estate as a capital investment: Calculation of a condominium

Learn in this video how you can almost double your invested equity with a conservative calculation – that’s how a condominium pays off!

Related links about the topic Real estate

Are you wondering how to buy, sell, rent or finance a property? What exactly does a real estate agent do? If you’re looking for answers to these questions, then check out our advanced real estate video lists!

Buy property

Buying real estate – Buying real estate is not like shopping in a mall. Before you buy a house or an apartment, many aspects must be clarified in advance. Many mistakes can happen. With our guide you avoid problems and get in the best case the perfect property.

• Video Tips: Buy property
• Book Recommendations: Buying real estate

Build property

To build or to buy a house? This question is on the minds of many prospective buyers. Here we show you the advantages and disadvantages of both options and offer interesting tips on financing. Both options have their advantages. A new build has the great advantage that you can determine the layout of the rooms according to your wishes. In an already existing property you don’t have to deal with the complicated construction phases and you can live in your own home much faster. Here you will find videos that will help you finance your dream home and what you should pay attention to.

• Video Tips: Build property
• Book Recommendations: Building real estate

Let property

Real estate rentals are the perfect way to finance your property, or better yet, have your tenant pay the monthly payments.

You’ll learn what you need to know here:

• Video Tips: Rent out property
• Book recommendations: Renting a property

Overview Real Estate XXL: Investment & Co.

Here you get back to the overview of book and video recommendations on the subject of real estate in Germany. Investment cases, capital investment, passive income, house or apartment buy and rent and much more is explained to you here by experts and understandable. In this XXL guide you will find information and articles on the most diverse questions on the subject of real estate.

• Back to Book & Video Tips Overview: Real Estate