Rented property: termination due to own need

Owners have the right to terminate because of own need, as long as the notice of own need meets all legal deadlines, which are 3 to 9 months. In general, you as landlord and owner must really need the apartment for yourself or a family member, there must be understandable and valid reasons.

Here are the facts in brief:

• Legal deadlines between 3-9 months
• Comprehensible reason

Read here everything about the law on own use/ Immobilien-Erfahrung.de

Own need: reasons and beneficiaries

Own use must always be justifiable and may only be available for the closest family members.

Reasons for own use: examples

The desire to own must always have a long-term component; A short or temporary use as a transitional phase would not be a justification.

• Desire to live in own apartment / house
• Desire to have children, housing expansion
• Second home or house, absolutely necessary for professional reasons
• …

Beneficiaries: Examples

You can use personal use for yourself or for “beneficiaries”. But, who is included? Recognized are:

• Children
• Parents
• Grandparents
• Siblings
• Grandson
• Nieces and nephews
• Children-in-law and parents-in-law (if marriage still exists)
• Separated spouses (without divorce petition)
• Registered civil partner (without current request for annulment)

Next step: comparison of layer types

You have the necessary change together and have decided to invest in a property. But where exactly do I buy this property? First of all, the question arises: yield or investment property? This question plays a major role in the choice of location of a property for capital investors but also owner-occupiers. What exactly does A, B or C location mean and what are the differences? Read here everything about the location of real estate with its advantages, disadvantages and risks.

Owner occupation: Unrented for immediate move in

If you buy a property such as a condominium for your own use, you probably want to move in immediately. In this case, it is less worthwhile to buy a property that is already rented. If you buy a property that is rented out at the time, you can terminate the tenant’s lease on the basis of personal need.

Termination for own use

Owners have the right to terminate due to own need, as long as the notice of own need meets all legal deadlines, which are 3 to 9 months. This only applies if you really urgently need the property yourself or for a family member.

Here is a brief overview:

• Termination for own use possible
• Legal deadlines between 3-9 months
• Comprehensible reason (you or beneficiary move in)

Real estate as an investment: Buy rented

Buying rented or unrented always depends on the given situation. There are advantages and disadvantages for both options, which must be considered in the respective situation.

Advantages and disadvantages of rented objects

Advantages:

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

Disadvantages:

• Rental mostly below current market value
• Existing leases must be taken over in most cases

Real estate as an investment: Buy unrented

Again, you will find certain advantages and disadvantages to buying unrented properties. What you end up buying still depends on the circumstances of the property you are buying.

Advantages and disadvantages of unrented properties

Advantages:

• Immediate renovation work possible and deductible
• Market rent for new leases
• Own lease can be used

Disadvantages:

• Vacancy at the beginning: loss of rent
• Expenses for renovation and new leasing

Conclusion for investors

Decide for yourself which factors add the most value to your goals. Depending on that, an unrented or rented property will fit better into your personal strategy.

Next step: termination of own use

Buy a rented property and terminate the tenant’s lease due to personal need? No problem, if you as a landlord have comprehensible, valid reasons why you need the property. Regardless of whether it’s a house or an apartment, here you’ll learn everything you need to know about owner occupancy.

Mistake 1 – The location is decisive

A property in a poor location without high demand quickly becomes a problem. Therefore, one should always buy in an attractive location.

Property in a bad location:

• Low demand
• Renting becomes difficult
• Consequence: Vacancy

Therefore our tip: Pay attention to A- B- and C- layers!

Real estate in good location:

• Buying in large cities (not metropolises in top A locations), example Bonn or Leipzig
• Conurbations, the famous Speckgürtel, with good B-location like everything around Munich, Darmstadt near Frankfurt
• B-location cities in demand, such as Kassel, Braunschweig or Heidelberg

Mistake 2 – A property that is too specific

Special real estate requires a special group of buyers – and this group is not easy to find. That’s why you should always go for real estate whose utility and use covers the needs of the broad masses. In our article on real estate types you can learn everything about apartment, house and co. So what are you looking for on the real estate market?

So what’s there to keep your hands off of?

• Loft/ Villa/ Apartment, everything that exceeds the normal consumer
• This type of property must be in a top A location in order to sell/rent it.

Our tip: 1-2 room apartment

In all locations, be it A, B, or even C, 1-2 room apartments can be found and the demand is constantly increasing. Since more and more people live alone, a look at the single apartments is always worthwhile.

An example of a special property in C- location: hard to sell.

Mistake 3 – Self-interest instead of investment

You can read a lot about owner-occupation in our article on the subject. Here you will learn again in a nutshell why it is not advisable to use your first property for personal use. Therefore, our tip: Do not buy an owner-occupied property without capital investment, because you are responsible for 100% of the operating costs, neither tenants nor the tax office comes to your financial aid.

Reasons against self-interest

• Self-interest is the most expensive way to live
• One will never be completely rent free due to ongoing costs
• You pay off the property yourself
• Self-interest reduces credit rating
• Property is not suitable for old age later

Mistake 4 – A house as a first property

If you choose a house as your first property, you must also be aware that this means that you will have to bear 100% of the costs. Therefore our tip: Buy a condominium as your first property.

Condominium: Cost allocation made easy

As soon as you acquire an apartment in a multi-party building as your property, you become part of a community of owners. Thus, all running costs incurred for repair, maintenance and modernization are divided among all parties of the house.

Here is a small example:

• Homeowner (100%): 12,000 euros
• 4-party house (25%): 3,000 euros (-9,000 euros)
• 8-apartment house (12.5%): 1,500 euros (-10,500 euros)

Mistake 5 – Let the emotions flow in

Real estate should always be viewed rationally instead of emotionally. Therefore, our tip: Never buy a property out of emotion. Even if you find the property at first sight insanely beautiful, think again well about it. Often such buildings are due to the year of construction and the condition dilapidated or in need of modernization, whereby for you in the end much more costs than actually jump out.

So what should you do?

• Avoid impulse buying!
• Testing at commercial and technical level
• Examination of yield, purchase and resale value

A typical property that is bought out of emotion: A lot of charm, little profit.

Mistake 6 – No attention to resale value

A really great purchase price! – And now? How much do you get out of it in the end? Many people don’t pay attention to the resale price when buying a property, but you definitely should!

The decisive factors for the resale value are:

• Property type
• Location of the property (see return or investment)

Comparison: location and increase in value

Let’s compare the 3 types of location and the increase in value:

• A- location: value increase at 4-6% per year
• B- location: value increase at 1-2% per year
• C- location: no increase in value

As a beginner, they opt for a condominium in a good C- location or B- location.

Mistake 7 – Top equipment- bad property

Great kitchen, great furniture, you bought the property only because of its great equipment? That’s bad for you, because you’ll make less profit. What you are looking for are properties in need of renovation, because this way you can renovate them yourself and then sell them, making a profit.

Mistake 8 – Paying in huge installments

You want to pay off your loan as quickly as possible and think large sums will help you? Unfortunately, this is wrong. Here’s our tip: It’s better to agree on small repayment installments with the bank.

• The tenant pays off the property, all surpluses are direct asset accumulation
• Inflation reduces the loan for a long time
• The higher you set the repayment, the less is left at the end of the month
• The faster a property brings cash flow, the higher the surplus

Next step: criteria to the condominium

The property for first-time buyers. Want to buy a condo as your first property, but don’t know where to start? Here we’ve created a checklist of 11 items for you to determine the basics and criteria of your real estate search. Whether determining the maximum purchase price, the question of owner-occupancy or capital investment, yield or investment property as well as existing or new construction – here you will get all the answers to your questions.

Owner-occupation vs. real estate as an investment: advantages and disadvantages of owning a home

The dream of owning a home is a goal that many people have in mind. But does it make sense to choose a house for personal use as the first type of property? Or is it not perhaps more sensible to use the first property as an investment? Living rent-free in old age will never quite come true, even with a home of your own, because you are always 100% responsible for all running costs. Therefore, in this article you will find a comparison between owner-occupancy and a property as an investment, which should help you make the decision to use your first property.

• Personal use vs. real estate as an investment