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

Metaverse and real estate

In the interview Real Estate & AI with Lukinski, we talked about the future with AI. We had a few follow-up questions about the exciting topics and what we can expect in 4, 5 years. Among others, it was about:

Metaverse: What’s next?

FIV: Thank you for taking a moment again! How will this affect metaverse visualization, construction and co.

Lukinski: The metaverse is a term that refers to a virtual world where people can interact and communicate with each other in real time. Metaverse technology is expected to have a significant impact on visualization, construction and other aspects of the real estate industry.

One of the main benefits of Metaverse is that it can facilitate collaboration and communication between project stakeholders. For example, architects, builders and engineers can hold virtual meetings to review designs and discuss changes without having to be physically present. This can speed up the design process and improve collaboration.

In addition, the Metaverse can enable immersive 3D visualization of buildings, guiding viewers through the building without having to be physically present. This can help builders and investors get a better picture of a building and its surroundings before it is built.

The metaverse can also help make real estate construction faster and more efficient by allowing virtual buildings to be designed, constructed and tested before they are physically built. This can help minimize errors and optimize the construction process.

Overall, the Metaverse can help transform the real estate industry by providing new ways to collaborate, visualize and plan buildings. However, it will take time for the technology to mature and become widespread to have a significant impact.

Buy real estate in the metaverse

FIV: Can you already buy real estate in the metaverse?

Yes, it is already possible to buy real estate in the metaverse. Virtual worlds like Second Life, Decentraland and Somnium Space already offer the possibility to buy and own virtual land and buildings.

In these virtual worlds, users can buy their own virtual property, build on it and erect their own buildings on it. The virtual buildings can also be rented or sold, similar to real life.

There are also already startups specifically focused on trading virtual real estate in the metaverse. These companies offer platforms where users can buy and sell virtual land and buildings.

It is expected that virtual real estate trading in the metaverse will continue to grow in the future as technology and virtual worlds continue to improve and attract more users.

Metaverse real estate examples!

here are some examples of virtual real estate in the metaverse:

1. Decentraland
2. Somnium Space
3. The Sandbox
4. CryptoVoxels

Decentraland

In Decentraland, users can buy and own virtual properties on which they can create their own buildings and applications. There are already several companies that own and use virtual properties in Decentraland, such as Atari, which operates its own virtual casinos.

Somnium Space

Somnium Space is a virtual world where users can buy and own land and buildings. The platform also offers the possibility to rent or sell the virtual properties.

The Sandbox

The Sandbox is a virtual world where users can own and build on their own virtual land. The platform uses blockchain technology to manage the ownership of the virtual land and buildings and enable trading with them.

CryptoVoxels

In CryptoVoxels, users can buy and own virtual plots of land on which they can create their own buildings and artworks. The platform uses the Ethereum blockchain to manage the ownership of the virtual plots.

These virtual worlds and platforms are just a few examples of virtual real estate trading in the Metaverse. It is to be expected that further platforms and virtual worlds will emerge in the future that enable trading in virtual real estate.

Fancy more future?

Real Estate & AI (Artificial Intelligence) – The Interview

Today and the future – How is a villa created and how would it be created if artificial intelligence were in play. This interview with Stephan Czaja of Lukinski provides an overview of the steps involved in planning and visualizing villas and their timeline. Architects usually create 3D visualizations to give their clients a better idea of their design.

Artificial intelligence (AI) can improve the process of 3D visualization in the future through automation, personalization, simulations, increased efficiency and real-time updates. Other possible developments include automation of planning, control of construction machinery by AI, creation of 4D visualizations, and personalized advice through AI-based tools. A look into today and the future with AI!

• Real estate & AI (artificial intelligence) – the interview

Why do I have to pay land transfer tax?

Everyone who buys a property has to pay the real estate transfer tax. The good thing about it – it only has to be paid once at the time of purchase, and not annually like property tax. Since the real estate transfer tax is more or less depending on the federal state, one should inform oneself about the percentages before blindly buying an apartment for emotional reasons, because the price always plays a role. Generally, the land transfer tax is set between 3.5% and 6.5%.

Calculation of the real estate transfer tax

The real estate transfer tax can be calculated quite simply:

Purchase price x tax rate by federal state = real estate transfer tax

Overview: Property tax rate of the federal states

Here is a brief overview with the 16 federal states and the individual real estate transfer tax rate:

The next step: brokerage costs in the search for housing

You want to buy your first property, such as a condominium, and want to hire a real estate agent? Good idea, but first you should know that a real estate agent costs quite a bit of money, whereby a distinction is made between private and commercial sales. How much that is, as a percentage of the purchase price, you can find out here.

Buying real estate: What costs will I incur?

When buying a property, you always have to reckon with compound costs. On the one hand there is the purchase price, or the price for which the property is advertised, and on the other hand there are the ancillary purchase costs.

Incidental purchase costs: What are they?

The ancillary purchase costs are not always the same, they differ depending on the federal state. Therefore, always inform yourself in advance about the land transfer tax and the brokerage costs of the federal state in which you want to buy. The notary costs and the land register entry, on the other hand, always remain the same in percentage terms.

Incidental purchase costs are derived from:

• Real estate transfer tax (3.5-6.5%); varies by state
• Notary fees (1.5%)
• Land register entry (0.5%)
• Broker commission (3.57-7.14%; 50:50 for private purchase); varies by state

How do I calculate the total cost of my dream property?

The calculation of the service charges and the subsequent total costs of a property is actually quite simple. So that you understand it directly, we have an example calculation for you here. Let’s assume you buy a condominium in North Rhine-Westphalia with a purchase price of 200,000 euros. The final price is made up of six steps.

The six steps to the final price:

1. Purchase price
2. Real estate transfer tax
3. Notary fees
4. Land register entry
5. Brokerage costs
6. Incidental purchase costs

Step 1: Purchase price of the property?

Let’s start with the purchase price. In this example, it is 200,000 euros for a condominium in NRW.

• Purchase price: 200.000 Euro

Step 2: Amount of real estate transfer tax?

In NRW, the land transfer tax for each property is 6.5%. For our apartment, this means a surcharge of 13,000 euros

• Real estate transfer tax: 13,000 euros

Step 3: Amount of notary fees?

The notary fees are the same in every federal state. They amount to 1.5% of the purchase price, which corresponds to 3,000 euros.

• Notary fees: 3,000 euros

Step 4: Costs of the land register entry?

The costs of the land register entry are also the same in every federal state, namely always 0.5%. So another 1,000 euros are added to the purchase price.

• Land register entry: 1.000 Euro

Step 5: Calculation of the brokerage costs?

When you hire a real estate agent, you always pay a certain fee in brokerage costs in addition. These costs vary depending on the federal state. In NRW these costs amount to 3.57%. The positive thing about it? The brokerage costs are divided equally between the buyer and seller, i.e. 50:50%.

• Brokerage commission: (3.57% [7,140 / 2]): 3,570 euros

Step 6: The result of the total cost

Once you have calculated the incidental costs in relation to the purchase price, you can determine what you will ultimately have to pay.

• Purchase price: 200.000 Euro
• Real estate transfer tax (6.5% in NRW: 13,000 euros
• Notary fees (1.5%): 3,000 euros
• Land register entry (0.5%): 1,000 euros
• Brokerage commission: (3.57% [7,140 / 2]): 3,570 euros

Total amount:

• Total incidental costs: 20,570 euros
• Total price at purchase: 220,570 euros

The next step: land transfer tax

You have found your dream apartment at a dream price? Good, but the purchase price is accompanied by ancillary costs, which include land transfer tax. But how high is the land transfer tax that I have to pay additionally, once when buying my first own apartment? Depending on the state in which you buy, the land transfer tax has a different percentage. How you can easily calculate this, you can find out here!

Determine maximum purchase price: Creditworthiness, equity & Co.

How much real estate can I afford at all? This question is asked at the beginning of the process of buying what may be your first home and depends on many factors. These include your creditworthiness and self-disclosure, in terms of assets, the monthly asset balance (repayment), the equity and the mortgage lending value of the property to be financed. Here you will learn everything you need to know to determine the maximum purchase price.

• Maximum purchase price

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

Leasehold: What is it actually?

Leasehold, also called hereditary building right, means that the right of ownership and the right of use are permanently separated. When you build on a leasehold land, you do not buy the land, you lease it from the owner for a certain, contractually agreed time. Thus, there are two parties, the ground lease grantor (1st person) and the ground lease taker (2nd person).

The grantor of the ground lease grants the holder of the ground lease a plot of land for development. The former receives a ground rent in return.

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

Advantages and disadvantages of ground lease: costs and purchase price

Here we have listed all the advantages and disadvantages of leasehold.

Advantages of ground lease

A leaseholder only builds or buys the property on the leasehold land. This lowers the purchase price, because you don’t have to pay anything for the land.

• Leasehold reduces purchase price

Disadvantage of ground lease

As a leaseholder, you always have to pay a ground rent, which results in additional costs. In addition, the mortgage lending value of the property at the bank decreases, because due to the fehelenden land value and the ground rent, the hereditary building lease has a negative effect on the determination of the mortgage lending value.

• Permanent payment of the ground rent
• Mortgage lending value of the property decreases at the bank

Tips for capital investors: Tax deductions

As an investor, you cannot pass on the ground rent to the tenant, which increases the monthly charges. On the other hand, the costs are tax-deductible. Since the financing of ground leases is complex, we have briefly summarized here what you should pay attention to when buying:

• Residual term at least 30 years
• Purchase price plus imaginary land share min. 30% cheaper than in the market

The next step: social binding and post-binding

Before looking for your first condominium, you should know everything about social commitment in housing. Here you will learn all the pros and cons and what you need to know about everything from low-interest loans by public authorities for social housing, to obligations, to the post-commitment period.

Old properties: Aging properties

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?

Purchase price and return

Older properties often have a lower purchase price and thus lower ancillary purchase costs. Thus, the return is also significantly higher than for newer houses with a high purchase price.

Maintenance costs and defects

Due to the age of the property, the running costs are significantly higher. Different years of construction have different defects, which should be taken into account during the technical inspection of a property. The better the location in which you buy, the older a property may be.

Advantages and disadvantages

Here are briefly summarized the advantages and disadvantages of buying an old property!

Advantages:

• Favorable purchase price, better return
• Costs are calculable if defects are known
• Location in grown infrastructure

Disadvantages:

• Higher costs for maintenance
• Possible hidden defects

Existing real estate: typical defects

Among the disadvantages of buying existing real estate is the occurrence of possible defects. Generally, these include mold, water damage, vermin infestation or dry rot.

Here is a brief overview of typical damage and defects:

• Building fabric: cracks in the plaster or masonry, mold
• Building services: insulation of water pipes, sometimes still lead pipe in use
• Electrical engineering: Too few sockets in the rooms or cables too thin according to old standards
• Roof: missing and slipped roof tiles (moisture penetrates) or mold infestation
• Leaky: windows, basement and roof

Checklist 1900-1999: Defects, Damage & Co.

Here you can find a list of old buildings from 1900 to 1999 and what typical defects and damages they have.

Existing properties up to 1900

Properties built before 1900 are now over 120 years old! It should come as no surprise that these properties have defects. Weather, weather and Co. have here a large influence. But also the electrical and sanitary systems can be outdated and need to be replaced urgently. Here you can find an overview of the possible defects:

Facade, insulation, roof and basement:

• Cracks in plaster and masonry
• Non-existent thermal insulation (subject of energy efficiency)
• Single glazed windows
• No sound insulation

Plumbing and electrical:

• Damp basements and attics
• Lead pipes as water supply (No longer permitted!)
• Obsolete electronic system

Existing real estate 1900 – 1939

Properties in these years also have certain defects. Here is an overview.

• Missing underlays in the roof
• Dampness in the roof & basement
• Sponge infestation of wooden beams in ceilings
• Defects of the outer walls due to too thin constructions
• Condensation problems and mold
• Lack of fire protection
• Lead pipes as water pipe

Existing real estate 1939 – 1945

These years are considered very eventful in Germany. Political changes and the Second World War took their toll on the building stock, and as a result very little new construction took place.

Overview of deficiencies due to the Second World War:

• Severe shortage of building materials
• Construction waste and miscellaneous became building material
• Pest infestation due to wrong building material
• Fast building can also cause static problems
• Cracks in the plaster or masonry
• Exterior and interior, thin walls
• Leaking gas pipes
• Lack of fire protection

Existing real estate 1945 – 1959

Properties built in the post-war period from 1945 to 1959 also have some defects due to Germany’s difficult situation.

• Lead pipes still in use (increasingly steel pipes)
• Use of questionable building materials such as asbestos and lead paint
• Lack of fire protection (fire department access, fire doors)
• Gas pipes leaking
• Vermin in the wooden ceilings
• Poor sound insulation (thin walls and wooden floors)
• Here too, cracks in the plaster or masonry

Portfolio properties 1959 – 1969

While property defect lists were relatively long before 1960, the items on the checklist already shorten considerably for post-1960 construction. Here is a brief overview:

• Single glazing
• Building materials of concern (parquet adhesives containing tar)
• Insulation harmful to health (fibers too short)
• Roof trusses not insulated
• Concrete damage to balconies and loggias

Portfolio properties 1969 – 1979

From 1970 onwards, the introduction of soundproofing and insulation requirements allowed even more deficiencies to be crossed off the list. There was also a revolution in the subject of water pipes and building efficiency

Here is the brief overview of remaining deficiencies:

• Concrete as a building material with difficulties in cold / moisture
• Already, often in need of renovation (balconies, old water pipes, heating systems).
• Parquet adhesives containing tar were still in use
• Central heating (year of construction before ’85 must be replaced)

Portfolio properties 1979 – 1999

Here you can often find a very solid stock of used building materials that do not need to be replaced.

Here are just the few defects that are present:

• Connections and terminations for flat roof
• Central heating (year of construction before ’85 must be replaced)
• Upcoming maintenance in view
• Weak insulation

More on the subject of construction defects/ Immobilien-Erfahrung.de

The next step: maximum size of your property

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

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.

Rent, buy, live in Mönchengladbach

Our interview partner, has specialized in the mediation, selling and renting of real estate in Mönchengladbach, Grevenbroich, Neuss and Erkelenz. We have talked with the real estate agent from Mönchengladbach in an interview about attractive districts, financing options and the Gladbach real estate market. Here you can find out everything about buying your first home, different types of houses and types of apartments.

Mönchengladbach at a glance:

Microlocation Mönchengladbach:

Rentals: Child-friendly neighborhoods

You have decided to rent a house or apartment? Then you should definitely know more about bedroom furnishing and beautiful terrace design. Home is where you feel comfortable!

Purchase: Incidental expenses and credit

Find your new home in attractive districts of Mönchengladbach such as Rheydt, Odenkirchen or Wickrath and avoid serious mistakes in your purchase! You can find the 5 steps guide in this article. Are you also interested in other cities in NRW? We have selected other interesting cities for you, such as Düsseldorf, Aachen and Duisburg.

Interview: Real estate in Mönchengladbach

We talked to a real estate agent from Mönchengladbach about the current real estate market, prices, taxes and apartments as an investment. In this article you will also get a checklist to help you avoid typical mistakes and unnecessary costs.

Interviewee Di Lorenzo: Real estate market

FIV: Before we talk about Mönchengladbach and its real estate market and your recommendations for tenants and buyers, we would like to know a little more about your agency Di Lorenzo Immobilien. Could you briefly summarize for our readers what your agency does and what you specialize in?

Di Lorenzo: Dear FIV team, first of all, thank you for choosing us among the best 10 real estate agents! Our real estate agency is specialized in real estate sales and rentals. We sell and rent all types of real estate. From single family homes to large investment or commercial properties. We also provide appraisals for developed and undeveloped land. We specialize in giving the client an answer really in every direction.

Architectural planning, building damage surveys & construction of real estate

We certainly have a unique selling point in Mönchengladbach because we operate under one roof together with our cooperating architectural and expert office. Here the customers receive architect planning, building damage expertises and consultation approximately around the building of real estates. Through our many years of experience and through our constant further training in every direction of the real estate sector, we can really give our customers a great deal of assistance.

The proximity to the market and the large number of sales and rentals mean that we are still learning, even after so many years. We try to offer our customers real added value and see ourselves as a service provider with heart and mind. In addition to all the knowledge, it is also important to offer people a strong shoulder, an open ear and a lot of empathy. That is the beauty of our profession! We can help people even in difficult phases of life, which often entail a house sale, and pave an easier way for you into a new phase of life.

FIV: As an estate agent in Mönchengladbach, which properties do you personally prefer to broker?

Di Lorenzo: We prefer to broker single-family houses, multi-family houses and apartments.

Single-family house in Mönchengladbach:

Districts with a future: Wickrath, Odenkirchen to city center

FIV: Neighborhoods for Singles, Families & Co. – For those who don’t live in Mönchengladbach yet and want to move to Mönchengladbach, which neighborhoods have a future? Where should you move to in Mönchengladbach if you want to live nicely?

Di Lorenzo: There are many beautiful districts in Mönchengladbach. All the surrounding districts such as Giesenkirchen, Odenkirchen, Rheindahlen, Wickrath, Hockstein, Schmölderpark, Pongs, Venn, Hamern, Windberg offer very beautiful and rural living space in many places and are very popular with families. The Bunte Garten, Großheide and also Windberg are among the high-priced districts that are equally popular with families and singles. Mönchengladbach Oberstadt, part of Bruckner Allee and also Mönchengladbach city center, also in the direction of the University of Applied Sciences are rather popular with younger people.

Desirable neighborhoods:

• Odenkirchen
• Wickrath
• Hockstein
• Giesenkirchen
• Windberg

Popular district: Wickrath

Development of rental prices: Rising rents

FIV: Rents are a big topic, all over Germany. How has the real estate market and rental prices in Mönchengladbach developed in recent years and how will they develop in the future?

Di Lorenzo: The real estate market in Mönchengladbach rose later than in the surrounding cities. In recent years, however, Mönchengladbach has also followed suit, but is still below average compared with NRW and Germany. Last year, rental prices in Mönchengladbach also rose sharply. I think that the level will now consolidate and no longer rise so considerably.

Rent or buy as a young couple?

FIV: In Germany, more people rent than buy. What would you recommend to a young couple or even a single person, renting or buying in Mönchengladbach?

Di Lorenzo: It always depends on how much people can afford. If it’s feasible, I advise everyone to buy. But it also has to be compatible with income and capital. It should not be bought at any price. If you can afford to buy property as a young person, then a small apartment is a good start to build on later.

You can then use the proceeds to buy a larger property in a few years, since you can save up equity through the apartment. This is more likely to be possible in Mönchengladbach than in surrounding larger cities.

Facade of an old building apartment in Mönchengladbach:

Home ownership and condominium: follow-up costs

FIV: Anyone who rents in Mönchengladbach is relatively flexible and can move if necessary. Anyone who buys a property, whether a home or a condominium, is at least tied to the property for the long term by the loan or financing. What are typical first-time buyer mistakes from your experience as a real estate agent and how can you avoid them?

Di Lorenzo: When you buy a property, you should consider whether it can also be rented out well in the event of a move and whether the rent will cover the loan in an emergency. Mistakes I see first-time buyers make is that they see the low rate at the beginning, because the interest rates on loans have been very low in the past. Some buyers want to own a home at any cost, but don’t think about the subsequent costs.

Financial plan: Avoid unexpected surprises

Here you should have a good financial plan, because many properties can also bring surprises, e.g. special allocations for condominiums, renovations, refinancing of the loan after the fixed interest rate. First-time buyers should seek advice from a professional. Real estate agents in cooperation with a good financing advisor can be of good help here.

Living and dining area in a Gladbach apartment:

Service charges and taxes: Everything you should know!

FIV: The purchase price of a property is one thing, but what ancillary costs and taxes must buyers in Mönchengladbach expect?

Di Lorenzo: On the one hand, there are the typical ancillary purchase costs that the buyer always incurs when making a purchase. Land transfer tax 6.5% of the purchase price, notary’s fee and land registry costs approx. 1.8% of the purchase price, and, if applicable, brokerage costs 3.57% of the purchase price. But then you should also have the renovation costs estimated by a professional. Also the removal causes costs, which one should not disregard.

Incidental purchase costs:

• Real estate transfer tax: 6.5%
• Notary fee/land registry costs: 1.8%
• Brokerage costs: 3.57%

Real estate as a capital investment & future opportunity

FIV: Mönchengladbach districts for real estate investment – Let’s move on to real estate as a capital investment in Mönchengladbach, for those who want to buy and rent. If our*r reader*in decides for the purchase, with following letting: Which 2 districts or satellites around Mönchengladbach would you recommend to a buyer for their capital investment in Mönchengladbach? In your opinion as an expert, where do the most future opportunities lie?

Di Lorenzo: There are many parts of town that would be suitable. However, when I compare the purchase prices and the rents, I would rather buy in good surrounding locations of Mönchengladbach. At the Bunten Garten, the rents are high, but also the purchase prices have risen to such an extent that you don’t get a good return here, so I would rather point in the direction of Windberg or other surrounding districts such as Hockstein.

Di Lorenzo team photo:

Investing in different types of real estate such as apartments & plots of land

FIV: In your opinion, what type of real estate has a future in Mönchengladbach, what should one invest in? Small, large, existing, new construction?

Di Lorenzo: I would buy an existing property that has manageable renovation costs. Condominiums are always a good investment for small investors and will be profitable in the future. An investor with a lot of equity should go in several directions (apartments, MFH, land) and spread his capital to have a lower risk. Mönchengladbach is a city with rather low income, so you will surely get a condominium rented.

Tips and first steps in buying real estate: avoid mistakes

FIV: You mentioned the typical mistakes in buying a property. Many buy, but some also want to sell. As an experienced real estate agent in Mönchengladbach, what tips can you give to those who are selling a property for the first time? What are the first steps and how do you successfuly sell a property in Mönchengladbach?

Avoid mistakes from the beginning – Step 1

Di Lorenzo: There are many pitfalls here, too. But you don’t realize that until you’re in the middle of it. Selling real estate doesn’t just mean taking photos, putting them online and writing a little text and I’m already sitting at the notary’s office. Many of my clients have experienced the opposite and come to us for professional help after an unhappy start to the sale. You have to check many things. First of all, the right selling price is very important, which many sellers first of all estimate incorrectly and thus delay the sale.

Documents for the sale and legal basis – Step 2

As a seller, you need to know what documents you all need to provide. What is the legal situation with my property. Are there encumbrances and rights in the land register, are all the components of the house approved, what do I have to tell the seller, what about liability for false statements, even if they happen unknowingly. Nowadays the banks want to receive complete plans and living space calculations from the architect. Are there building encumbrances, are the costs of the adjoining owners settled, is there an energy certificate, etc.?

A good plan is the key – Step 3

You sell successfuly if you have a good plan, set the right sales price and have all documents complete. Floor plans, building plans, building description, calculation of living space, building insurance, notice of real estate tax, certificate of occupancy (not older than 3 months), information on building encumbrances (not older than 3 months), cadastral map (not older than 3 months), energy certificate (not older than 10 years), extract from the land register (not older than 3 months), in the case of condominiums the declaration of division and the certificate of seclusion, minutes of the meeting, utility bills, reserve account. If the declaration of division is amended, the deed of amendment and any other documents recorded in the land register are required.

• Floor plans
• Construction plans
• Building description
• Living space
• Building insurance
• Property tax notice
• Residents’ certificate
• Information on building encumbrances
• Parcel map
• Energy certificate
• Land register excerpt

Checking the land charge in the land register – Step 4

You should also check whether a land charge without a certificate or a certificated land charge is entered in the land register. If it is a securitized land charge, then you need to find the land charge certificate in your documents, if it is no longer with the bank. If you have checked and collected all this, then you are one step further. If you know everything about the condition of your house and create nice pictures and write a good text about it, then you can put the property online in the common real estate portals. After you have received some inquiries, you should check who will enter your house soon.

Not Every Prospect Should Be In Your House – Step 5

Do not let just anyone into your home. People should provide you with their complete contact information. If the viewing appointments are successful, then you can hand over all the documents to the customer for the bank. You must then wait to see if the prospective buyer receives written confirmation of financing. You will not get any information from the bank, so you have to wait for the potential buyer’s response. Check the financing confirmation for correctness and authenticity! If everything is correct, then you can give all the details of the sale to the notary, which the buyer may choose. Then wait until the buyer has paid.

If the buyer has paid, then you may hand over the keys. During the handover, any discrepancies, meter readings, number of keys, documents and costs still to be settled, e.g. insurance, property tax, should be handed over.

Get good advice from a professional. You will save a lot of nerves and also money. A good and reputable broker will advise you without obligation and free of charge and will definitely bring you added value.

Rent, buy, live in Mönchengladbach

The real estate market in Braunschweig is large and for this reason it is important to find the best real estate agent for you. In our overview you will find the 10 best real estate agents from Braunschweig, who can make your dream of your property possible.

• Broker Mönchengladbach

Thanks to Di Lorenzo Real Estate for the interview!

First apartment? Step by step to capital investment

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