Social binding: What is it anyway?

For housing construction, social binding means that low-cost housing is subsidized by public funds. This means that there are low-interest loans or subsidies for investors in exchange for committing to affordable rents. The catch? Only people with a housing entitlement certificate are allowed to rent these apartments.

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

Rebinding

Buyers are tied to social housing until the public loans have been repaid. However, due to the post-commitment period, one has to wait 10 more years after repayment until the social commitment ends.

• Commitment to social housing until loan is repaid

Limited rent

The cost rent slows down the maximum rental price of the apartments. The housing construction is therefore price-linked, which guarantees that only the cost rent can be demanded from the tenants. The rent may be increased in this period only every 3 years, according to the consumer price index.

• Maximum rental price limited by “cost rent

Social bond summarized

Here again everything you need to know about social binding!

• Affordable housing through public funding
• Very good conditions for loans or grants
• Obligation to rent to low-income persons
• Maximum rental price limited by “cost rent
• Post-commitment period ends only 10 years after full repayment of public loans

The next step: equity

Regardless of whether it is for personal use or as a capital investment, the first thing to think about for any type of real estate is the financing. Here, equity capital is an important topic, from the use of equity capital to the difference due to tax deductibility of the interest on the loan. The big question here is, how much equity do you need if you include all costs from the purchase price to the ancillary purchase costs? Here you will learn everything about financing and equity.

Real estate purchase and renting for beginners and professionals

Buying a property and thus using it as an investment is something that many people are now doing, regardless of whether it’s a penthouse, apartment, maisonette, villa, terraced house or bungalow. To use his purchased property not only for personal use, but to rent out the property is a long-term project. This is best approached with the right preparations and negotiations. In order to make your first profit, it is important to be well informed to avoid mistakes. We try to give you the first knowledge and get you started in the real estate world.

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

Renting out a property: first steps

You have bought a property and now want to rent it out, or you are planning to use a property as an investment. But you still have no idea how to go about it and what factors to consider? In the following videos you will find the most important answers to your first questions about buying and renting out property.

Buying and renting your first home: Advice and tips

You are about to buy your first apartment, but you are still unsure what to consider here? The area of buying an apartment may sound daunting, especially for beginners, but with the right advice and one or two insider tips, you can venture into the real estate world.

Renting out real estate the right way: Everything about rental contract, equipment and the right rental price

You want to rent out a property? Here are important factors such as the determination of the rent. In this 9-step guide, you’ll find out how to determine the rent and how best to draw up a rental contract.

Real estate purchase and management: effort and work

When buying real estate, you invest not only money, but also time. You can see here how much work and effort is behind the real estate business.

Financing and return on investment

Owning and renting a property is one thing, but how do you keep track of financing and calculate your potential return? In these videos you will find information about financing, yield and income.

Buying and renting real estate: calculating rental yields

Here you will learn how to invest wisely in an apartment, house or other property to buy and rent, by calculating the rental yield and all the pitfalls around renting, buying and living.

Real estate calculation: Calculation of return and cash flow

When buying a property, many costs must be considered. In order to properly use real estate as an investment, it is important to know the right real estate ratios and to calculate them correctly. But what are the key figures? Cash flow, gross rental yield, net rental yield or just the return on equity? In this video, we talk about the topic of “return on investment explained simply” and show you what return real estate can really bring you.

Buy and let a new building: Investment

Is a new building really worthwhile as an investment? How much profit can be made on an investment? The experts are available to answer your questions on this topic!

Second or more real estate!?

Why should you buy a second property after your first? And when is the right time to buy another? In this video you will get 6 answers why you should have several rented properties.

Errors, risks and problems

When buying a property or even as a property owner, you can make many mistakes and always come across new or even already known problems. In these videos you will learn which are the most common mistakes and problems when renting out a property and how you can best prevent them. You will also learn how to recognise and correctly assess potential risks.

Real estate leasing: risks and problems

The real estate market is a highly competitive market and certainly not without risk. Even if at first glance real estate is perfect as an investment, there are always difficulties with rent losses and vacancies. You have bought a property as an investment and your tenant does not pay anymore? You don’t know how to find the right tenant for your investment property to save you the trouble of non-payers? Tips and tricks for these cases, there are in this video:

Real estate purchase: preparation, recommendations and error prevention

Are you about to buy a property and don’t want to make any mistakes? When buying a house or apartment, it is easy to fall into traps and make a loss instead of a profit. The video shows you how to avoid these traps and become a successful homeowner:

Further tips on the subject of real estate

You already own a property and are looking for more information about real estate topics such as real estate agents, selling real estate, real estate as an investment or capital investment or much more? Then take a look at our articles with book and video tips on these topics. For example, below you will find links to the topics of real estate agents and real estate financing.

Real estate agent: tips and tricks from experts

You notice how your interest and know-how in the field of real estate is growing and are thinking about making the real estate business your profession? You can find explanatory videos on the training and everyday work of a real estate agent here:

• Real Estate Agent Videos
• Real estate agent books

Real estate financing

You want to buy a property as an investment, but you don’t know how to finance the whole thing. This is the case for many beginners and private individuals and they all have to face the same questions and problems. We have compiled book and video tips for you on the subject of real estate financing.

• Real Estate Financing Book Tips
• Real Estate Financing Videos

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

Interview with real estate expert Jan Rickel from IHV – Die Immobilien Makler.

Capital investment – Is it worth it?

FIV: We met last month to discuss house sales in general and the future of living. Today we wanted to know more about the hotspots in Germany. We all know the news of rising real estate prices in Berlin, Hamburg, Cologne and especially Munich. Rents, but also land and purchase prices are exploding here. Many people are thinking about investing in real estate – sooner or later. But is real estate a worthwhile capital investment at all?

That depends. It depends on how long I want to hold this investment. In the long run at least a real estate is a very good investment. I’ll tell you a personal story: When I wanted to buy a 2-room apartment in Frankfurt more than 20 years ago, gab´s had a lot of discussions with my parents and friends. They thought I was crazy in view of the returns that could otherwise be earned on the market (time deposits, gold, stocks, etc.). With a rental yield of 5% at the time, one looked rather old at that time alongside the usual forms of capital investment.

FIV: And then why did you still get into real estate?

Because the value of this apartment has risen dramatically in the following years. And that was already apparent at that time! Actually, many people, including myself, initially believed that the price increase on the housing market was coming to an end so slowly but surely. But the opposite was true. Apart from the one or other dent or two, the value development of real estate has constantly risen. So I could sell this apartment today for a multiple of the original price. I paid the loan from then via the rent and at the same time my small equity capital invested at that time grew without my involvement. And this is far higher than with the vast majority of share packages or other conventional investments.

FIV: And that works everywhere?

That would be too good to be true! Here the location of the apartment or house is very important. If I had bought a big house somewhere in the countryside, far away from all the hustle and bustle, then things would probably have turned out quite differently. This does not mean that a house in the country is basically a bad investment. In the so-called “fat belt” of conurbations, for example, property prices have also developed rapidly. If the location of the purchased property is regarded as very desirable for living, then not much can go wrong in the long run and the one or other “dent” in the value development is to be absorbed. By the way: it is well known that share packages or funds also have one or the other bend in their performance. The decisive factor is the so-called investment horizon, i.e. the time I give my capital investment to develop its value. Fast money cannot be made in the real estate business. In the long term, however, it is a very solid and secure investment.

Is there an end in sight?

FIV: But isn’t the boom slowly coming to an end?

Of course, I can’t predict that for sure. As I said: even 20 years ago, many real estate experts believed that the price trend for purchase and rent had come to an end. That was not true, as we have seen to this day. How the prices for the purchase of real estate – and by the way also for the rent level – change depends above all on how much living space will be demanded in the future and what new living space can be created. In any case, I cannot see any saturation of the real estate market in the long run.
The question remains: how is the interest rate level developing? If it becomes more expensive to borrow money to buy real estate, then the real estate market cools down again. And then we are again at the “dents” mentioned above. The investor has to endure them.

FIV: Should I buy a property now, or should I wait until prices fall?

If I knew if and when prices would fall, I would probably advise you to wait and see. Especially if the price reduction for the property would not be eaten up by significantly higher interest rates in the financing. But since none of us has the proverbial glass ball, I advise: calculate exactly what I can afford and then look for and buy the matching object in a sought-after location.

Real estate market in the big cities

FIV: This brings us to the areas in Germany where real estate values have been rising for a long time. Let’s look at the four top regions: Berlin, Munich, Cologne and Düsseldorf. Let’s start with Berlin. How do you rate the real estate market in the capital?

It is unbelievable how Berlin has developed in recent years. Apartment houses were then sold for a button and a clicker because nobody wanted them and now domestic and foreign investors are ripping themselves off for real estate in our capital. Berlin is hip and also “the place to be”. For many young adults it is the coolest city in the world, even people from other European and non-European countries are drawn to Berlin.
Which district is currently “in” changes in Berlin almost as fast as in any other major German city. In the meantime, the boom has also affected the suburbs. Reinickendorf, for example, increased real estate prices by about a quarter last year. This is insane! Even previously unattractive districts such as Marzahn-Hellersorf or Spandau have seen significant increases in purchase and rental prices. This in turn means that municipalities in the immediate vicinity of Berlin have a much higher population growth rate than Berlin itself. Potsdam, Teltow, Bernau or Falkensee are on the rise. It remains to be seen whether prices there will develop so dramatically.

Increasing property prices – buy or wait?

FIV: How do you rate the rising prices in Berlin and the surrounding area? Should we buy a property or wait and see?

I believe it will be a long time before the market in Berlin and the surrounding area calms down. So now is certainly a good time to buy, because in the long run the prices there continue to rise and now the interest rate level is still low.

FIV: Let’s go south, to Munich. Munich is regarded as the hotspot for rising prices – regardless of whether it is a condominium or a detached house in the suburbs. The Handelsblatt reports a price development of +47 percent. What makes the Bavarian metropolis special and how is the market developing here?

As long as the growth of the corresponding economic sectors in Bavaria does not slow down, experts will be sought there and they in turn will be looking for housing. Especially when the specialists of the respective industries, and this is still the IT environment and other service companies in Munich, do not find jobs elsewhere. Experts estimate that by 2035 there will be about 350,000 new arrivals in the greater Munich area. Municipalities such as Dachau, Fürstenfeldbruck or even Landsberg am Lech are already attractive as places to live for people who commute daily to Munich.
The pressure on property prices and rents there is also being increased by the still high recreational value of the region. For many people, the proximity to the mountains and the Mediterranean Sea is much more attractive than – say – the North Sea or Holland. Ultimately this means that in the Munich area, salaries are usually higher than elsewhere in Germany. However, the prices for buying or renting apartments usually eat up this “surplus”. Especially for families this is a real problem…

Purchase real estate in Munich

FIV: Against this background, what do you think about buying real estate in Munich?

Anyone who gets one and can pay for it should buy safely from the perspectives. In relative terms, however, the performance and rental yield in other selected areas of Germany is by no means worse than in Munich. I’m thinking of Berlin, the Rhine-Main area or the Cologne-Düsseldorf axis.

FIV: You didn’t mention Hamburg now. Is there a reason for that? Away from publicity, do objects like the Hamburg Philharmonic generally enhance the city or just a part of it?

Sure. Hamburg has also experienced a steep development. A few years ago, the image of the city was still rather grubby, but a lot has happened there – especially with the Hafen-City and many other urban development projects. Hamburg as a whole is far removed from price developments such as Munich.
Of course, construction projects such as an Elbe Philharmonic Hall enhance a city as a whole. Not alone, though. Overall, cultural institutions, but also other large “lighthouse projects”, promote the image of a city. However, I would like to see the money more often in many smaller developments. In all major projects, for example, the individual quarters must not be forgotten. Of course, it’s nice to see this building from the Elbe. However, the renewal and maintenance of the parks, the upgrading of playgrounds, the subsidization of kindergartens in the individual districts will lead more to the whole city developing a positive pull They will become more attractive for the people who now live there and for newcomers. This means growth in the number of inhabitants, tax revenue, etc. That is why, to return to the question once again, I am rather sceptical about investing in a major project of this scale.

Hamburg from above – The Hanseatic City

Purchasing real estate in the Hanseatic City of Hamburg

FIV: Hamburg is not that far away from the sea. The North Sea and Baltic Sea are popular holiday regions. So if I buy a property in the north, would I rather buy it in the countryside than in a holiday home or in the city itself?

The same applies to Hamburg as to Berlin and Munich. Often even the prices per square metre and the expected rents are directly comparable. Using an apartment in the city as a holiday home can be problematic. Many cities have put a stop to the rental of holiday homes (Airbnb etc.). The risk of rent loss would be too high for me. The holiday home in the countryside only makes sense where there are really good occupancy rates – and best of all throughout the year. In the “Alte Land” or in “Vierlanden” – to name just a few areas in the direct vicinity of Hamburg, this is certainly not the case. Moreover, one should be a little better versed in the tourism rental business if one does not want to suffer a shipwreck with his investment in a holiday property by the sea. I therefore advise most people against doing something like this.

FIV: We still have the Cologne / Düsseldorf region. There are currently about two million people living there. Buy or better rent? What are your tips for Cologne and Düsseldorf?

Who can, should buy! Especially Düsseldorf and the surrounding area are not much behind the price development compared to Berlin and Hamburg. However, the following applies to both cities: take a close look at the district in which the property is located. In Cologne and Düsseldorf, it has not yet been noticeable that former “shadow districts” are becoming the absolute in-city districts overnight. In Düsseldorf, Oberkassel is still on the list as one of the “top adresses”, while Eller and Flingern are rather undervalued. In Cologne, the most sought-after districts have been called “Rodenkirchen” and “Bickendorf” for many years. “Chorweiler” or “Nippes” are rather something for connoisseurs of the scenes…

FIV: What is the difference between the attractiveness of the two cities?

I’m sure you don’t expect me to answer that seriously. There is still no binding answer to this fundamental question of Rhenish existence. Maybe this much: in both cities there is delicious beer and nice pubs.

Thank you so much for the interview.

Interview with real estate expert Jan Rickel from IHV – Die Immobilien Makler.