The right location: owner-occupier or capital investment? – The factors

The right 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!

Owner-occupiers: what matters to me?

Real estate for personal use is often associated with an emotional value, you have to like it. Accordingly, the property is preferred to the locality. Factors such as the route to work or kindergarten then take priority; in short, the micro-location becomes decisive.

Here again in short:

• Property that pleases personally
• Proximity to work/ kindergarten/ school/ …
• Micro location/quality of life is priority

Resale value: location is decisive

However, you should always keep in mind that it could still be that you have to sell your dream property again later. Reasons for this can be age justice, job change or the growth of the family. Therefore, one should always have a look at the location of the property when buying, because this determines the resale value.

C-location: The dream of the country

If you want to buy your dream property in the countryside, in a C-location, you have to expect possible losses. Here, briefly, the factors that are responsible for a decrease in property value.

• Declining population figures
• Negative development of the economy
• Tight local market, little demand

Capital investment: yield and investment property in comparison

Capital investors always choose the location with the goal of investment or yield property in mind.

Yield real estate as an investment

The aim here is to generate direct cash flow through rental income. This is achieved through low purchase prices and a high rental yield, which covers the costs incurred such as repayment, interest and operating costs. It is best suited as a B or C location here.

• Direct cash flow
• B- or C- position

Investment real estate as a capital investment

Investment properties pursue the goal of value appreciation in the long term. This is usually only found in A- locations or even less in good B- locations. The reason: The purchase prices are enormously high, so the running costs cannot be covered by the rental income.

• Value enhancement in the long term
• A- Location

The next step: Determine maximum purchase price

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 capital 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.