German Real Estate Investing Blog

Source: Money icons von monkik - Flaticon The gross initial yield is a yield measure for real estate that reflects the return on a property as a percentage of the purchase price (or the current market value). It indicates what percentage of the purchase price is generated annually as rental income. You get the gross initial yield by dividing the annual net rent by the purchase price of the property. Let's illustrate this with an example. Let's say you buy a property for €300.000, which is rented for a net rent of €1000 per month. With this property you achieve a rental income of €12.000 per year. The gross initial yield of this property is therefore €12000 / €300.000 = 0,04 = 4 % Is the gross initial yield a meaningful indicator of the quality of an investment? While the gross initial yield is an important factor in evaluating a property, it does not tell the whole story about the quality of the property. Much more significant factors for the quality of a property a

Image by Oliver Putz from Pixabay When investing in real estate, the maintenance fee (“Instandhaltungsrücklage”) is an important matter when it comes to the maintenance and upkeep of your real estate assets. But how high should it be, what exactly is this maintenance fee, and which part of the maintenance costs is already covered by the common charge for the condo? In today's article, we want to approach exactly these questions and clarify essential aspects around the topic of a maintenance fee for real estate. We will also take a look at why it is crucial for you as an investor to properly account for the maintenance fee in your yield calculations when checking a buy-to-let property. What is the maintenance fee? The maintenance fee is money that you, as the owner of a condo, pay and set aside to cover the maintenance costs of the property. In Germany, the maintenance cost for a condominium consists of two parts: The maintenance fee for the common property and the maintena

Image by Oliver Putz from Pixabay Real estate investments have become very popular in recent years. A real estate investment can be very lucrative, but it also carries risks. Especially if you buy a property that is overpriced by current standards. But why are there then so many people that are willing to buy properties that are completely overpriced? I think the main reason for this is the current fiscal conditions: we currently have a lot of money in the markets because of the loose central bank fiscal policies. And let’s face it: that money has to go somewhere! And so it goes into different asset classes. Vintage cars, stocks, old whiskeys, or real estate. Investors flock to real assets because they see how much their money is being devalued by inflation. According to the German Federal Statistics Office, the inflation rate in Germany rose to 7.4 percent in April! The last time there was such a high inflation rate was over 40 years ago, in 1981. With such inflation ra

Image by  Oliver Putz  on  Unsplash Buying a property with 100% financing comes with both some advantages and some disadvantages. The main advantage is that you need very little equity and can therefore build up your real estate portfolio very quickly.  Also, your return on investment, relative to your actual invested capital, is of course very high with a 100% financing.  But on the flip side, you pay these two benefits with a greatly increased risk in your financing. But let’s not get ahead of ourselves and take a closer look at the two areas. What are the advantages of a 100% financing? The main advantage is clearly that you require very little equity to start your career. More specific: You only need to pay the ancillary purchase costs yourself (depending on the property itself and the state the property is on, that’s about 10% of the purchase price). The rest of the money you borrow from the bank.  For example, if you want to buy several properties to rent them out, and you ha

Hi dear reader, after already having started a German real estate blog under immoprentice.blogspot.com , I also wanted to start an English blog to reach non-German-speaking people that are interested in investing into real estate in Germany. On this blog, you therefore will find very similar content to the German blog, but just in English. So this blog still focuses on all things relevant for investing into real estate in Germany, but will especially cater to all you English-speaking people out there ;)