German Real Estate Investing Blog

A real estate as an investment can be very rewarding, but also has some risks. In this article, I therefore explicitly want to have a look at some of the risks of real estate as an investment. Investing in real estate is a popular way to increase your capital. But there are also some risks that should be considered. So in this blog post, we will look at the disadvantages of real estate compared to other forms of investment, such as stocks. What are the risks of investing in real estate? In my opinion, there are two major risks with real estate: the risk of rising interest rates and the risk that the property will lose value over time The risk of rising interest rates: higher costs Real estate that you buy with little money down a lot of financing carries a high interest rate risk. That's the risk that interest rates on your financing will rise. Although you lock in interest rates for a few years when you take out a loan for your real estate investment, at some point, those fixed 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...