What is better financially

A property does not only cost the offered purchase price.In addition, there are usually 20 percent equity, which you first have to raise and purchase ancillary costs of about 10 percent (brokers, real estate transfer tax, notary), financing interest, insurance fees (to hedge the risk for the bank and the family), regular maintenance, modernization and late refurbishment costs. These are all costs that you as a tenant do not have. If the inhabited property becomes too large or too expensive, one moves out as a tenant, as the owner one is relatively immobile and under time or financial pressure one sells mostly under value. These hidden costs, which no one tells you beforehand, lead to a considerable need for capital in the long term. If you want to sell your property before the expiry of the mortgage and you want to repay the outstanding loan amount with the sales proceeds, the banks charge prepayment fees. This also reduces the return on sales. Experienced private real estate investors calculate their properties in such a way that they are no more expensive than a factor of 10, maximum factor 15. That is, the property should be wisely calculated in 10 to 15 years paid off by the tenant = purchase price / (recoverable net monthly rent x 12). In the high-priced top cities (Hamburg, Berlin, Cologne, Dusseldorf, Frankfurt, Stuttgart, Munich) there is virtually nothing left to get, at least not via the well-known real estate exchanges on the Internet. If it’s your favorite object to buy yourself, it can be more expensive. However, all mortgages should have been paid off by retirement. Especially in high-price locations, rents for ordinary earners are often cheaper and safer because they are more flexible. Many private property investors buy real estate to make money, to have them financed by tenants, to save taxes, to achieve high returns on resale (after 10 years, the speculative tax on profits earned) is eliminated, and not to live in it. Currently, with the European Central Bank’s zero interest rate policy, many asset owners want to park their money in safe real assets and forgo high returns. Better 2 percent with real estate in highly sought-after locations than zero percent for cash in the accounts, which loses purchasing power year after year. The money circulating is driving up property prices. In short: Real estate is something for people with money and with pointed pencil, coolly calculated and unemotionally repulsed when they yield high returns on sales. For ordinary earners, owning a property is often a shaky dance on a high rope, which requires many years of deprivation, making you inflexible. Even failed marriages are a high risk factor. Due to the mortgages that have often not yet been paid off in old age, the high maintenance costs that are then incurred, the properties do not necessarily secure the age, as is often said, of those who like to do business with the property and the make financing. In any case, as a tenant, I have always lived better than I could and wanted as an owner and have retained my professional flexibility. Unfortunately, I only dealt with real estate investments very late and should have started investing in small rental apartments at a young age with a regular salary. I can only recommend this to every young person. Do not move in yourself, but rent it out. Real estate billionaire Donald Trump said in his 1987 US bestseller “The Art of the Deal” that counts not the myth of “location, location, location,” but what matters is the best deal. German merchants say: “The profit is in purchasing”.

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