Real estate investment strategy

Answer the following questions to set up the right real estate investment strategy.

Table of contents

Introduction

When it comes to real estate in general, it is very important to determine the right real estate investment strategy. To do this, you should answer some questions to be clear about how you want to proceed. Below, we will go through the real estate investment strategy questions and explain these questions. So all you have to do is answer them.

Can you buy/finance a property?

First of all, you need to be clear about whether you can buy or finance a property at all. To do this, you need to meet some requirements on the personal side, such as a permanent employment contract, no probationary period and a good Schufa score. On the financial side, you should prepare a cost breakdown with your income, which should be high, and all your expenses and savings to determine the property value you can afford. For more information, check out our 5 to-dos before buying real estate here.

Which property type do you want?

Property Size:

If you meet all the criteria, you can proceed to choosing the property size. Since there are many different property sizes (apartment, house, etc.) to choose from, it is important to know what exactly you want. But be careful, you can only choose a size you can afford. For this reason, we have previously determined your purchasing power or your future purchasing power.

Building Usage:

The use of the property is also important. You can decide whether to rent a home, buy a home or buy a home and partially rent it. Be aware that this question is very important from a financial point of view. If you rent it out, you can deduct all the costs from your taxes. For more details, see our article on buying or renting a home in Germany here

Where is the right property location?

Another crucial question is the location of the property. This is probably the most important step when it comes to buying a property. As in any country, the location is largely responsible for the increase in value in the future and also, if you rent it out, whether or not you will find a tenant. We recommend buying in A, B or C locations. Read more here.

What is the long-term plan for your property?

And last but not least, it’s about long-term plan for your property. Since we are financial advisors, we will look at this topic from a financial point of view.

Your future place to live

Honestly, it doesn’t matter that much if you want to stay in Germany or Europe for the next 2 years, 30 years, or forever. Just in case you will leave Germany soon, maybe in the next 2-3 years, it is probably better to rent by yourself, simply for the reason that you have additional purchasing costs.

Additional purchasing costs

Be aware, that you have to pay additional purchasing costs for the notary, ground purchasing tax, and the real estate agent. These costs are lowest in Bavaria with 5.5% and highest in Berlin at up to 15.7%. So as soon as you buy your first property, you are automatically in the red.

tax refunds

If you buy a property for self-usage, you have to pay for everything yourself. However, if you decide to buy a property as a rental, the government will benefit you with some tax refunds. In this case, you will get the additional purchasing costs and the interest rate back at your personal tax rate. If your property needs to be renovated in the future or you have to pay for maintenance, you can also deduct these costs from your tax return. So choose wisely.

Conclusion

As soon as you decide to buy a property, you need the right real estate investment strategy. Try to be as rational as possible to make the best decision for your future life. If you need help with the right strategy, or choosing the right property or financing, you can book a free consultation here.

2 thoughts on “Real Estate Investment Strategy”

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