You have decided to buy your first property? Then we have prepared 5 valuable tips for beginners in this article.
The ongoing low/zero interest phase and penalty interest rates on deposits inspire the assumption that banks would love to take over a 100% real estate financing. This plausible assumption is wrong. A real estate loan is first and foremost just that-a loan. The larger the equity share, the easier and more favorable the financing.
Because of the size of a real estate investment, it is easy to tend to think only one or two steps ahead. Take this hurdle, the next and so on. Experienced, successful real estate investors take a different approach. To put it bluntly, professionals plan for resale after depreciation before all possible building sites have been sifted through and look around for a suitable broker. A real estate investment is a long-term affair, but even long periods come to an end one day and in the end the calculation must have worked out.
No wine tasting goes by without heroic stories of success in the real estate business that place Deutsche Wohnen and Vonovia in the district league. It may be that a fabulous return with streamlined financing has resulted from a stroke of luck on a property. But that does not mean that the same brilliant financial coup will succeed similarly well in a different location, with different partners and a similar but not identical property. With only a similar property, perhaps a thoroughfare is currently being built. Or not built. Or the next large industrial company is planning to relocate, which will thin out the local sociotope and cause rents to drop. Your own detailed local and property knowledge is one of the keys to your success on any real estate project.
Tax saving models based on depreciation pay off the better, the higher the income and therefore the higher the tax burden. A calculation that requires exorbitant increases in income is no good. With an income that makes real estate financing possible for you, please consider that all your colleagues belong to the same income bracket! But there can be only one department head. If all of 20 colleagues include the tax burden of the head of department in their financing plans, 19 of these 20 financings will be in trouble. Test your model with a pessimistic perspective! If it pays off in the worst case, it will not deprive you of sleep with a more favorable development of your income.
Real estate ownership and income from it are not secondary activities in the sense of labor and social security law. Regardless of this, see it for you as an activity for which you must schedule time! Every young entrepreneur who registers a business, establishes a limited liability company, etc. has a number of new challenges to overcome. You have to orientate yourself with regard to taxes, familiarize yourself with the relevant legal situation, organize the supply system and the like. The same applies to you as a real estate owner. If you are in the fortunate position of being able to hire a management company to do the bulk of the work for you, you still have the work of preparing your documents for the tax advisor. Surely routine sets in, but until then, better count on spending too much time on your property!
