Why it is profitable to invest in tenement houses in Germany
Despite the serious downturn in the world economy and other global risks, one of the reliable sources of income remains investments in real estate. If we consider investments exclusively in the European segment, here a good option would be Germany and its tenement houses.
The economy of this country is considered the most stable among the members of the European Union. The volume of investment in the German real estate market is growing annually, helped by the state, which has created a flexible environment for the acquisition of local properties by foreigners, without restrictions on the regions and cities. In addition, interest rates in the country are still among the lowest. Investments in commercial real estate yield a return of 4 to 15% per annum. By comparison, when investing in commercial space, such as a store, you can count on 10% per annum.
A popular investment option is tenement houses – apartment buildings that are designed to be rented out. Profits here will be at the level of 5-15% per year, much depending on the size of rental rates. However, when choosing an object should take into account a number of features that will increase profits. For example, choosing such a house, you should pay attention to its location. It is assumed that apartments in such a house will be rented mainly by young people, students, or employees. Therefore it is better if the complex is located near educational institutions or office centers. It is also important to have a well-developed transport infrastructure, stores, and cafes.
Good luck buying a house where approximately 50% of the apartments are rented on a long-term basis. This will bring a good return on investment already in the first months.
According to statistics, more than 57% of the population rents in Germany. For large cities this figure can reach 75%, in Berlin it is 84%. This means that this niche is extremely popular, which means that finding tenants will not be a big problem, given the limited supply on the market. In addition, the demand for real estate is growing regularly, and the construction sector has not kept up with it.
When buying a tenement house, you can use the services of a bank. Loan terms in the country are quite favorable, the term of the loan can be up to 25-30 years. You can also consider the option of owning an object by several investors. In this case, the income from the house is divided according to the agreement of the owners.
Choosing to invest in tenement houses, you should seriously consider their technical evaluation. The cost of major repairs to the object can exceed your expectations, which will increase the payback period. At the same time, often for such houses, there is a savings fund for repair work, which compensates for part of the cost.