Why student apartments are worthwhile

There is a housing shortage in almost all German university cities – and this is exactly where your investment comes in. Small apartments or shared apartments near the university(map with universities) are always in demand, and you can buy, upgrade and rent them out directly without a lot of start-up capital – stress-free via a property management company.

Constant tenant turnover is an advantage

Students are moving more frequently, starting a new semester or changing cities. For you as an investor, this means: no fear of vacancies, but constant demand – especially in central locations or close to the university.

Compact size = high efficiency

An apartment with 20 to 30 m² will cost you less to buy and less to maintain. At the same time, you can achieve more rent per square meter than with larger apartments by equipping it with a kitchen and possibly furnishing it.

Little effort, clear processes

Instead of taking care of rental contracts, utility bills and minor repairs yourself, you can commission a property management company – ideal for beginners or if you have a busy work schedule.

• High demand all year round
• Compact properties with strong returns
• Hand over administration completely

What you should consider when buying

When it comes to student apartments, location counts. If you buy centrally, you will get more rent and find new tenants more easily. It is also important that you have the incidental purchase costs under control – and know your net yield, not just the gross figure from the exposé.

Only proximity to the university brings real returns

The classic: a small apartment within walking distance of the university or with a direct subway connection. Without this, it will be difficult to reach the target group – especially for smaller units.

Keep purchase price low

The trick is to find a solid property below market value – e.g. in a basic condition that can easily be upgraded with a little paint, a new kitchen and furniture. This will increase the value without you having to dig deep into your pockets.

Buying cheap real estate? Here are my tips from Los Angeles: Buying real estate cheaply (acquisition)

Plan property management from the outset

The monthly costs for property management (usually €25-40) are manageable – in return, you get peace of mind, professionalism and legal protection. This is worth its weight in gold, especially if you have several tenants per year.

• Affordable shopping with potential
• Location = daily demand factor
• Property management saves time and nerves

More rent through simple fittings

Do you want more than the standard price? Then invest specifically in equipment – and target students who don’t want to organize their own furniture or kitchen.

Fitted kitchen as a rental booster

For €399, you can get a modern, small fitted kitchen with a fridge, hob and storage space. This will immediately set you apart – and you can easily charge €50 more rent. Many students specifically look for apartments with their own kitchen.

Fitted kitchen = 399 €

Surcharge per month = 37.50 (at 1.50 € / m² for 25 m²)

Amortized in 11 months

To do this, make a handwritten note in the rental agreement that your tenants are responsible for any damage or repairs to the fitted kitchen.

Furnished = more rent, less vacancy

A simple bed, desk and wardrobe – that’s all you need. You can include the furnishings in the rent; many tenants are happy to pay for this as they don’t have to buy or transport any furniture.

Paint once = better effect

A light coat of paint makes a big difference. Clean walls and a well-maintained floor look immediately more modern – even if the substance is simple. The effort is minimal, the effect is great.

• Kitchen: +50-100 € rent possible
• Furnished = reach target group directly
• Looks count – even for students

Micro-apartments as an alternative or extension

If you want to scale up the concept, take a look at micro-apartments – they work in a similar way to student apartments, but are often more modern and also appeal to young professionals or commuters. Advantage: often slightly higher rent, same basic logic.

More target groups, similar strategy

You can reach more tenant groups through better facilities, services (e.g. Wi-Fi, cleaning) or location in business districts. The principle remains: small space, high rent, low vacancy rate.

Investing through society

Especially if you are buying several units, it is worth taking a look at GmbH structures in order to work efficiently from a tax perspective. We will be happy to advise you on this – or you can learn more in our further videos.

• Scalable due to many locations
• Broader target group than students
• GmbH models for larger investments

10 % return is achievable – if you buy smart

Student apartments offer you a solid, calculable entry into the world of real estate. If you buy cheaply, modernize a little and adapt to the target group, you can achieve realistic net yields of 8 to 10 percent. Even better: you hand over the management directly – and have created your first real investment property with a small apartment. Now it’s up to you to take the next step.

Micro-apartment as a capital investment: advantages for you

Small apartment with 25 m² instead of a large 4-room apartment. Why? More and more people are living alone in single households. Students, singles, holidaymakers, but also professional groups such as fitters, who are often in different cities. Learn more about investing in small condominiums, so-called micro-apartments, here.

• Micro-apartment as a capital investment

Does it make sense to form an LLC in the USA?

LLC gründen – sinnvoll oder nicht?

The formation of an LLC is a legal form of company that is very common in the USA. It offers many advantages, especially for small businesses and the self-employed. When forming an LLC, certain steps must be followed, including

Articles of association: Formation of the LLC

The formation of an LLC requires an operating agreement that sets out the basic rules and structure of the company. This agreement may contain specific clauses on management and profit distribution.

Minimum capital: Variable

In the USA, there is no standard minimum capital requirement for the formation of an LLC, but some states require a minimum capital contribution, which may vary. It is advisable to find out about the specific requirements of the respective state.

Entry and registration

The LLC must be registered with the relevant state office. This includes the submission of formation documents and the payment of fees. The exact requirements may vary from state to state.

Foundation costs in detail

The cost of forming an LLC can vary from state to state. As a rule, you should expect the following costs:

• Foundation fees: between 50 and 500 USD
• Notary fees: if required
• Annual reporting costs: between 50 and 800 USD, depending on the state

My recommendation for the first 10 properties

For the first two to ten properties, an LLC (see GmbH in Germany) is best suited to minimize liability risks and at the same time take advantage of tax benefits. The LLC limits the personal liability of the owners, while profits and losses are attributed directly to the shareholders, which avoids double taxation. In comparison, a Limited Partnership (see KG) offers more flexibility in terms of passive participation, but the general partner bears full liability. A general partnership (see OHG) involves higher risks due to unlimited liability.

• More about the LLC
• All US legal forms

US-Firmengründung speziell für Tax-Lien-Investoren

• Gründung einer LLC oder Corporation
• Registered Agent Service (gesetzlich vorgeschrieben)
• Geschäftsadresse
• Postservice

• US-Firmengründung

Advantages and disadvantages of an LLC

Here are the main advantages and disadvantages of an LLC at a glance:

3 advantages at a glance

1. Limited liability
2. Flexibility in taxation
3. Fewer formal requirements

The main advantages of an LLC are limited liability, which means that the owners’ personal assets are protected in the event of debt or liability claims. LLCs offer flexibility in taxation as they can be taxed as a sole proprietorship, partnership or corporation. In addition, the formal requirements are lower compared to other forms of business.

3 “Disadvantages” at a glance

1. Formation costs
2. Accounting complexity
3. Regulatory requirements

Forming and managing an LLC can be costly, including set-up fees and annual costs. In addition, bookkeeping requires more effort than with a sole proprietorship. Regulatory requirements can also vary by state.

Examples of successful LLCs

Some well-known LLCs in the USA are:

• Netflix, Inc.
• Walmart LLC

Alternatives to the LLC?

Discover other legal forms that may be suitable for your company here:

• LLC vs. corporation

Taxes for an LLC in the USA

LLCs are generally subject to pass-through taxation, which means that the profits and losses of the LLC are passed through directly to the owners and taxed on their personal tax returns. More on this topic here: Taxes USA.

Important tax aspects

1. Federal income tax
2. Federal taxes
3. Self-employment tax

LLCs must pay tax on their profits, and federal income tax and state taxes may vary by location. Self-employment tax may also apply to owners who are actively engaged in the LLC.

Save taxes with the LLC

Using an LLC can help you save on taxes, as you can deduct certain expenses and benefit from tax breaks. However, careful accounting and tax planning are essential.

FAQ about the LLC

How much does it cost to set up an LLC?

The start-up costs vary depending on the state, but are generally between USD 50 and USD 500.

Can I form an LLC on my own?

Yes, in many states it is possible to form an LLC as an individual.

LLC formation for entrepreneurs

Forming an LLC can be a smart decision, especially when you consider the benefits of limited liability and tax flexibility.

LLCs offer protection for your personal assets and allow you to benefit from tax advantages. This makes them an attractive choice for many entrepreneurs.

Conclusion

The LLC is a versatile business form that can offer significant benefits to many entrepreneurs in the US. If you are thinking about forming an LLC, it is advisable to learn about the specific requirements of your state and possibly consult a professional to make the best decisions for your business.

Legal forms USA: Foundation & real estate

What types of company are there? If you want to set up your first US company, choosing the legal form is one of the first steps in the company formation process. Whether you want to set up a special real estate company or a start-up, we have summarized all types of companies in the USA for you here – with extra tips for real estate investments, of course.

• Legal forms USA

Book real estate coach or not?

Just google “real estate coaching”, you will get ads and hundreds of websites that want nothing but your money! You can see that already in the structure of so-called landing pages. These are websites that offer hardly any info, but only a “button” to “enter”, “buy” or to “get free info”:

Here you will learn:

1. Recognize serious (unserious) coaches
2. You get 3 concrete tips for good coaches

For:

• Real estate beginners
• Homeowner:inside
• Entrepreneur:inside
• Financial freedom and passive income
• Real Estate Sales
• …

Coaching for entrepreneurs – example

An example instead of a thousand words – If you already turn over 1 million euros a year and instead of ~ 25% you only pay ~15% tax, through the right legal form and corporate structure, such as family foundation, the effect is enormous.

• 1 million turnover, 100,000 profit at 25% = 25,000 euros tax burden
• 1 million turnover, 100.000 profit at 15% = 15.000 Euro tax burden ( 10.000 Euro more profit / year )

If the costs of coaching are now 2,000 euros for 1 day in a master class – why not! Scaled to 5 million turnover, assuming 500,000 euros profit already 50,0000 euros more at the end of the year.

A simple example! If we stay here, other benefits are added such as allowances, etc..

Now you are probably already starting to rake!

It doesn’t always have to be the Masterclass, but you should pay attention to a few things to find good and reputable real estate coaches. Or you can just have a look at my recommendations.

Coaching for beginners: learning to get started

The most blatant experience I’ve had myself was in Berlin, a 21-year-old Teinehmerin. She had previously set up a fund in Switzerland, and now she wanted to get into the real estate business. Extremely interesting person! She then started as a tipster, so without investing or brokering herself. Now she is 22 years old and has built up a wealth of knowledge and asks punky questions, wow. Whether it’s BGF calculation, tenant lists, and skepticism of overly generous calculations. Impressive what becomes possible with the right ambition and training.

Real Estate Coaching in Germany

Here you will find once again my list of recommendations in Germany:

• Alex Fischer – my allround tip
• Real Estate Coaches

Serious real estate coaching: What to look for?

For me there are only two quality criteria

1. experience

2. success

Why does success come second? Anyone can have a “one trick pony” that you can talk about for years. But who creates continuous success? Here you can find good coaches.

Experience and success count!

How do you find good real estate coaches? These are my 3 tips!

1. Tip – Participant voices in quantity and quality
2. Tip – North Data Online Check in 1 minute
3. Tip – My Coach Recommendations

Participant comments: Quantity and quality – Tip 1

Trust in what? Participant testimonials are good, but they can also be fake, especially if it’s purely text-based.

• Many participant voices
• Ideally in video format with clear name
• On the spot from coaching or after, not only from “home”.

Falsify opinions of participants: This is how it works

I myself am an SEO, so I (also) deal with online marketing and search engine optimization. Nothing is easier to “fake” than opinions of participants. Especially now with AI (artificial intelligence) and programs like ChatGPT.

Example?

These aren’t real reviews, but they look convincing! Especially if you do not expect it.

“My name is Markus and I booked the real estate coaching a few months ago. I had already bought my first apartment and wanted to learn how to scale my real estate portfolio. The coaching was absolutely amazing! The coach helped me optimize my strategies and showed me how to successfuly invest in more condos. Thanks to the coaching, I was able to grow my portfolio to 12 condos and exceed my financial goals. I am so grateful to the team at Online Coachings for Real Estate and highly recommend them!”

Sorry for the long example, but that’s exactly how it goes!

So, what to do?

North Data Check: What can your coach do? – Tip 2

Tip, just check the person with North Data. Here you can already see whether it is, for example, a sole proprietor or a person with several companies, ideally also asset management or real estate GmbHs or family foundations.

This is what you should look for when checking:

• Extensive structure, not “just” a UG or GmbH
• “Real estate limited companies” (asset management for real estate)
• Asset Management
• Family Foundation

Background check online: 2 examples

The more professional and comprehensive the setting, the better.

Example: Small entrepreneur, “only” a UG.

Solid real estate investor with smart corporate structure and investments:

Advantages and disadvantages

Let’s honestly summarize again the advantages and possible disadvantages (depending on the coach you work with), the pros and cons:

Check: How to find good real estate coaches

Let’s summarize the 3 tips once again:

1. Tip – Participant voices in quantity and quality
2. Tip – North Data Online Check in 1 minute
3. Tip – My Coach Recommendations

Example: thousands of participants, huge community (100,000+) can’t be wrong (photo: Alex Fischer Event).

Real Estate Coaching in Germany

Here you will find once again my list of recommendations in Germany:

• Alex Fischer – my allround tip
• Real Estate Coaches

Crowdinvesting: explanation, advantages and disadvantages

Too little equity, too little time, no problem! Crowdinvesting in real estate allows you to invest with smallest amounts. My recommendation for small investments starting at 500 euros are providers like Exporo and InRento.

Let’s start with basics:

What is crowdinvesting?

First of all, what is crowdinvesting?

A very simple comparison would be “a corporation“. The company sells various shares to individuals and institutions. Thus, many “participate” in a company and give it the necessary financing for growth. It works the same way with crowdinvesting in real estate.

Instead of one large investor, shares are spread to many “small” investors. This allows people to invest in real estate who either do not have the necessary credit rating, not enough equity or both. There are several providers for this, such as Bergfürst, Engel & Völkers, Exporo or also InRento, which you will also find in a list later.

More and more want to participate in the real estate market. Also Haufe reports this month“The swarm flies on real estate“, let’s look at the advantages and disadvantages.

Advantages of real estate crowdinvesting

As already learned in the introduction, you as an investor have some advantages, such as the low equity, the various properties as investment options, risk minimization through capital diversification, but also an extensive participation (fixed interest rate, profit-related distribution and participation upon sale).

• Little equity – start from 50 – 100 Euro
• Once registered, various investment options
• Transparency – contact with construction companies possible (information)
• Risk minimization – capital spread over several projects

Compensation and Disbursements:

• Fixed interest rate
• Profit-related distribution
• Participation in the exit case (sale of the property)

Disadvantages and risks for investors

As always, there are advantages, but also disadvantages that you should consider. Here also a more detailed article in Capital“Risky game“. After that you will know all the disadvantages and risks in detail.

• No right of co-determination (participatory loan)
• Capital commitment over a long period 5+ years
• Total loss when projects fail
• Too much participation – loss of overview

How does crowdinvesting in real estate work?

In the vast majority of cases, a property is to be developed (renovated or completely rebuilt).

With regular real estate investment, one would now specifically look for a partner for financing. With crowdinvestment, however, owners talk to the crowdinvestment platforms, which in turn take care of the distribution of the shares. Online platforms then broker real estate shares to investors.

This crowdinvestment platform then takes over the entire presentation to the individual investors and the owners can take care of their core business, construction and development. So with crowdinvesting, you don’t give a “typical” loan to the respective developer, you participate in the property with a participatory loan. This also means you have no say in the matter.

Participation in the real estate does not mean, of course, that you can move in tomorrow and take 0.5 square meters. The real estate will be managed afterwards, you are only a capital investor. From this you achieve a return in the form of the fixed interest rate and the profit-dependent distribution.

Once again the remuneration and payment:

• Fixed interest rate
• Profit-related distribution
• Participation in the exit case (sale of the property)

So a few euros become more and more.

Crowdinvestment provider

Which crowdfunding platform is the best? Where can you invest? There are various, reputable providers for crowdinvesting. Here is a small market overview. The minimum investments differ, depending on the projects on the platforms.

As a rule, the minimum deposits are between 100 and 1,000 euros.

List of providers:

• Bergfürst
• Crowdinvest real estate
• Scroogeinvest
• Engel & Völkers Digital Invest
• Exporo
• Immofunding
• InRento
• Linus
• Rendity
• Savings Bank
• Interest module

What makes real estate so attractive as an investment?

Does real estate investment make sense?

There is a second advantage from crowdinvesting, for you personally!

With every new real estate listing and offer, you get to know the real estate market and learn to evaluate properties accordingly. Be sure to read my article on calculating rental yields here, as this will allow you to calculate the attractiveness of real estate investments in advance.

Real estate is extremely interesting as a capital investment, due to many aspects. A very important reason for real estate as a capital investment, especially with regard to one’s own retirement provision, real estate is not subject to inflation. The material value of a property protects it from the devaluation of money. Looking at the inflation table and the development in the next 25 – 30 years shows that real estate has many advantages, especially compared to financial investments such as savings accounts or Riester pensions for retirement.

Inflation and demonetization: effects

Example: In 30 years, inflation will have risen to the point where the purchasing power of 1,000 euros will be minimized to only 600 euros. In other words, if you spend 1,000 euros in 30 years, you will only receive goods worth 600 euros today. So (circa) 40% less, after inflation.

• 1,000 euros in the savings book in 30 years = 600 euros real value

Now we come directly back to the advantage of a property as an investment. This is rented out. Accordingly, the tenant pays an equivalent value (rent) for the monthly use of the tangible asset (real estate). If money is worth 40% less, your tenant has to pay 40% more rent. Accordingly, the rental income increases from 1,000 euros to 1,400 euros. So (circa) 40% more, after inflation, respectively no real value loss.

• 1.000 Euro rent in 30 years = No loss (1.400 Euro)

So if you had invested your money in a financial product, let’s take the classic savings book, you would have had a real loss of 40%.

When you invest your money in real estate, you are protected from the effects of inflation. Even better, you additionally benefit from the increase in value of the property. Germany is a booming real estate market, not only in recent years, also when looking at the last decades.

The population is growing, housing is scarce.

This way you additionally profit from the rent increases.

No fluctuation like shares & Co.

Real estate also has the advantage that it is hardly subject to fluctuations. If you actively trade currency, invest in stocks or buy cryptocurrency, for example, you will experience constant fluctuations in prices. Depending on the type of investment, currency, stock or crypto, more or less. Leases are long-term, rent is transferred monthly and the amount remains the same, tends to even increase due to rent adjustment.

• Real estate is stable in value
• Real estate offers inflation protection
• Real estate values do not fluctuate (like stocks, cryptocurrencies, and other financial products)

Major construction site in Stuttgart, profit, thanks to crowdinvesting.

Equity: Entry into real estate investment

The biggest sticking point for most is equity.

Especially when it is no longer about condominiums worth 100,000 euros (15,000 euros equity), but about investments in large cities with apartment prices of 400,000 euros, 500,000 euros and more. For a property with a purchase price of 500,000 euros (including ancillary costs), you would have to have 75,000 euros of equity ready.

Equity share in the purchase of real estate: security of the bank

First, let’s ask the question:

How much equity do you need for a regular property?

The answer differs, especially according to the real estate location. A condominium in Munich, unaffordable for most, even in the wider Speckgürtel around Nuremberg, Freiburg.

It is no different in the other major cities, Berlin, Hamburg, Düsseldorf or Frankfurt. So the purchase price of a property varies extremely, between 50,000 euros (in C-location) and 400,000 (in B-location). Of course, more if we talk about very good micro-location within the A-locations. e.g. Munich-Mitte, Berlin-Mitte, Hamburg-Mitte, Düsseldorf-Mitte and so on.

Calculate equity ratio: Here’s how

Whether 50,000 euros or 100,000 euros, the bank requires for the financing of a property, usually 15% equity. Especially if it is your first property.

In addition to the purchase price of the property, there are also the ancillary purchase costs. Depending on the federal state, including land transfer tax, notary costs and land registry entry, the total is approximately 7% to 10% extra.

Service charges idR. 7% – 10% yes according to federal state + broker (if involved)

The fluctuation comes on the one hand from the land transfer tax, which differs in each state. On the other hand, the question, was a broker commissioned? Here, too, the brokerage costs differ depending on the federal state. In the case of a private purchase, the buyer and seller must each share 50% of the brokerage costs. Ultimately, this results in the total purchase price of the property, including ancillary purchase costs.

This is how you calculate the equity ratio:

• Financing request: 100.000 Euro
  (purchase price plus ancillary costs)
• Equity: 15.000 Euro
• Loan from the bank: 85,000 euros

Purchase price calculation with additional costs:

• Purchase price: 100.000 Euro
• Real estate transfer tax example NRW (6.5%): 6,500 euros
• Notary fees (1.5%): 1,500 euros
• Land register entry (0.5%): 500 euros
• Brokerage commission (3.57% [3,570 / 2]): 1,785 euros

Credit rating for financing: crowdinvesting as an alternative

Not everyone has the necessary credit rating for such a large financing. Even if the equity would be available. e.g. because regular income counts (self-employed). Even more, however, do not even have the necessary equity available. For those who do not want to wait, there is a great alternative, even to invest in real estate as an investment.

Many reasons that speak for real estate as an investment and if the equity is not yet enough, for crowdinvesting in real estate.

Residential neighborhood with many condominiums (new construction):

Find profitable real estate

Crowdinvestment does not take away from you the decision in which property you invest. Therefore, here again the question opened:

How to find profitable real estate?

You still have to decide for yourself in which property you want to invest your money. Perhaps you already know my detailed guide on the subject of buying your first property? Here you will learn about the different types of real estate, the difference between yield real estate and investment real estate but also (very important) the real estate yield.

The real estate yield is a simple calculation once you know and understand it. It looks at the investment amount (purchase price and incidental purchase costs) and the monthly income (rental income). The result is a percentage.

If this is above 6%, all costs are usually covered by the repayment of the financing, interest and reserves for maintenance. Any return above 6% means additional wealth accumulation for you. Accordingly, the real estate yield is an extremely important factor for real estate investors. Because with this single key figure, you can evaluate the attractiveness of a real estate investment, but also compare different investment properties with each other.

Let’s first look at the simple formula of rental yield:

Annual net income / investment * 100 = rental yield

The rental yield is subdivided once again into the net rental yield and gross rental yield. Where is the difference?

• Net rental return = incl. incidental purchase costs
• Gross rental yield = excl. incidental purchase costs

With this knowledge, you can act much better as an investor and thus find really profitable properties for your investment.

Once you have registered in a crowdinvestment platforms, browse through the individual investment properties and compare them based on the return. Of course, you won’t get 100% of the rental payments, but you will see the yield on all platforms. Now you know what it’s all about!

Earn rental income today with investments starting at 500 euros. My recommendation:

• InRento

Service charges: definition & explanation

Whether yield real estate or investment real estate, during the purchase of a house or an apartment there are always ancillary purchase costs. What many underestimate: The ongoing ancillary costs of owning a property. If you buy a rented property or do the initial letting yourself, you can pass on some of these incidental costs to the tenant.

Non-apportionable incidental costs: repair, maintenance & co.

You cannot pass on costs for craftsmen, maintenance and management to the tenant. After all, it is your responsibility as a landlord to ensure that the property meets modern safety standards and is rentable.

As the landlord, you must bear these costs yourself:

• Repair costs
• Maintenance costs
• Administrative expenses
• Bank charges

Apportionable service charges: The tenant pays

The apportionable ancillary costs are those that can be apportioned to the meter by you as the landlord. To avoid misunderstandings here, these should be agreed in the rental contract. This type of incidental costs are also called operating costs. Let’s take a closer look at them.

List of operating costs: (BetrKV) § 2

Operating costs are therefore constant ongoing public charges on the property. These are defined and regulated by law. Thus, any costs for the care and maintenance of the common areas and facilities fall into the category of apportionable service charges. Any costs for street cleaning, garbage disposal and for the chimney sweep are also paid by the tenant.

Here is a brief overview:

1. Water supply
2. Drainage
3. Heating system and fuels
4. Hot water system, supply and equipment
5. Connected heating and hot water supply systems
6. Passenger or freight elevator
7. Street cleaning and garbage disposal
8. Building cleaning and vermin control
9. Garden maintenance
10. Lighting
11. Chimney cleaning
12. Property and liability insurance
13. Janitor
14. Community antenna system
15. Facilities for laundry care
16. Other operating expenses

More about buying real estate: Operating costs

Are you buying a property that is already rented out or are you planning to rent out your newly purchased property? If you’ve never rented out a property before, you should definitely take a closer look at the different ancillary costs. Read even more on the subject here, on my new site for buyers, Immobilien-Erfahrung.de:

• Apportioning operating costs to tenants (external)