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)

Check apartment and house: Important criteria

During the technical inspection, you personally make an overview of the condition of the property. Important, if you are not able to assess technical systems, take a person with the appropriate know-how with you to the inspection. You should pay attention to this during the technical inspection of the apartment and house:

Windows, exterior walls & co: condition and sealing

Particular attention should be paid to the windows. Depending on the year of manufacture, they may have certain defects. You should pay particular attention to the seal, otherwise moisture can creep in. The same applies to the exterior walls. Our tip: Take a measuring device with you and carry out a moisture measurement.

Here is an overview:

• Windows: condition and seal
• Exterior walls: check moisture
• Fuse box / electrical subdistribution
• Bathroom: condition and furnishings

Bathrooms and sanitary facilities: Moisture Check

In addition to the fuse box, you should also look at the bathroom. Check the toilet, sink, bathtub and shower for proper function. Moisture plays an important role, especially in the tiles and silicone joints. Otherwise, mold can quickly accumulate here.

This is what you should check during the bathroom check:

• Sanitary facilities
• Tiles
• Silicone joints
• Instantaneous water heater
• Water pressure
• Bath ventilation

Checking community property: Important criteria

If you decide to buy a property as part of a WEG (homeowners’ association), you should also look at the common property. Here it is important to note the following:

Facade, roof & basement: condition and moisture

Look at the condition of the facade as well as the roof and the basement. If there are other common areas, you should also look at them. You should pay particular attention to dampness and mold.

Here is an overview:

• Facade
• Roof & attic
• Basement
• Heating system
• Electric meter cabinet

Consultation with residents: defects & modernization measures

Our tip: Talk to the residents of the WEG and let them tell you about problems and defects in the house. Also ask whether and which modernization measures are planned, as you as a resident of a WEG must expect future costs here.

Checklist: Technical check

Here, once again summarized, the – typical – 10 test points in short form:

1. Windows: condition and seal
2. Exterior walls: check moisture
3. Fuse box / electrical subdistribution
4. Bathroom: condition and furnishings
5. Facade
6. Roof & attic
7. Basement
8. Heating system
9. Electric meter cabinet
10. Future modernization and maintenance measures

Buying real estate: Learning from A-Z

Everything from A-Z: owner-occupancy or renting, financing a condominium, apartment search, real estate portals, brokers, valuation, purchase prices, negotiations and taxes. Knowledge and experience from experts, in one guide.

✓ A guidebook
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Mistakes when buying real estate: You should avoid them at all costs!

Emotional real estate purchase, a too special property in a bad location and the purchase of a house for personal use – the list of possible mistakes is long. Learn here what you should avoid at all costs!

Error: Poor location of the property

One of the most consequential mistakes is buying a property in a bad location. Demand is low, renting is difficult and the risk of vacancy is high. Large cities in sought-after B locations are best suited. Even a little outside the major cities, in the Speckgürtel, real estate investment is worthwhile. Here are the best locations at a glance:

• Buying in major cities (not metropolitan areas in top A locations)
• Metropolitan areas, the famous Speckgürtel, with good B-location
• Cities in demand with B location

Error: Your real estate is too specific

The more special your property is, the more difficult it is to sell or rent it later. A chic loft with a view of the skyline or a designer villa on the edge of the forest sound tempting, but are nowhere near as sought after as an average 1-3 room apartment on the edge of town. Our tip: So before you start looking for real estate, get to grips with the different types of houses and apartments and their demand and don’t invest in a property that is too fancy.

While each property on the market has its own individual charm, it may not be as easy to resell later:

Mistake: Buying property for personal use

One of the most basic mistakes beginners make is buying a property for their own use. After all, it is not tenants and the tax office who will then pay off the property, but you yourself. This makes owner-occupancy the most expensive form of housing. That’s why we recommend investing in a property as a capital investment first and only then in owner-occupation.

Reading tip: Personal use or capital investment? Advantages and disadvantages

Mistake: Buy house as the first property

Similarly, as with owner-occupancy, you are left with 100% of the costs when you buy a house. So for your first property, do not invest in a house, but in an apartment. As a homeowner, you must always bear all costs alone. However, if you are an apartment owner, these costs are divided among the parties.

Mistake: Emotional real estate purchase

You have dealt with the topic of real estate investment, the different location types and property types and clarified the question of investment or yield property, and suddenly you stumble upon an apartment that reminds you of your childhood? The important thing here is: Never buy a property based on your emotions. Stay true to your strategy and goals and think rationally about the purchase.

Mistake: Resale value not in view

When purchasing your property, also think about the resale value. After all, you should not make a big minus after a later resale. Here, above all, the location again plays an important role.

Here is the comparison of the 3 types of location and their increase in value:

• A-location: Annual increase in value of 4-6%.
• B-location: Annual value increase of 1-2%.
• C-location: no increase in value (possibly small decrease in value)

Error: Buy due to the top equipment

If you buy a property because of its features, you may even end up flipping it unnecessarily when you buy it. Instead, you should apply the strategy of ‘buy and flip’. So you buy a property cheaply, renovate and refurbish it and thus make a profit again when you resell it. After all, you cannot increase the square meters of your property, but you can always improve the facilities.

Buying real estate: Learning from A-Z

If you want to learn even more about the individual sources of error, then take a look at our guide:

• Mistakes when buying real estate (external)

If you want to learn even more on the subject of buying a property, whether owner-occupied or capital investment, numerous articles, guides on the subject of rented vs unrented, as well as checklists, all free and 24 hours online available, with us!

Apartment, house, apartment building, everything for real estate beginners!

Now new on Immobilien-Erfahrung.de:

• Buy property: learn – external