Selling apartment with tenant: What to consider

Selling a rented apartment is a complex undertaking. After all, many factors have to be taken into account, from finding a buyer to legal requirements. Above all, the tenants play an important role. The sale of an apartment does not necessarily mean that existing tenancies may be terminated. We will now take a closer look at what needs to be taken into account.

Termination protection: Purchase does not break rent

A sale of the apartment does not necessarily mean that the rent is broken. On the contrary, the existing lease agreements must be honored by both parties even after the apartment is sold. This is stipulated in the Civil Code. This means that the new owner must adopt the terms of the lease. The tenant continues to have the right to quiet and undisturbed possession of the apartment as long as he makes his rent payments and complies with the terms of the lease.

However, it is important that the landlord informs the tenant about the planned sale and gives him a reasonable period of time to inspect and prepare the apartment. The tenant should also be informed about the new owner and, if necessary, sign a new lease.

In summary:

• § 566 BGB: Purchase does not break rent
• Buyer takes over rental agreements
• Condition: Tenants continue to make rent payments
• Landlord must still announce sale

Right of first refusal for tenants

If it is not just a single apartment that is being sold, but a complete apartment building that is being divided into individual co-ownership shares, the tenant enjoys a right of first refusal. This is a protective mechanism designed to prevent him from having to move out of the apartment without warning after a successful sale. With the right of first refusal, the tenant can buy the apartment and now becomes part of the resulting condominium owners’ association.

The most important facts about the right of first refusal:

• When apartment building is divided into individual apartments
• Right of first refusal protects tenant from moving out
• Becomes a member of the homeowners association

You can find out here what other special features need to be taken into account in this case:

• Apartments for sale individually

The expensive alternative: a lease termination agreement

The tenancy cannot therefore be terminated unilaterally by the new owner without sufficient justification. However, the owner has the option of offering the tenants a lease termination agreement and granting them an attractive severance payment. In this contract, an eviction period for the rented apartment is agreed upon, which is independent of the legal regulation. This allows the tenancy to be terminated by mutual agreement.

Right of the landlord to inspect

Whether it’s a maisonette or a micro apartment – if you want to sell your apartment, you are legally allowed to hold viewing appointments. These are important to show and present the apartment to potential buyers. However, the landlord does not have unlimited rights to visit. He must respect the tenant’s privacy and may not conduct viewings too frequently or at unreasonable times.

For this reason, you should arrange any viewing appointments with your tenants in good time. In addition, you must state the purpose of the viewing so that the tenant can see the time and space involved. Although the landlord is generally entitled to a right of inspection prior to the sale of the rental property, the tenant does not have to allow an infinite number of inspections. According to current case law, inspections once a week are considered reasonable.

Right of inspection of the landlord declared:

• Conducting surveys allowed by law
• Agreement with tenant indispensable
• Once a week possible
• Naming the purpose of the visit

Owner-occupier: termination in the event of owner occupancy

If a landlord wants to sell his apartment, he may not simply terminate the tenant’s lease. However, there is one exception: If the landlord needs the apartment for himself or his family members and no other comparable apartment is available. In this case, the landlord can terminate the tenancy with a notice period.

It is important to emphasize that the landlord must make the own need credible. A blanket assertion that he needs the apartment for himself or his family members is not sufficient. The landlord must be able to prove that he actually needs the apartment, for example by explaining why he needs the apartment and that he has no other apartment available.

Under these conditions, a termination of own use is possible:

• Legitimate interest on the part of the lessor
• Self-interest for oneself or other family members
• Proof that the apartment is needed
• Compliance with the statutory periods of notice

Sell rented apartment: Procedure & Tips

Let’s say you’ve now decided not to move into the apartment personally, nor have you agreed to a lease termination agreement. Here are some important things to consider when selling a rented apartment:

Capital investors & investors as target group

If you decide to sell your rented apartment, you have to expect a lower demand. After all, most buyers are looking for an apartment for their own use. At the same time, the current low interest rates ensure that more and more people want to invest their money instead of hoarding it in the bank. Therefore, the purchase of rented apartments is the most interesting for capital investors.

Rented apartments can be a stable and long-term investment opportunity as they generate regular income while allowing for potential property value appreciation. Investors can benefit from ongoing rental income and thereby continue to build their wealth.

Tips for planning and procedure

Marketing a rented apartment can be complex. There are some important points to keep in mind. As mentioned above, you need to make sure that you are familiar with all the rights and obligations surrounding the sale. You are also obligated to inform the buyer of all important details about the rented apartment. This includes, for example, the current lease agreement, tenant status, rental condition, and any rent arrears. Since a rented apartment may be worth less than a vacant apartment, you should consider both the condition of the property and the amount of rent when setting the price.

The most important things summarized:

• Familiarize yourself with the rights & obligations
• Inform the tenant about the sale
• Clarify the tenancy to the buyer
• Set a realistic purchase price

Tip: Sell apartment with broker

One tip when selling a rented apartment is to hire an experienced real estate agent for this purpose. A good agent has the necessary know-how and experience to make the selling process go smoothly and achieve the best possible results for the seller. A realtor can help properly value the home, create the exposé, find prospective buyers, arrange viewings and negotiate the closing of the sale. In addition, he can assist in obtaining the necessary documents and legal issues. Thus, a real estate agent can be a valuable support in the sale of a rented apartment.

Conclusion: selling apartment with tenant

In summary, the sale of a rented apartment presents some special challenges. It is important to consider the rights and obligations of the landlord and tenant, to conduct viewings only by appointment, and to comply with the tenant’s protection against termination. When selling, all necessary documents should be complete and up to date to facilitate the sales process.

It is advisable to contact an experienced real estate agent for assistance in marketing the apartment and handling the sale. Through professional preparation and careful execution of the sales process, landlords can achieve a successful transaction and obtain a reasonable return on their investment.

Apartment sale without a broker: That speaks for it

In this case, you will have to take care of the sales process yourself, including creating ads and organizing viewings.

Let’s take a closer look at the advantages and disadvantages.

Advantages: Saved costs & faster processing

One of the biggest advantages is that The most important factor is certainly that you can save the broker’s commission, which is usually incurred in a successful sale. This commission is usually several thousand euros and can therefore represent a significant portion of the sale price. In addition, you always have full control over the sales process and can always decide yourself about viewing, buyer & Co.

The biggest advantages at a glance:

• Savings on broker commission
• Control over the sales process
• Direct contact with potential buyers
• More personal appearance
• Faster processing of formalities

Disadvantages: Lack of professional support

However, a sale without a real estate agent is also associated with some disadvantages. For example, you have to take care of creating advertisements and organizing viewings yourself, and you don’t have the support of a professional real estate agent in evaluating the apartment and handling the contract. In addition, it can be difficult to find a suitable buyer if you do not have an extensive network or experience in selling real estate.

All disadvantages summarized:

• Time and resource consuming
• No support of a professional broker
• Lack of network and experience in real estate sales

You see: Selling without a realtor is worth it. Even if you lack experience, a private apartment sale is not impossible. If you follow these steps, nothing will stand in the way of your sales success.

Procedure: From the valuation to the purchase contract

If you decide to sell your apartment without the help of a real estate agent, you should follow these steps.

An overview of the process:

1. Have apartment valued
2. Create sale ad
3. Organize tours
4. Negotiate purchase price
5. Create purchase contract
6. Apartment handed over to buyer

Have apartment valued

The first thing you need to do is find out how much your apartment is worth. To do this, you can use various online tools or real estate portals to value your apartment and determine the average price per square meter in your area. A professional property valuation by an appraiser is also possible.

Create sale ad

Once you have determined the value of the apartment, you need to create an advertisement to draw the attention of potential buyers to your apartment. For this purpose, you can place ads in newspapers, online real estate portals or even on social media platforms. Make sure to include meaningful photos and detailed information about the apartment.

Organize tours

Once you have received inquiries from potential buyers, you should organize and conduct viewing appointments. You should be flexible and offer appointments at weekends or in the evenings to accommodate as many interested parties as possible.

Negotiate purchase price

Once a buyer has been found, you need to negotiate the selling price. Here it is important to set a realistic price and not to make too high demands. Also, make sure to answer all the buyer’s questions and provide additional documents or information if needed.

Create purchase contract

Once the buyer and seller have agreed on a price, you need to draw up the purchase contract. For this, you can use standardized contract templates or seek advice from a lawyer. The contract should contain all the important information about the apartment and the conditions of the sale.

Apartment handed over to buyer

Now you just need to make a notary appointment to complete the sale. After the sales contract has been signed, you have to hand over the apartment to the buyer. Here you need to provide all the necessary documents and keys and also make a handover protocol to record any damage or defects.

It is important that you proceed carefully with each step of the sales process and take sufficient time to organize and carry it out. If you are unsure or need assistance, you can also consult a notary or a lawyer to ensure that all legal formalities are complied with.

Costs: Notary, energy certificate & Co.

As mentioned above, you can save the broker’s commission if you decide to sell without a broker. However, you will still have to bear some costs that come along with the sale. Here are some of the costs that may come your way as a seller:

• Notary fees
• Costs for the application of the energy certificate
• Marketing & advertising costs

Overall, the cost of selling an apartment without a broker may vary depending on the value of the property and the scope of services used. It is advisable to find out in advance about the possible costs in order to make a realistic calculation of the proceeds of the sale.

Important documents at a glance

As we all know, good preparation is half the battle. This also applies to the documents. It is best to compile them in advance and keep them in an important folder that you can access at any time.

In any case, you can not do without these documents:

• Land register excerpt
• Energy certificate
• Purchase contract
• Parcel map
• Floor plan
• Building description
• Living space calculation
• List of maintenance measures
• Overview of the house payments

Make sure that all documents are always complete. Additional costs may be incurred, especially for the application for the energy certificate and the land register extract.

You can find everything you need to know about the most important documents here:

• Documents sale

Checklist: This is what you should pay attention to

Here’s a checklist of some important questions to ask yourself when considering whether to sell your home without a realtor:

1. Do you have the time and resources to handle the apartment sale yourself?
2. Do you have experience in dealing with real estate sales?
3. Can you realistically estimate the value of your home?
4. Do you have all the necessary papers and documents together?
5. Are you ready to negotiate with potential buyers?
6. Do you have a clear idea of what you want to achieve in terms of sales?
7. Do you have the necessary knowledge to clarify legal issues related to the sale?

Conclusion: Selling an apartment without a broker is worthwhile

In summary, selling an apartment without a broker is an option that has many advantages. First of all, you save the broker’s commission that would otherwise be due, which can be a considerable sum, especially for expensive properties.

At the same time, selling without a real estate agent also requires some time and work, since the seller must take over all tasks himself. These include, for example, advertising the apartment, conducting viewings and negotiations, as well as preparing and reviewing the necessary documents. However, if one is willing to take on these tasks and has the necessary knowledge and skills, selling without an agent can be a sensible decision that leads to a successful and satisfying selling experience.

Search engine optimization for brokers

Traffic means reach, i.e. visitors who are on your website. SEO Tip from professionals, for professionals! First, let’s start with the definition of search engine optimization.

What does SEO mean? 5 Basics

Search engine optimization (SEO) includes all measures that serve to increase the visibility of one of your website in search engines (such as Google, Bing & Co.). These are:

1. Page structure and keywords
2. Page content with structure, keywords, text length and links
3. Visualizing (photo) and explaining media (infographic, explanatory video, etc.)
4. Internal links (increases page dwell time)
5. External links (increases page relevance)

Goals in SEO: High placement in search results

There are two crucial aspects for you:

1. If someone is looking for you, you should “be there” – just learned already
2. When someone searches for topics relevant to you, you should “be there”

There will be to the 1) search queries that revolve around you. Typical are

• “Sample broker city” – General search
• “Sample Broker Reviews”
• “Sample Broker Valuation”
• “Sample Broker Experience”
• “Sample Broker Experience”
• “Sample broker reputable”
• “Sample broker unserious”
• …

Now, if you do not have your own website, you will not have any influence on the search results. If you have too small a web page, for example, only home page, About us and Contact, it also happens that others (competitors) appear before you. Or even portals like Gutefrage.net, where someone has asked this question about your name.

The stronger your page, the more present (visible) you are

There are millions of searches in Germany every day, just for the context “real estate”. Sell, rent, manage, buy, finance, … that’s why you should 2) “be there” when someone searches for topics relevant to you.

You will now learn the basis for this: the structure.

No matter where and when someone searches for you, they have the “sovereignty” on the first page (to be seen right away in example graphic).

SEO Advantages: More visitors, new customers

• Here you also achieve the acquisition of new customers via search engines
• More visitors on the website
• Additional sales channel
• Targeted marketing activity (through search terms / active “demand”)
• Once set up, you get “free” visitors, every day

SEO Disadvantages: Long-term and initial costs without ROI

• Long-term build-up necessary, especially in the real estate sector (high competition)
• Build up time: At least 1 year
• ROI (return of invest) will be achieved late (comparison: SEA quasi immediately)
• Costs for content creation and website

SEO, SEA, what’s the difference?

SEO deals with your website, its content and structure. SEA (search engine advertising) on the other hand, is a “direct” placement in search engines through paid advertisements. These ads are displayed above the organic search results (SEO).

Real Estate SEO for Beginners: How it works

Simply put:

• Creating a website for desktop / mobile devices
• Plan topics (keywords) in a structured way
• Create individual pages (company pages and blog posts)
• Each blog post has 300 – 1,000 words, links to other posts
• Goal: Good quality and more content than the direct competition

By individual topics / keywords:

• House for sale Berlin
• Sell house after inheritance Berlin
• Sell house after divorce Berlin
• …

your “platform” becomes strong. Your subtopics (such as house selling divorce Berlin) thereby link to the parent page (house selling Berlin).

As a result, the visitors you have collected in the search engines will stay longer and longer on your website.

Why SEO! Advantages for real estate agents

Advantages of SEO – When person X learns about you as a realtor, through recommendation, advertising, by chance, person X will in almost all cases search for you as a realtor. Mostly in search engines, mostly on Google. There are 10 places in the search results (away from advertising), the more channels you serve, the more you determine the information that is here.

In short:

• 85% search for information first on search engines
• Page 1 has 10 results (away from advertising > SEA)
• No digital media = No influence

SEO offers the ultimate advantage:

• Once on page 1, it will be hard to oust you (sustainable)
• Users have a need, they already want something
• You give users “something” for free, without anything in return (positive image)
• Users recommend your good content
• SEO works for you 24 hours a day, 7 days a week
• You passively (after work) collect new leads

Disadvantages of SEO: You have to be that honest

SEO is long-term marketing, you will achieve results (visitors) only after weeks and months, depending on how hard you work on it and how high the competition is (C-location easy, A-location hard).

• Long-term online marketing
• Results by weeks, months
• Time intensive (article creation)

For this, your search engine rankings are very sustainable and often stay for years once you have made it. Because, the competition must first become better than you. Compared to advertising in search engines, you do not pay for each click (about 4 – 16 euros / click in the real estate segment).

Checklist! The 3 SEO basics for brokers + example

To be visible (as seen in the example in a moment) you basically need only 3 things:

1. Google Business Entry
2. Website
3. Social media channel, example Facebook, Instagram and LinkedIn

… you have already taken a certain part of the first page. Here you can see how effective the mix of these 3 components is, for all those who are looking for you.

1. Internet site in the first place of the search results
2. Google Business Entry
3. Own photos, direct, visual understanding
4. Map and directions
5. Address, contact details and opening hours
6. Social media (Facebook)
7. Reviews on the web (Facebook)

Almost all roads, lead to the broker (not third parties or even competitors).

How does SEO work, so right?

Let’s get back to your brokerage website and the question: How does SEO work, so right?

Create theme construction: “Keywords” – What do you want?

You build individual blog posts for individual so-called keywords. For example, one keyword could be “renting”, another “renting tips”, yet another “renting process” and yet another “first renting”. Depending on what users are looking for in a search engine, you have the right content for it.

Here again the example of the introduction for our real estate agent in Berlin, with the focus object acquisition:

• House for sale Berlin
• Sell house after inheritance Berlin
• Sell house after divorce Berlin
• …

Create SEO texts: 1-2-3 formula – checklist

On the Internet you will find thousands of guidebooks that will tell you a lot about SEO, in principle, means good optimization.

The little 1-2-3 formula:

1. Create individual pages (company pages and blog posts)
2. Each blog post has 300 – 1,000 words
3. Articles link to other posts (Sale > Divorce > Separation year and back).

The most important, most important (!) in SEO – added value

Now the most important thing:

Importantly, these articles should contain added value!

Therefore directly tip 2:

It’s not about creating 1,000 articles, better are 50, 100 focused (topic) and dotted (region)

Added value means that your visitors take something with them, ideally stay on your website for a long time and thus increase the value of your website (domain value). This way you get more and more visitors, thus also new customers.

2 SEO example for object acquisition

Are you looking for existing properties in your region (real estate acquisition)? Help sellers with problems, landlords, heirs. Almost everyone will want to sell sooner or later.

The first SEO text

You now know the process you need to follow to advance your website. SEO is long-term marketing, you will achieve results (visitors) only after weeks and months, depending on how hard you work on it and how high the competition is (C-location easy, A-location hard).

SEO summarized

SEO means quickly explained

• Structure – contents and texts
• Added value – texts must “give something” to readers
• Links – Links provide further information
• Goal – Good content ensures high placement in search results

Agencies like Model Agency One offer holistic online marketing solutions for maximum visibility.

Deal Trader: contacts for commission

Condominium, townhouse, half of a house or detached house, as a deal trader you do not buy yourself, they broker the property for sale for a commission.

You can make money with real estate in different ways. Buy’n’hold (the classic buy and let), buy’n’flip (i.e. buy, renovate and sell on quickly at a profit). However, without equity or regular income, getting started in real estate and investments becomes difficult.

The solution: Become a Deal Trader

Best of all, even if you later buy your first, second or even third own capital investment, you can continue to broker properties that are too far away or have an investment volume that is (still) too large for you.

3 quick benefits of deal trading as a tipster:

• No expertise or degree required
• Quick income through commissions
• Building knowledge and assets (equity)

Hardly any other profession brings so much profit in comparison to the effort (money and time), as the mediation of real estate.

The main thing is that the return on a property is right!

What does a Deal Trader do?

Every day people decide to sell their house or condominium. For deal traders much better: multi-family house sales and whole real estate portfolios, consisting of several residential units (apartments) or multi-family houses.

Now, if you are in the right place at the right time, you can earn money relatively quickly by referring the right contacts.

Directly two more advantages: You do not need a“broker’s license” and you learn through the mediation from practice. Valuable knowledge to become a real estate investor yourself later with creditworthiness and equity.

So if you manage to get your hands on one or two properties for sale, you can quickly become a successful deal trader.

Your unfair advantage as a deal trader?

You have what everyone wants: Cheap solid real estate with yield and / or margins on resale.

Often it goes faster than expected, once people know that “you have good contacts” to sell a property quickly, safely and at a good price. But before the real estate acquisition, let’s come back to the advantages at a glance.

Advantages of a Deal Trader

Here again the advantages you have already learned about and more:

• No expertise or degree required
• Very low risk
• You can start with little money
• You have high earning potential
• You have quick income through commission
• What’s more! Building up equity for own investments

Not enough yet? Ok! More advantages of deal trading:

• No “broker license” according to §34c of the trade regulations necessary
• The craft can be learned in the short term
• No long or large training
• Easy real estate entry
• Knowledge building through practical experience
• Further expertise: fix’n’flip, property developer, etc.
• Network building: Craftsmen, investors, etc.

Deal trading can begin in the comfort of your own home.

From Deal Trader to Real Estate Investor

Many would also call a deal trader for real estate a top buyer for investors. The secret lies in acquiring real estate. Preferably off market real estate.

Real estate acquisition of off market properties

You may remember the initial phrase, “You have what everyone wants: Cheap solid real estate with returns and / or margins on resale”. If a property has been for sale on real estate portals for weeks and months, you can not be a bargain, something is “rotten”.

Off market real estate refers to properties that are not yet on the market. Typically real estate agents, real estate portals and newspapers. Simply explained: you know good investors and are offered a property from your acquaintances or network that is for sale (soon): Perfect.

Now you can get the deal done. Your investors will do the rest.

Therefore, they do not take over the tasks of a broker.

You only establish the contact between seller and buyer / prospective buyer. For this you take your small tipster commission.

Best “buyer” for real estate investors

Therefore, as a deal trader, you are in high demand because you have what everyone wants, especially investors looking for capital investments.

1. Fast and uncomplicated real estate deals
2. Off Market Real Estate
3. Low-cost real estate with good potential for return and margin, if resold
4. Real estate, where there is a high demand (solid middle-class real estate)
5. A good network to real estate investors, brokers, inducers, etc.

With sufficient creditworthiness: Secure real estate yourself

At some point you will have built up sufficient creditworthiness of your own, i.e. solid and regular income plus assets (equity). Another advantage: Through your network, you can now grab the fillets yourself and rent them out as buy’n’hold or upgrade and resell them with fix’n’flip.

Deal trading with real estate is an excellent way to enter the real estate industry without risks and gradually acquire more and more expertise.

Broker and Deal Trader: Difference

As previously learned, as a deal trader you do not take over the duties of a realtor. Experienced investors can evaluate and buy real estate without the help of a broker.

What deal traders do not (have to) do

Real estate agents accompany sellers through the entire process. They collect documents, they take photos, they create real estate listings, they communicate with prospective buyers, they arrange viewing appointments, and they negotiate for the seller’s side. All this, you do not do as a deal trader for real estate.

Real estate agents are broadly positioned to help you land many properties for brokerage. Their goal is not to broker forever, but to build 1) knowledge and 2) equity through deals as a tipster.

Deal Trader brings sellers and buyers together directly.

• Agents broker real estate to a wide audience
• Deal Trader connects experienced investors and sellers directly

Tip! It doesn’t always have to be apartment buildings, even more special real estate such as underground parking spaces can be profitable for you.

Who can become a Deal Trader?

Going into “real estate full-time” is a gamble for many who are already in permanent employment. The good thing about the job of the Deal Trader, you can also part-time, so on the side, broker real estate, whether as an employee or self-employed. Also for students, retirees, theoretically for anyone with affinity to real estate and wealth accumulation.

Your motivation? Deal trading is something for everyone who:

• An affinity for real estate has
• Want to make money with real estate
• Wants to secure his assets
• Wants to increase its equity and credit rating
• Wants to find real estate investors
• Want to buy his first property
• Want to build a real estate portfolio
• Want to make the entry into the real estate industry
• Want to learn the real estate trade
• Want to switch to self-employment
• Want to build a 2nd leg
• Want to earn more money on the side
• Want to afford more
• Want to build up assets with real estate for your children
• Taxes to be converted into equity and stable assets
• Want to achieve financial freedom

Working alongside your job:

Real estate buyers: investors

Let’s move on to the different target groups you talk to as a deal trader. Ideally, you have decisive investors who want to buy and have sufficient creditworthiness and equity. This way you can finance and buy a property quickly.

Professional investors make quick decisions.

The main customers of a Deal Trader are:

Real estate investors with little acquisition time

Real estate investors who are looking for quick real estate deals but don’t have time to research and acquire properties themselves. The model is called buy’n’hold (buy and hold [let or with vacancy on appreciation)].

Buyer for:

• Existing properties
• Residential
• Commercial real estate

Fix’n’flip: Property in need of renovation

Buyers who fix’n’flip (buy, upgrade, sell) are professionals who quickly buy properties in need of renovation, renovate them, and then sell them again quickly.

Buyer for:

• Real estate in need of renovation
• Tip: Years of construction & defects – The checklist

Example: Apartment building in Dortmund.

Developer (new construction): Land / demolition house

Developers (new construction) are professionals who buy land with or without demolition houses to build a new building.

Buyer for:

• Land
• Demolition houses

Example: Demolition house Berlin in prime location. Ideal for property developers.

Subdivider / developer (stock): Apartment building

Subdividers / developers (stock) are professionals who buy up multi-family buildings(apartment buildings), then convert them into condominiums. The condominiums are then resold individually, at a good margin.

Buyer for:

• Rental house

Real estate agent: offer for existing customers

Real estate agents are professionals who are happy to pay tipsters commissions to professionally refer off market properties to their client.

“Buyer” for:

• Any type of real estate for their clients

Your commission only flows to the broker when he or she has found a buyer. The direct deal with investors, developers, subdividers and the like is therefore faster.

Deal Trader: Lucrative properties in your own portfolio

You keep the most lucrative properties yourself as your credit rating and equity increase.

What do you need to be able to do?

Make money fast with real estate! That sounds super easy.

As a deal trader, challenges and problems are waiting for you. You do not invest a lot of money, but you should invest time to learn. Advance knowledge makes you a deal trader. Whether it’s basic knowledge of valuation, the right analytical tools for square footage pricing, or even gaining quality contacts (investors) who trust you.

Problems and challenges: Checklist

Let’s take another look at the typical problems and challenges that await you in the everyday life of a deal trader.

Problems and challenges:

• Entering the real estate industry with little knowledge?
• What are the first steps to becoming a successful deal trader?
• What tools are available to perform market analysis?
• Which properties deliver good deals? You and the investor
• Which partners are valuable, who can you ignore?
• How do you evaluate real estate offers quickly and independently?
• How do you secure good deals?
• …

If you look at all the challenges one by one, they are not so difficult anymore. Especially if you act with the knowledge and experience of experts to avoid the first mistakes in advance.

Get started now! Become a Deal Trader

You don’t know where to start? Here’s a tip: Immobilien-Erfahrung.de – the colleagues will provide you with the expertise you need. If you are seriously interested in the topic of deal trading and you want to make money with real estate, then read more here:

• Become a Deal Trader

know-how, network and access to specialists:

• Deal Trader
• Fix’n’flipper
• Investors
• Developer
• Etc.

Renting a villa: return and increase in value

Is it worth renting in Spain? Yes! As you will see later in the example, some generate 5%-10% of the purchase amount per year, just by renting in and around peak season. The remaining 3-6 months you use your villa yourself.

Are you planning to rent for the first time?

Profitable is not only the renting, also the increase in value of the property in special places like Mallorca or Ibiza, you should not disregard. More about this, after the yield calculation.

Learn everything you need to know here in the guide!

Renting: return of a villa

In Germany, real estate is rarely used as a vacation home and rented out during off times. If they do, the calculation works a little differently than the typical fully rented property. In a long-term lease, tenant X pays sum Y every month. Vacation rental also means a bit of speculation, depending on off-peak and peak seasons. In principle, however, the calculation of real estate return is the same.

Rental yield target: tenant pays your villa

Let’s summarize the simple goal of a good real estate return:

The return should be so high that your tenants, pay off your villa

The value varies, currently a good yield is at least 6% (in Germany). With higher interest rates for financing abroad, the value increases accordingly. 1% more interest requires directly 1% more yield – simplified.

Calculate return on investment: Example of how to get started

The usual yield calculation works in such a way that the annual cold rent (i.e. monthly rent * 12) is calculated. In the case of partial renting, the possible annual cold rent is just as important, but focused on a few weeks or months in the year in which you do not use the property yourself.

Simply calculated:

Return = annual income (cold rent) / investment (purchase price and ancillary costs)

Quick example:

• 6,7 % = 80.000 / 1.200.000

Tip! Decisive for good rental prices are, in addition to the villa (extras such as swimming pool) and good location, always the number of bedrooms / bathrooms.

But from the principle everything remains the same. Yield calculation.

Yield of a villa summarized

Fact 1) The calculation of the return on a property becomes important whenever you want to rent out your property. Fact 2) It simply puts the income of the rent in relation to your inventories (purchase price and service charges), with the aim that your tenants, pay your villa.

Fact 3) The result of the real estate yield is a percentage. If this is (currently) above 6%, all running costs (financing [repayment, interest] and maintenance) are covered, so to speak. If the yield is (currently) below 6%, you pay monthly.

Here again, for illustration purposes, the calculation of the “usual” return (when a capital investment is fully rented) and adjusted, the return of a rented property abroad (vacation home), which you also use.

Formula

The formula to calculation:

Fully leased:

Return = annual cold rent (cold rent * 12) / investment (purchase price and ancillary costs)

Partial leasing:

Return = annual cold rent / investment (purchase price and ancillary costs)

So, in principle, the same calculation.

Rent: How much rent for which villa?

Tip. Wondering how much a property worth X can be rented out for? Compare offers on platforms for vacation homes or also on AirBnb. Use similar parameters (location, condition, living space, bedrooms).

This way you can also benefit from the experiences of other landlords in the location without having to do a lot of rental experimentation yourself.

Example: Renting in the main season – 2.6% return!

For example, an acquaintance rents out his property worth 2,100,000 euros for 54,000 euros in the month of July alone.

Yield for this month:

2.57 % from the purchase price

In Germany, investors focus on real estate for their capital investment, with an annual return of 6%, so in hotspots like Ibiza you can earn almost half of the necessary minimum return in one month. Of course, the year does not have 12x the month of July on offer (hot temperatures, summer vacations in many countries). But the main season alone, May to September, generates a decent amount of return.

Unfortunately, you pay a little more interest and also the rental must be organized.

Fees: Rental and House Service + Advantage

Those who rent in hotspots like Mallorca, Ibiza or Marbella, of course, do not take care of it themselves. But there are excellent contacts on the spot, who take over everything directly for 20-25% of the rental income: Rental, house cleaning, maintenance to garden and pool maintenance. Of course, you could hire everything separately, but everything from one source is the best way to rent stress-free to serious tenants.

Renting through agency:

20% – 25% of the rental income

Once again the great advantage:

• Villa renting
• Communication with tenants
• Handover of the villa (moving in and moving out)
• Maintenance
• Outdoor facilities like garden, pool, tennis court, etc.
• Everything without stress

Let’s now look directly at a practical example with concrete figures.

Advantages: Return from rental and increase in value (land).

Real estate in the Spanish hotspots are of course somewhat more costly than buying “at home”. This brings the yield advantage, not everyone “dares to take the step”. In addition, you need more equity abroad, a whole 50-60% of the purchase price. More about this in a moment.

1. Good returns, often over 10%
2. In addition, increase in value of the property

Purchase price incl. refurbishment for example calculation

In the example, you buy a property including ancillary costs for 1.9 million euros and invest another 240,000 euros for the refurbishment to the final touches.

• Purchase price: 1.90.000 Euro
• Redevelopment: 240,000 euros
• Investment: 2.140.000 Euro

In peak months like June, July and August you can get 50.000 to 60.000 Euro / month, realistically and with pre-booking in January, February, March. We calculate 14.000 Euro / week in peak season +/- 1 month before and after peak season; also we consider realistic vacancy and your own use, for example over the winter months.

Calculation: Income from rental

The months then differ. Example:

• January – March: Self-interest
• April: Empty
• May: 12.000 Euro / week
• June – August: 14.000 Euro / week
• September: 11.000 Euro / week
• October – November: Empty
• December: Self-interest

Your return on investment is then calculated from the purchase price, rental/house service and the income:

• Annual cold rent: 260,000 euros / year
• House service (20%): 26,000 euros / year
• Annual rent (net): 234,000 euros / year

In sum:

• Investment: 2.140.000 Euro / year
• Yield: 10.9 % Yield

In Germany you can find real estate with yields over 10% only extremely rarely or in C-locations, which bring risks with them. Here you buy in the best location, villas with pool and sea view.

Increase in value of the property

Then, on top of the real estate yield, there is the general increase in land prices. Do you know what advantages places like Ibiza and Mallorca offer? Space is not infinite. Just like in Switzerland, for example, building space is limited and accordingly the real land price increases are higher compared to a capital investment you make “at home” nearby.

Here is an excerpt from the Frankfurter Rundschau, current from last year:

“On average, prices for island properties increased by 27.2 percent, with the highest rate of increase recorded by market researchers in the city of Palma, 42.1 percent, followed by the southwest, where vacation properties now cost 37.8 percent more than five years ago.”

Let’s calculate “only” with the 27.2% average.

• 27.2 % / 5 = 5.45 % p.a.

What are the incidental costs of buying real estate?

The cost block of incidental expenses is relatively extensive if you really consider all aspects. But there are a few differences.

Costs for the broker

Brokerage costs – In Germany, brokerage costs (for private purchases) are split 50% each between seller and buyer (by law). If a property is sold from company to company, the distribution of the brokerage costs is freely divisible between buyer and seller. In Spain (i.e. also Ibiza, Mallorca or Marbella) the brokerage costs are already included in the purchase price of the property (5% for standard properties).

Property tax on the purchase of a villa

Wealth Tax – If you buy a property in Spain and put over 700,000 euros of the purchase price from equity (not financing), you will have to pay tax on everything above the 700,000 euro exemption amount. Spanish wealth tax is between 0.2% to 2.5% of the net assets you bring in.

Tip. The exemption amount differs in the municipalities. In Catalonia and Valencia, the tax-free amount is only 500,000. In Madrid, the tax-free amount is unlimited.

Example:

• Total purchase price of the villa: 1.8 million euros
• Equity share (60%): : 1.08 Mio Euro
• Allowance: 700,000 euros
• Taxable assets: 308,000 euros
• Tax rate: 0.3%
• Tax amount: 924,00 Euro

Property tax: table

Here are all tax rates with assessment limits:

Source: WF Salinas.

Refurbishment for existing properties

Refurbishment and upgrading – Surely you still want to design your villa according to your wishes and ideas. For this you have to calculate at least with costs for the upgrading and depending on the year of construction of the house, or the last renovation, also with renovation costs (garden, pool to bedrooms, kitchen, bathrooms).

Typical ancillary costs at a glance:

1. Theoretical travel expenses (site visit)
2. Brokerage costs – pays seller
3. Notary fees – contract of sale
4. Land register costs – change of ownership
5. Refurbishment / upgrading (for existing buildings)
6. Wealth tax (from 700,000 euros)
7. Property tax (after purchase)

Conclusion: buy and rent villa

You have now really learned a lot. About the return on rent in seasonal times. You have learned the taxes, but also the incidental costs from the purchase with real estate agent, to the rental in maintenance of your property.

With this knowledge, you can find a profitable villa for rent in Spain.

Here I have 2 extra tips for you!

Real estate agents: Villa Portfolio Ibiza, Mallorca & Marbella

As a real estate agent I am on canvassing for clients, we provide exposés, schedule viewings and help with the buying process on site, from notary to financing if needed. A small selection and choice of my villas in Mallorca, Marbella and also Ibiza, you can find here:

• Lukinski: Villas

Financing abroad: equity and interest rate

You want to buy a villa in Spain? Whether Mallorca, Marbella or Ibiza, the conditions for real estate financing differ significantly. If you do not buy your villa for 100% personal use, but rent the villa partially or even completely as an investment, then you should know the special conditions in Spain. In addition, I also give you a few insights from the USA, as a comparison. So you can see how cheap a financing in the home country and how expensive loans as a foreigner in other countries become, in relation to your interest rate and your equity. In the end, it’s always about return on investment.

• Financing abroad