Macro, Meso & Micro: Definition

In addition to a distinction between A-, B- and C-location, the second step in determining the location is to distinguish between macro, meso and micro location. Thus, the macro location defines the city of the object, the meso location refers to the neighborhood and the micro location to the immediate surroundings. So, to describe the meso and micro location of an object, we must first define the macro location.

Here is the overview:

• Macro position (Where in Germany)
• Meso location (Which district)
• Micro-location (Exact location)

Let’s take a closer look at the different types of layers.

Macro location: A, B & C location

The macro location depends on your personal goal and individual strategy. Do you want to invest in a property as a capital investment? Is this a return or investment property? For investment properties, we always recommend A-locations, i.e. metropolitan areas such as Berlin, Hamburg and Munich. In the case of yield properties, it is best to look around in good B and C locations, as the rental yield is high here compared to the purchase price. Of course, your individual preferences are also in the foreground.

The different macro-locations summarized:

• A-location (metropolis)
• B-location (large city / city with positive development)
• C-location (small town / city with stagnant development)

So the macro location is about the question: Where in Germany is the property located?

Meso-location: infrastructure, connectivity & co.

So you have now decided on a city or place? Very good! Then we must now answer the question:

Which part of town do you want to go to?

Large cities in particular offer a large number of attractive districts, all of which differ in their character and charm. How well is the district connected? Is it easy to reach by public transportation? Is the neighborhood safe? Are the commutes to school and/or work long? So think about your living situation, future plans and needs in advance.

So here’s what you should definitely keep in mind when it comes to the meso layer:

• Infrastructure
• Security
• Proximity to work & school
• Connection to the other districts
• Environmental influences

Foremost in the meso location: In which district / neighborhood is the property located?

Micro-location: guaranteed feel-good factor

Finally, the last step is to determine the micro-location. This is about the immediate surroundings of your property. Is it located directly on the street or near railroad tracks? Is it quiet, especially at night, or does the street noise rob you of sleep? Where is the nearest shopping market? As soon as you step out of your front door, do you feel comfortable and safe?

This and more is the focus of the micro-location evaluation:

• Noise level
• Parking facilities
• Shopping facilities
• Cleanliness

The micro location of the house:

Conclusion: Personal preference & objective decides

So before you start looking for real estate, think about the criteria that are important to you. Look at different neighborhoods and also the street in which the property is located. After all, you should feel comfortable and safe here and not suffer a loss of value in the event of resale.

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• Macro, meso, micro situation explained – (external)

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• Return vs. real estate investment

Definition: Investment property or yield property?

So what is an investment property? And what is an investment property? Very important here is the objective. Do you want to generate a direct income through yield or rent? Or is a long-term increase in value more important to you?

Investment real estate: value enhancement over the long term

With an investment property, the aim is to achieve an increase in value over the long term. This also means that you first invest and only then sell your property at a profit and thus capitalize on it. It is not about an immediate return or renting.

The location of the apartment or house is the most important factor for the value of the property. Redevelopment and renovation also have a value-increasing effect on your property.

Here is an overview of the goals of an investment property:

• Primary: Increase in value of the property, profit from sale
• Real estate with corresponding A-location

Return on investment in real estate: Direct cash flow through letting

The primary goal of a yield property is the immediate profit after the acquisition of such a property. Ideally, these properties generate a rental return. Properties in good C-locations carry higher risks than properties in very good B-locations.

Here is an overview of all destinations:

• Primary: profit from renting
• Real estate with a rental yield of over 6%
• Real estate in C+ to B+ location

Tip: Yield real estate – advantages & disadvantages

Both the yield real estate and the investment real estate bring both their individual advantages and disadvantages. While the investment property requires a particularly large amount of capital, a yield property provides a direct income. Therefore, we recommend investing in a yield property especially in the beginning.

Advantages: Direct income & surpluses

The most obvious advantage of a yield property is the immediate income from renting it out. In addition, if there are any surpluses left over, they can be used to cover other properties in the portfolio.

• Instant cash flow
• Surpluses can offset other properties with shortfalls

Disadvantages: Higher taxes & temporary in B locations.

However, there are also two disadvantages that bring a return real estate. The first is taxes. Thus, the tax burden increases due to the additional surpluses. On the other hand, yield properties can be found only very rarely in A-locations.

• Tax burden increases
• Property rarely found in A-locations

Conclusion: Tips for beginners & advanced users

So if this is one of the first investments in real estate, we recommend a yield property. Once a solid real estate profile has been established, a combination of investment and return is recommended later.

For advanced investors: A mix of both types of investment