Partial sale / partial purchase: what is it? Explanation + advantage

Surely you have seen the advertisements of the many part purchase providers. This purchase offer is aimed in particular at older property owners who need money, for example, for a more pleasant retirement.

A look at costs of use, advantages, disadvantages, the total sale, the calculated increase in value under inflation and a comparison, what is “cheaper”: partial purchase or the alternative real estate loan, more specifically the mortgage loan? In addition taxes, sale from community of heirs, divorce and much more.

Here you will also find all calculators with examples: Partial sale provider comparison.

First, a quick, short definition.

Definition partial sale or partial purchase

What does real estate partial sale?

Of course, no second person moves into your property; you remain the sole user. However, as the former sole owner, you now pay a fee for the use of the part of the property that no longer belongs to you in full after the partial purchase – comparable to rent. This payment is referred to as “compensation for use” or “usage fee”.

Partial sale summarized:

• You sell a part of your property (usually 10-50%)
• Partial purchase house: Yes
• Partial purchase apartment: Yes
• Partial purchase of land: Yes
• Financial company becomes part owner
• You remain the sole user of the property
• You pay monthly usage fee
• Total sales in X years (optional)

The most important questions about the partial purchase

The most important questions at a glance:

• Can I sell half of the house? Yes, most sellers ~ 20-50%.
• Can I sell part of my apartment? Yes.
• Partial purchase also for land? Yes.
• Advantage? Fast, uncomplicated purchase price transfer.
• Disadvantage? Usage fee (~ 3-5% p.a.)
• Moreover, for total sale: sometimes below inflation

These important factors in the purchase of parts

The key factors for the partial sale:

• Value of the property = 500,000 euros
• Desired immediate payout = 100,000 euros
• Share for sale = 20%
• Monthly usage fee = ?
• (if) total sale after X years = ?

You have to answer two key questions in the comparison:

1. What is the monthly usage fee?
2. (At total sale, later) appreciation and fees?

Difference: sale vs. partial sale

What distinguishes the partial sale from the normal real estate sale? If you want to sell a property in the normal way, you will go through a total of three major phases (preparation, viewings/credit checks, sale), which in turn contain several steps. The search for solvent buyers (creditworthiness) can take a longer time depending on the real estate situation (demand).

Regular real estate sale: timing

Roughly summarized, the real estate sale includes the following steps:

1. Prepare documents
2. Valuation
3. Real estate marketing
4. Preparation of an exposé
5. Realization and planning of the viewing appointments
6. Purchase negotiations
7. Processing and drawing up of the purchase contract
8. Handover of keys

Shortened sales phase

With a partial sale, a large part of these steps is skipped completely. You go directly to a financial service provider who buys your property on a pro rata basis. Accordingly, the following steps remain from the procedure of a regular real estate sale:

1. Valuation
2. Processing and drawing up of the purchase contract
3. Handover of keys

Advantages at a glance: Sold and paid for quickly

Whether it’s a terraced house, a single-family home or even the condominium in an apartment building: you’ve never sold part of your property so quickly.

A partial sale has advantages:

• Financing method independent of banks
• No credit check, cf. credit financing
• Fast sales process

Disadvantage? Use in cost comparison

As described in the introduction, the “Partial Purchase” offer is aimed in particular at older property owners.

“Banks give no / few loans to older people”.

Such a common prejudice. That is why advertising with the “partial purchase of your property” currently works so well. However, the subsequent costs are often not taken into account. For example, if you sell 25% of the property and then pay 300 euros a month usage costs, you should definitely compare the amount with a regular real estate loan, more precisely mortgage loan.

In retrospect, otherwise an experience that will cost you cash, every month.

Let’s start the analysis.

Usage fee for partial purchase: Disadvantage 1

Now for the “follow-up costs.”

What is monthly user fee? Many currently advertise it as “easy,” “convenient,” “no bank.” True. But the price is high. First of all, the ongoing costs incurred in the partial purchase to financial companies. The financial company becomes a co-owner. The sold part of the property, will be returned to you.

So you do not give “half” of the garden or part of your rooms: you continue to use your property alone.

For this you pay the “compensation for use”.

Amount of compensation for use

The compensation that the financial company requires for the use of the property is usually:

• Between 3-5% of the amount paid out p.a.

The sum refers to 1 year in each case. The formula for calculating the usage fee (depending on the provider) per month:

• Monthly usage fee = 3% * purchase price (share) / 12
• = 3% * 100.000 / 12

Thus pay, at the partial sale worth 100,000 euros, 250 euros a month.

User fee at 100.000 Euro = 250 Euro / month

As always, depending on the provider. All providers can be found here in the part purchase house: comparison.

Real estate loan comparison: 2-4% cheaper

How much do you currently pay for a “classic” real estate loan? Due to the low interest rate phase, you currently pay only:

• Approximately 1% of the disbursed amount p.a.

Compared to the financing request of 100,000 only ~ 80 euros / month.

Credit only ~ 80 Euro / month

It pays to calculate and consider when it comes to the partial sale of your property. Tip! You will also learn about the “real estate annuity” as another alternative to the partial sale.

Taxes: What do you have to pay?

The tax does not differ in the partial sale from the regular sale.

As you can see in this tax checklist, for private individuals it is actually “only” about the speculation tax. It comes into effect when a property is resold within the first 10 years after purchase. The amount of the speculation tax is calculated according to the individual tax rate, which can be more than 25 percent.

Mentioned for completeness, anyone who sells 3 or more properties in 5 years is also subject to commercial real estate trading and therefore also to trade tax. Last, for the sake of completeness, the sales tax (buyer) for commercial real estate trade.

More on the subject of taxes when selling real estate:

• Selling real estate: taxes

Calculator! Provider comparison

In this analysis, I have calculated example for you in all the calculators of the providers. How much is the usage fee? How much do you get in the total sale? Here you can find the big provider comparison:

• Partial sale provider comparison

Total purchase price and inflation: Disadvantage 2

If you think carefully about the online calculation of step 2) the total purchase, you will notice that you do not specify any regions(real estate location) of the property. Accordingly, the increase in value is a very rough value. But let’s take this as a basis.

Inflation vs appreciation: comparison (-2.8% loss)

Inflation factor (currency devaluation) – If you now add inflation as a second factor, which according to the European Central Bank should be at 2% per year, but is currently even at 5% (as of 01/22), then you will see:

The increase in value of only 25%, 30% in 15 years, does not even equal inflation.

So let’s compare 30% in 15 years and inflation (“as desired” at 2%, with no increases):

The result of our comparison:

According to (most) online calculators, a loss of -2.8%.

Accordingly, you will not even be compensated for inflation if you are below 32.8%.

Tips for your partial sale: use, annuity, divorce and inheritance

Here are some practical tips and food for thought:

Real estate pension: Another alternative

You have now learned about the partial sale, also the mortgage loan. Perhaps another tip for you, the real estate pension. Especially interesting if you have already reached a higher age, usually from 70, 75 years.

Real estate annuity means: You sell your real estate (directly) completely, but keep a lifelong right of residence and use. In addition, you receive a small monthly amount. For some, this is a good solution. Because you also no longer have anything to do with maintenance costs, the new owner takes care of that.

Real estate pension simply explained:

• Direct, complete sale of your property
• Lifetime right of residence and use
• Small, monthly “extra pension” from the seller
• No maintenance costs

Usufructuary right: “Lifetime, sole right of residence

Before we compare the different providers, here is an important tip if you really decide to sell your property in part. As you have already learned in the guide partial sale, you can sell your property in 2 ways: Partial or Partial including total sale in X years.

If you are considering an overall sale after X years, be sure to take a look at the:

Usufructuary right in the event of a total sale

Usufruct right simply means that you have the sole right to use your property – even after the sale (as well as in other cases, such as early inheritance).

Advantage: The usufruct right brings you the advantage that you are not dependent at any time, on the goodwill or the consent of the seller.

Partial sale possible despite current financing?

Partial sales are possible – by arrangement – but both you, as the borrower (property owner), and the bank, are fundamentally bound by the loan agreement you have concluded, at least for an agreed fixed-interest period. Ideally, therefore, your property is paid off.

What is the difference between partial sale and annuity?

Let’s first clarify the term life annuity: Under a life annuity, you sell your property in exchange for an annuity payment and simultaneous, lifelong right of residence and use. It is therefore a special form of selling a property. The advantage: liquidity.

• Mostly owners over 70 years
• Complete sale to a financial company
• In return, lifelong right of residence and use
• Additional monthly amount for you (life annuity)
• No additional costs / maintenance costs

Community of heirs: sale after inheritance

Is it possible to sell a share in a community of heirs? Yes. With reference to BGB § 2033 Paragraph 1, which states:

“Each co-heir may dispose of the share in the estate.”

More on the topic:

• Community of heirs: selling property

Divorce: sale after separation

Is it possible to sell a share from a separation or divorce? In the case of divorce, things are initially a bit more complicated. In principle, only after the separation year, but at the latest after the divorce, can spouses demand that their partner sell their home. Talk to the providers individually about this.

More to:

• Divorce: Sell property

Microapartment: What is a microapartment? – Definition & Features

Due to the many variants and the different requirements, there is no uniform definition for the term microapartment. In German-speaking countries, a microapartment is a small, furnished apartment with usually one to two rooms and a size of approximately 19 to 36 square meters.

Read more about the conventional apartment here.

Features of a micro apartment

Micro apartments are in most cases rented furnished and are often equipped with futons or pull-out beds, fold-out tables and small or hidden appliances. In some cases, the cost of electricity or internet is also already included in the lease. There are also often common areas such as fitness rooms, rooftop terraces or sports courts.

• Often furnished
• Space saving device
• Electricity, Internet included in rental contract
• Common areas: Fitness rooms, roof terrace, etc.

Advantages & disadvantages of a microapartment: costs, return & co.

Before you invest in an apartment, you should look at the advantages and disadvantages of each type of apartment. This will help you decide whether this type of apartment is right for you and whether you can accept the disadvantages. Especially in the case of an old building apartment, the construction method is different from that of new buildings. We have compiled a list of the most important aspects for you, so that you can make the right choice.

Advantages: High yield, safe, central

Micro apartments have a very decisive advantage: location and location. This type of property is mostly found in the inner cities and very central. So if you want to live in the city but spend little, a micro apartment is just right.

If you want to invest in a micro apartment, you can be sure of one thing: While your real estate investment will require a manageable amount of capital, the rental yield and rental income will be higher than those of other apartments, such as the old building apartment, the loft or the floor apartment. In addition, they are a safe investment, which is worthwhile for investors with a long time horizon. Precisely because demand exceeds supply, you as a landlord have a high degree of rental security.

• As a real estate investment, microapartments require a manageable capital investment
• Yield and rental income are significantly higher than those of conventional apartments
• Investment is worthwhile for investors with a long time horizon and a pronounced need for security

Disadvantages: Small, furnished

What is an advantage for some may seem a disadvantage for others. Furnished micro apartments exclude the possibility of bringing your own style or furniture into your four walls. In addition, the apartments are very small and offer little living space.

• Narrow, small
• Mostly furnished

Microapartment: Who is it right for? Singles, couples, second home

The target group for small apartments consists mainly of the young, working singles, who are on average younger than 30 years. But microapartments are partly also suitable for couples and shared flats, as well as older re-singles who do not need much space. Microapartments are also often used as second homes.

Singles: Flexible, central

Micro apartments are especially popular with young adults. Often these properties can be found in the middle of the city center and are therefore ideal for students and singles. The proximity to the university and the flexibility that one has as a result is also a great advantage. Most of the time, these types of properties are already fully furnished and therefore ready for immediate occupancy. This is a great advantage for young people who are new to a city.

Seniors: Cheap, modern

Similar to young singles, this type of property is particularly suitable for single seniors who still want to live in the city and centrally, as well as cheaply.

Couples: space for two

Contrary to popular belief, a micro apartment can also be beneficial for young couples. Despite the small square footage, with the right and efficient furnishings and room layout, the apartment can be especially cozy and provide enough space for two people. In addition, you save money with the rent.

Secondary residence: vacation home, commuter

For example, if you live in the country and commute to the city for work, you can buy or rent a micro apartment a second home. This saves time and, depending on the distance, even costs. But microapartments can also be bought without a special purpose and rented as a second home or vacation home.

What you should consider before buying/renting a microapartment

Especially with older buildings, it is very important to get your own idea of the apartment before buying/renting. Inform yourself exactly about the construction and the building to be prepared for everything. We have summarized these for you so that you can clarify everything in advance and no unexpected costs await you later.

What to consider when buying?

First of all, you should find out about the condition of your potential property. Old buildings often require renovation and modernization, which can lead to additional costs. We recommend that you consult a specialist and a realtor who can help you with the purchase decision and give you an insight into the costs involved. It is possible, for example, that the exterior façade is damaged and moisture can get into the apartment, causing mold. It is also not uncommon that the statics of old properties need to be repaired to ensure stability. Repair work is also sometimes necessary. So let a specialist help you so that nothing can go wrong. Whether it’s an existing property or a new build – an expert will not only help you with the property valuation by year of construction, but also with the technical inspection and commercial inspection of the property.

• Structural condition
• Statics
• Repair work

If you want to learn even more about buying a property, you can find useful tips on the subject in the article Buying an apartment.

Viewing appointment: What to consider & checklist

You invest in real estate and this decision should not be taken lightly. Investments are always a good idea, but especially with old buildings you have to pay attention to some things, so that no unexpected costs reach you. We have compiled a checklist with the most important aspects that you should consider during an inspection to buy or rent.

You want to live in the big cities of Germany and have an apartment in the most expensive streets? Here you can find the most expensive streets in Berlin and Hamburg!

What to consider? – Condition, floor plan and location

Look at the condition of the apartment. Depending on the year of construction, every property has its defects. What is the floor plan of the apartment and does it meet your expectations? Often you have to adapt it to the property. Note the location and infrastructure of the apartment, this could increase or decrease the price at which you would sell the apartment. Are the kitchen and bathroom built in and what are the ancillary purchase costs and operating costs? Is the micro apartment rented or unrented? These are just a few aspects to consider. We have put together a checklist for you in the following.

Checklist: For your viewing appointment

Here you will find a checklist with the most important factors that you should definitely take a closer look at when visiting an apartment.

• Location
• Establishment
• Service charges
• Internet supply
• Sunlight
• Parking
• Pets
• Condition (in need of renovation)
• Floor plan
• Neighbors
• Kitchen/ Bathroom
• Additional rooms
• Heating, water, electrics
• Noise

Broker: safe investment with top – broker – costs, process & co.

Condominiums, such as micro apartments are ideal as an investment and are a very safe investment. Especially if you do not have much experience with the purchase of real estate, we recommend that you consult a real estate agent. He or she will advise you on important issues, find properties for you and visit the apartments with you. Real estate investments are not designed for a short-term increase of money, but rather for a good retirement provision. Therefore, you should approach the matter very carefully and get good advice.

Procedure of real estate purchase

First of all, you will consult with the real estate agent and you will have the opportunity to express your wishes. The real estate agent will now tell you what is possible and he will start with the first research.

Then begins the organizational management. Documents and records are obtained, which are important for a purchase of a property. Then the broker starts to find out potential sellers and condominiums for you. Viewing appointments are organized and carried out.

Last but not least, the negotiations begin. Negotiations are held with the seller and the purchase agreement is drawn up. Afterwards, the broker is present at the handover of the keys and ensures that everything runs smoothly. Even after the contract is signed, the broker will be a contact person for you.

You are looking for a professional broker and want to learn more about the benefits? Take a look!

Financing a condominium: loan or equity?

Do you want to fulfill your dream of owning a condominium or invest in an apartment in an old building and then rent it out? Then you should inform yourself in detail about the financing of such a property. You have to decide on the right real estate loan and should obtain and compare many different offers in this course. The choice of loan ultimately determines how high the total cost of your real estate loan. So it’s best to get advice and make the right decision.

Real estate loans and financing: tips, checklist and more

Financing a property can be done in many ways. Here you will find some of the financing options listed with brief summaries. In addition, you will find a link that will take you to more comprehensive articles.

Real estate loan

• Real estate loan adapted to personal needs
• Flexibility should be ensured
• Proper planning is important
• Loan

Financing of an apartment

• No house but only apartment to finance
• Comparison of different housing financings recommended
• Consultation
• Real estate financing

This is part of our larger guide on buying apartments. Back to Buying an Apartment USA.

The City of Angels – Buying an Apartment L.A.

Los Angeles, where dreams come true. The home of celebrities, hollywood, a sprawling cityscape, beach and surf, and everything else you can imagine. From Malibu to Bel Air, Silver Lake and Venice Beach. It’s worth the traffic and chaos of the metropolis, to experiennce the unique atmosphere of this city. So you want to live in Los Angeles, but don’t know where to start? It’s certainly not easy wrapping your head around where and how to live. Do you choose Mid City or and a retail paradise, or Silver Lake, and hang out with the young students? We give you the full run-down below. Some people buy a house in L.A., but no doubt, buying an apartment is a good decision.

Los Angeles Economy – Overview

Los Angeles has a massive economy, third largest in the world behind Tokyo and New York. Its strength is of course the creative sector. Hollywood is the world’s largest film production area, and countless stars and starlets have their villas and mansions in the city. This does not paint the full picture though. It is also home to a booming high-tech industry with a surge of startups heading to the seaside city. There is also a strong aerospace and transportation industry, as well as, perhaps unexpectedly, the nation’s largest international trade industry.

• GDP: 941,06 bil.
• Creative, high-tech & aerospace industries

If you’re looking to invest in real estate, it’s probably good to think about forming an LLC, an S corporation, or a limited partnership!

Los Angeles Drone – How Beautiful it can Be

Los Angeles has a ton to offer in visual pleasure. Sundown by the ocean, beaches, and skyscrapers. Take a look at Los Angeles drone footage:

Full L.A. Guide – Hot Neighbourhoods + More

Buy or Rent? Calculation Explained

Whether to buy or rent, you’re going to be paying a high price in L.A. Whether to buy or rent depends on the classic ‘break-even point’. How long you would have to pay rent in order to break even the amount which you would need to pay off a house. E.g. in Los Angeles, a median-priced home is around $630.000, and you may be paying rent around $2.000. That means, once you’ve lived in your residence for 6 years, you would have paid as much rent, to have been able to buy it. In short, whether to buy or rent depends on this: Assuming you live in a residence for at least five years, your rent needs to be lower than $2.600 in order to make renting more viable.

Also, in Los Angeles, it may be even better to buy than in other places, considering manageable property taxes in L.A. That means owning real estate is not a high recurring investment.

• Buy if your rent > $2.600

Is it a Good Time to Buy an Apartment in Los Angeles?

Maybe. At the moment, high vacancy rates mean low rent prices. That means it may be more beneficial to rent at the moment. Considering the growing market though, it may be clever to invest at the moment, where high vacancy rates may have more landlords selling their property at higher rates than usual, driving down prices. That means, when the market inevitably recovers, you’re likely to make profit quickly.

What state has the highest property tax rate? Ranking

• Property Tax Rates by State – List

Los Angeles Real Estate Market – Explanation

The Los Angeles real estate market, like so many of U.S.’ super cities, is doing well. For example, the year-over-year amount of sales of single-family homes increased by 23,2%. The median home price is at a strong $630.000, showing just how exclusive properties are here. Los Angeles is neither a sellers nor a buyers market. There are just as many real estate listings as there are sales. Combining this with the high increase shows the strong turnover, and ripe investment opportunities. Prices are also increasing, taking single-family residences, by over 16%.

Real Estate Price Development

Home prices in the metropolitan area of Los Angeles increase by about 13% annually, with the number of sales also increasing over the past year. The median price of an apartment is now $667.000. On top of this, rental prices have been steady in the past years, when looking at average rent.

• 2017: 2.281 $/m²
• 2018: 2.385 $/m²
• 2019: 2.516 $/m²
• 2020: 2.524 $/m²

What you have to know About L.A. Areas

Los Angeles is a massive city, spanning multiple counties. It’s near impossible to decide where to live. Generally, there are those that want to live in the famous residential areas of Bel-Air or Beverly Hills, there are also people who want the tumult of downtown LA, or younger people, and those looking for a more comfortable atmosphere will head to e.g. Silver Lake or Mid City. In general, for Los Angeles, it’s a good choice to rent, as opposed to buy. With purchases prices being comparatively high.

• Lowest rent: Jefferson Park $1.355
• Highest rent: North of Montana $4.690

How to Buy an Apartment

It’s of course a long and arduous process to buy an apartment, and takes a lot of time as well as financial investment. From beginning to end, there are irreplacable steps which, if you miss them, could be costly. If you’re not sure what real estate you should invest in, start here:

• Type of Real Estate – Which to Buy

Checklist – Things to do Before Buying

How to prepare for buying an apartment. Before buying real estate, you need to do these 5 things:

• Get knowledgeable about your finances
• Get together documents about your finances
• Speak to your possible mortgage broker
• Decide on the type of financing
• Find an attorney, real estate agent, and home inspector

When buying any property, you will need to pay a downpayment on your mortgage. In L.A., with comparatively high real estate prices, your downpayment should be at least 20% in order to avoid the likely very high mortgage interest rates.

Buying Apartment – Process from Negotiation to Close

To buy the apartment finally, you will want to start negotiating.

Make an Offer – How to Negotiate Sales Price

So you decide that this is your dream apartment. What now? Well now it’s time to make an offer. That means approaching the seller with an offer. There are two sides on which to negotiate, and you must pick one or the other. Either you try to reduce the size of the sale price. I.e. buying a property for $800.000 as opposed to $850.000. The other option is to negotiate the closing costs, e.g. agreeing on the sales price, but asking the seller to pay some of the additional costs, including real estate purchase taxes. These tactics of course mean either having more money in your bank account at that moment, or reducing the amount of montly costs in the future. You can typically expect to negotiate 5%-10% of the sale asking price.

Next Steps – Building Inspections

Your lender will most certainly require you to have an inspection of the apartment building, as well as the unit itself. This usually shows slight flaws, such as necessary maintenance in the future, or e.g. structural flaws.

Reducing Sales Price on Real Estate

Now you can renegotiate. You have found flaws in the building, and now have a strong negotiation stance. Let the seller know your concerns, and they will likely be more lenient in their negotiation.

There’s also a ton you can save on the many slight additional costs which come up when buying real estate, we give you the full guide

• All Additional Costs when Buying a Home

Final Important Step! Walk-through

Don’t forget the walk-through! This is one of the most frequent beginner mistakes. After moving out, things may change, the previous owner may have broken something, or a cabinet may have been covering up a flaw. Not doing a final walk-through can be your number one regret later on. It doesn’t take that long, and will most certainly be worth it, at least for the peace of mind.

What’s Different in Los Angeles?

There’s of course some caveats to buying an apartment in L.A. as opposed to elsewhere in the U.S. That means a few things to keep in the back of your mind when considering your purchase of an apartment. Of course, the normal process takes place, you buy a unit using a downpayment as part of your mortgage, pay closing costs, then taxes, and then move in.

Popular Types of Properties in L.A.

In L.A., there are a few different types of popular properties. The most popular being, as in most other suburban areas, single-family homes, duplexes, and condos. These are popular because they allow for a fairly private space, without the hassle of neighbours which are door-to-door with you. Note, duplexes (or even triplexes) are typically hard to own for the resident, as investors tend to buy these and rent them. Other types of property are townhomes, small lot homes (advantage: no homeowners’ association!), coops, much like the apartment market in New York, TICs (Tenancy in Common), and of course the infamous vacant lots, where you just buy a piece of empty land.

• Single-Family Home
• Duplex
• Condo
• Townhome
• Small-lot Home
• TICs
• Vacant Lots

Before – Buying Apartment Preparation & Planning

In L.A., it’s just as important, if not more important to get pre-approved. That means having your loan provider provde certification that you will be able to finance the mortgage on your home.

• Get Mortgage Pre-Approval!

Negotiation – Paying too Much on your House

In L.A., strong changes in price as a result of negotiation are rare. The vast majority of properties are sold at or around listing price. Meaning there is little to no negotiation, and when, this negotiation takes place in small degrees.

Taxes – Extra Real Estate Costs

Of course there’s different taxes in Los Angeles than elsewhere in the country. It’s important to be in the know about the unique taxes, from property taxes to transfer taxes in California if you’re looking to own property in Los Angeles.

Pretty much everyone pays too much in taxes. It’s especially easy to save on real estate taxes. Learn how:

• Saving on Real Estate Taxes – Easy How-to

Insurance – Expensive Additional Cost

Not to forget is that you will have to pay homeowners insurance. Los Angeles has a broad span in homeowners’ insurance amounts. In some parts you can pay as little as $837, with L.A.’s average amount being $1.116.

• $1.116/year homeowner’s insurance

Tips to Save Money – Lower your Homeowners Insurance!

These are the number one tips to reduce the amount you’ll have to spend on homeowners insurance.

• Install a safety system for your home that includes fire, smoke and carbon monoxide alarms
• Convert your older house to comply with earthquake regulations
• Replace your roof with fireproof materials
• Inquire with your insurance agent if you qualify for discount programs
• Repair and replace wiring and plumbing to bring it into line with current building codes

Where to Live in L.A. – Best Neighborhoods

You’ve probably heard of Compton, Inglewood, Hollywood, and the like. You also probably have some preconception about how dangerous or safe it is here, whether you’d like to live here or not. We give you a full-researched list of the worst neighborhoods to live in Los Angeles.

Homes for the Ultra-Rich

Of course, some of the super-rich of the USA have ultra-luxury houses in L.A. Among them, superstars from all over, and pretty much every film star has at least one residence in Los Angeles. Below we have one of these ultra high-end properties, worth $50 mil. Of course, you’ll find it in the legendary Bel-Air neighborhood.

Worst Neighbourhoods in Los Angeles – Danger, Crime, Low Standard of Living

You’ve probably heard of Compton, Inglewood, Hollywood, and the like. You also probably have some preconception about how dangerous or safe it is here, whether you’d like to live here or not. We give you a full-researched list of the worst neighborhoods to live in Los Angeles. Best to keep in mind, L.A. is more dangerous roughly everywhere east of Broadway.

• Skid Row
• Fashion District
• South Central L.A.
• Compton
• Central City
• Jefferson Park

The Places to be in Los Angeles

There are a few neighborhoods you can’t miss. These are the classics like Hollywood or Bel Air. The top neighborhoods in Los Angeles to invest are the famous ones of course, but there’s a few ones to keep in mind if you’re looking to be in the place to be. Hip neighborhoods are plenty in L.A., like Culver City or Silver Lake. Some that you may have missed include Echo Park, Frogtown, and Tujunga.

Classics: Hollywood, Beverly Hills/Bel-Air, Downtown

Hip: Fairfax, El Segundo, Chinatown, Culver City

Outside Call: Echo Park, Frogtown, Tujunga

You want more info. Where to buy an apartment in Los Angeles? We tell you everything you need to know

• Best Neighborhoods to Buy – Los Angeles

Best School Districts Los Angeles

Thinking about moving to L.A.? These are the best school districts, taking into account quality of education, safety, and more.

• Hermosa Beach City Elementary
• Newhall
• South Pasadena Unified
• Palos Verdes Unified
• San Marino Unified
• Walnut Valley Unified
• LA Canada Unified
• Temple City Unified
• Manhattan Beach Unified
• Arcadia Unified

Should I Rent a Co-op Apartment?

Co-ops are probably more famous and more popular in New York than anywhere else. Still you’ll find them from time to time in Los Angeles.Co-ops are slightly more challenging to get, with a complicated and time-consuming process, but the time investment is worth the reward, with typically lower property taxes, the possibility to build equity, and more.

What is a Co-op Apartment? Real Estate Corporation

A co-op apartment is an apartment which is administrated by a housing cooperative. If you buy a co-op apartment, you are not actually buying the property, i.e. the four walls which you intend to live in. Rather, you are buying a share in a legal entity. The shares you buy entitle you to use a specific part of the building. Therefore, you are not the owner of real property, but rather a membership which allows you to use the apartment you live in. This also means of course that you do not take out a mortgage, but rather share loans, i.e. a loan to pay for the shares.

• You buy shares, not property

Why you Should choose a Co-op – Explanation

Because you are not the owner of the property itself, you do not have to pay property taxes. Rather the cooperative pays the property taxes for the whole building, and these are divided among the members, i.e. residents. The main advantage of a co-op is that it is cheaper. The property taxes which each resident pays are lower, and any additional fees are also lower, because the co-op is not intended to make profit. Lastly, residents in co-ops, despite not actually owning the property, are entitled to many tax deductions which real estate owners are entitled to.

• Cheaper

How to buy a Co-op Apartment in Los Angeles – Step-by-Step

There are a few steps to go through before buying into the cooperative. Before approaching a co-op, or identifying an apartment which you are interested in, you have to gather an attorney, a mortgage broker, and an engineer. Although this is not necessary, it greatly increases your chances of getting the apartment you want. This is because, once you’ve identified the apartment you want, you apply. Your application is decided upon by the board. This board obviously wants the best possible residents, therefore it’s important to present yourself as a serious buyer. All co-ops have a certain list of requirements, which include the amount of downpayment you need to pay, and how much financial reserves you have. Following this, you contact the seller, begin the title search and mortgage application, and close the purchase.

Buying an Apartment Los Angeles – Checklist

If you want to buy an apartment in L.A., these are the most important things to do and keep in mind.

1. Decide! Rent or buy?
2. Prepare! Visit the city, research the market
3. Lawyer Up! Find your attorney
4. Choose affordable! Sponsor units, coops, or up-and-coming neighborhoods

Let an Apartment or House – the Right Tenants and Rental Contract

How do I set the rental price correctly? How does my advertisement appear attractive? And how do I draw up a suitable and fair rental contract? A future landlord asks himself all these questions, because in order to successfuly rent out a property, a lot of knowledge and experience is required. But if you follow a few simple steps, you will make the leap to a successful landlord and profit from the earnings.

The most important things:

• Landlords have many duties and tasks, including, for example, organizing the change of tenant or the annual preparation of a service charge statement for the tenant
• The rental price can be set with the help of the local rent index, but it must always be taken into account whether or not the affected region has a rent brake
• The rental contract should be fair for both tenant and landlord and regulate all important points
• When choosing the right tenant, it is not only the sympathy effect that counts, but also other important factors, such as creditworthiness
• The expose should contain all important facts about the property and convince with professional pictures
• The visit is possible both as open and closed date and depends mainly on the number of interested parties
• The apartment will only be handed over after payment of the rent deposit and the first month’s rent. At this time a protocol is made, which documents meter readings and existing damages.

The daily rental business – tasks of a landlord

If you want to be a landlord, it must be clear that a property does not maintain itself. Also the landlord has tasks and duties to maintain the tenancy. These tasks include, for example, the annual preparation of an ancillary cost statement for the tenant, the annual presentation of the economic efficiency for the tax office, the organization of a change of tenant, renovations or repairs to the property and, of course, participation in the owners’ meeting. Depending on the initial situation, a large part of the tasks can be taken over by an administrator, but the task as a landlord always involves a time consuming effort. If you want to keep it as low as possible, you should try to sign an unlimited rental contract in order to achieve a long-term commitment.

• Landlords have many duties and tasks
• These include, for example, the organization of tenant changeover or the annual preparation of a service charge settlement for the tenant

The right rental price – the rent index

The right rental price is not only crucial for success, but also enormously important for the rental. When determining a suitable rent, you should always orientate yourself on the local rent index of the respective city. This offers criteria such as location, size, year of construction or equipment of the apartment, according to which the own property can be categorized. If this has been done successfuly, the so-called “local comparative rent” can be read. This provides an orientation value for landlords. If there is a rent brake in the region concerned, the rent for the property may be 10% above the “local comparative rent”. If there is none, the rent may be 20% above the “local comparative rent”.

Exceptions will only be made if it can be proven that otherwise losses would be made. However, if the rent exceeds 50%, the law assumes “usury”, so there are limits here too. The rent must always be determined in the individual case. Depending on the region and the property, it is advisable to adhere to the “local comparative rent” or to exceed it up to a reasonable percentage.

• It must always be considered whether the affected region has a rent brake or not

The rental contract – fair for both parties

The preparation of the rental agreement is very important and it is usually not easy to rely on the first best form from the Internet. Depending on the regulations, the contract is either landlord or tenant friendly. Ideally, it should be both and cover all important points. For example the regulations over the keeping of domestic animals, the cleaning obligations of the tenant, the renovation work when moving out, the subletting possibilities or however the height of the additional expenses pre-payments count for this. Avoid here unclear regulations or regulations which are clearly disadvantageous for the tenant.

At best, the lease is fair for both parties and leaves no room for interpretation. Prefabricated rental agreements from the tenant or landlord protection association are usually very detailed and well suited, but should always be checked in individual cases. If there are any open questions or problems, a professional real estate agent can help and provide remedy. Our guide helps: real estate agent.

Finding the right tenant – agreeableness and important key data

Choosing the right tenant is not always easy and can cause many problems and costs if a wrong decision is made. When choosing a tenant, not only the sympathy effect should be considered, but also important key data should be obtained. These include a credit check and obtaining receipts for the last income, a tenant self-disclosure and a certificate of no rent debts. If all these key data are to your satisfaction, the personal impression of the potential tenant is important. A personal meeting at the viewing appointment can clarify many questions and help with the decision. The sympathy effect should not be ignored, because a good relationship between tenant and landlord helps to avoid future problems and disputes and to achieve a long-term lease.

• The rental contract should be fair for both tenant and landlord
• A rental contract should regulate all important points

The exposé and the viewing appointment – the way to the ideal tenant

The Exposé is the A and O with the tenant search. This is the first thing the potential tenant sees of the apartment and must therefore make a good first impression. Beside the most important basic data, like size, equipment, rent, additional expenses and situation landlords are obligated to publish the most important key data of the energy document of identification in the real estate announcement. Additionally, special features of the property should be highlighted here. A roof terrace, stucco or a fitted kitchen provided by the landlord represent characteristics increasing the residential value and justify for example a higher rent and arouse additionally the attention of prospective customers. Please note the correct indication of the number of square meters in the exposé. Since the rent is measured at this, it must be correct, since tenants can demand otherwise also afterwards still too much paid mine. When calculating the rent, it is especially important to consider roof slopes, low ceilings and the correct calculation of terraces or balconies.

The inspection can be done in different ways. With many prospective tenants, an open viewing is possible, in which all potential tenants view the apartment on their own and then submit a small application with a self-disclosure, a covering letter and other documents. Based on these you can then select a tenant. In addition, closed inspections are possible, with which you can show the dwelling to the prospective customers and clarify so again the advantages and get to know the persons better. Which type you prefer is left to your individual taste.

• The exposé should contain all important facts about the property and convince with professional pictures
• The tour is possible both as open and closed appointment

The correct apartment handover – handover protocol and the deposit

Before the apartment is handed over, the rent deposit and the first monthly rent should already have been transferred by the tenant. If this is not the case, this fact already makes the tenant’s payment morale doubtful and is usually not a good sign. If the handover of the apartment takes place as planned, a handover protocol is kept. In this protocol, any existing suggestions in each room of the apartment, the cellar, the garage and the attic are documented. Additionally, the meter readings of electricity, water and gas are documented. When handing over the apartment, it is advisable for each party to take a second person as neutral as possible as a witness and to ensure the existence of the protocol in case of disputes in court. However, the protocol should be signed by both parties in any case after leaving the property and kept in the documents.

• The apartment will only be handed over after payment of the rent deposit and the first monthly rent
• At the time of handover, a log is created that documents meter readings and existing damage

The most important questions about renting a house or apartment

Especially for inexperienced or beginners, the topic of real estate rental raises many questions. Who is the right tenant? How do I draw up a fair rental contract? What are my duties as a landlord? With these questions the support of an experienced real estate agent helps, but this option always involves the loss of money. To make sure that all questions are clarified for you and that you successfuly start off as a landlord, the experts of Lukinski answer the most important questions about renting a house or apartment.

What are the most important contents of an advertisement?

The advertisement should contain all important information about the property, such as size, location, equipment, energy performance certificate, floor plan, rental price and additional costs. Especially important, however, are the photos, which convey the first impression of the property to interested parties.

Must the rental agreement be checked by a notary ?

The rental agreement does not have to be checked by a notary. At most, he can check whether all existing regulations are legally permitted, but the document does not have to be notarized by him.

Is the apartment handover certificate mandatory?

The apartment handover protocol is not required by law, but it is usually done anyway. It protects both the tenant and the landlord and is only beneficial to both parties.

Must the rent be determined by the rent index ?

The rental price must be determined by the rent index. This helps to keep the prices within a certain range and to ensure justice for tenants.

Advantages and disadvantages: From rental conditions to rental commitment

The location depends on two decisive factors. On the one hand the rental conditions, around the rental price but also around the rental commitment, on the other hand the proximity to important traffic routes, suppliers or customers. The choice of location takes up a relatively small part of the business plan. But it’s essential to your business.

1. Where do you offer your offer?
2. Why did you choose this location?
3. What disadvantages does the location have?
4. How can you compensate these disadvantages?
5. How will the location develop in the future?

Expensive or many square meters?

Here are a few tips for your choice of location. Especially at the beginning, as an entrepreneur you don’t really know where to start. But there are great alternatives to the lonely single office, especially for young entrepreneurs. Have you ever heard of coworking? Coworking is a meeting place for many founders of new businesses. The big advantage is that you can benefit from the know-how of others. They help each other. While you may have special knowledge of InDesign, someone else is familiar with WordPress. Yet another has a hunch about search engine optimization and another about Facebook and Instagram Marketing. Mutually you can help each other, give inspiration and support. You learn a lot from your own experience.

Great city or quiet country?

Once you have opened your location, it is difficult to change it again. Especially if you want to go to another city. Therefore, you should think about where your location should be beforehand. Hotspots such as Berlin, Hamburg, Munich and Cologne naturally offer you excellent opportunities for growth if your peers don’t have to be too big at the beginning. If you can do without this luxury, then it is worth opening a location in the rural region. Because here the prices are extremely more favorable but also frequently steer of the individual municipalities. In addition, the danger of skilled personnel migrating is lower due to sparsely populated competition.

Enlargement over the years?

The third point you need to keep in mind is growth. If you have already set yourself up in your first office for such a long time that a later move will be complicated, then you will have extreme space problems from the 6 or 7 employees, with only 50 or 60 square meters, at the latest. Two offices? It’s no use. Accordingly, the first office must be furnished in such a way that nothing stands in the way of future expansion. The expansion of the company must therefore be taken into account in advance and factors such as the rental period and the furnishing planned accordingly. Accordingly, you should not make any major alterations to your first office. The fewest startups stay here after the start phase. Usually you will change your premises two or three times until you have found the perfect location with ideal space conditions.

Long-term binding?

Always keep in mind that tenancy agreements involve a long-term commitment, as well as the obligation to pay the rent punctually every month. Calculated over a whole year, a large amount quickly adds up. However, it is not only the costs that are important, but also the obligation to pay, because unlike private rents, there is hardly any protection against eviction. If you do not pay the rent, you will receive a reminder within 14 days, a reminder 7 days later and with a bit of bad luck another 7 days later a request for eviction. Of course, this is the worst case, but it is possible, e.g. if you are not a long-term tenant and just new. Especially in the case of start-ups and young companies, landlords naturally don’t take any pleasure in dealing with rent arrears. If you then have to weigh at the end of the month whether you pay wages or rent, you have exactly 30 days left.

You have to consider all this when choosing a location. As already mentioned, this topic hardly plays a role in the business plan. But for yourself, it’s extremely important.

Location choice: 5 facts

Here once again summarized, all tips for your location choice:

1. Search hotspots
   A&O → where does your business make sense
2. For starters: Coworking
   Other founders
   exchange of experience
   Input of unknown species
3. Top location or outskirts
4. Own office space → Rental ends and growth
5. Effect → Furnishings and ambience

Coworking – Savings Tip

Coworking – the perfect start for founders. If you want to start your own business, Coworking Spaces offers excellent opportunities to train yourself and qualify for new challenges. With a lot of know-how from people in the environment and through lectures. Especially entrepreneurial and media skills (social advertising to search engine optimization) can be found here at every corner. On the one hand, interesting conversations develop at the coffee machine, at the foosball table or on the large balcony. Every week there are also interesting workshops such as “Online evaluation portals – the sales turbo for sales”.

• Large office areas and meeting rooms instead of small individual offices
• Mediapark view with lake and green areas, in the middle of the city
• Community of young entrepreneurs
• Perfect also to combine professional and private interests
• All-round service: cleaning lady, janitor, etc.
• Media Services: Laser printer, beamer, etc.
• Friendly personnel

The personal and entrepreneurial, personal development is enormous due to the positive environment. I came as a designer, media manager, just moved to Cologne and was looking for my first projects. In coworking I quickly found a connection, first small projects and many interesting conversations. This year we did many entrepreneurial but also crazy things – like 30 online shops in one month, with 30.000 articles. Besides, just out of an idea. Why not!

From the all-round service, i.e. cleaning woman, laser printer, coffee machine and meeting rooms to the atmosphere. For me the way into a coworking space was probably the best decision. By the sharing principle a desk costs between 200 – 400 euro, depending upon offerer. With the extra services, however, this pays off very well. Likewise, you save time because you never have to worry about repairs, cleaning or other time wasters such as insurance, heating or even electricity. With a good environment, good ideas and good entrepreneurship. Coworking, the place-to-be for young entrepreneurs.

Coworking Office – Recommendations

Source: Lukinski Coworking List.

Berlin

• Agora Collective
  Kopfstrasse 48, 12053 Berlin
• Ahoy!
  Windscheidstrasse 18, 10627 Berlin
• Launch/CO
  Rudolfstrasse 14, 10245 Berlin
• Space station
  Stendalerstrasse, 10559 Berlin
• Aunt Renate
  Waldemarstrasse 37a, 10999 Berlin

Hamburg

• Betahaus
  Eifflerstrasse 43, 22769 Hamburg
• Lilienhof
  Lilienstraße 11, 20095 Hamburg
• Places
  Schopenstehl 15, 20095 hamburg
• Werkheim
  Planckstrasse 13, 22765 Hamburg, Germany
  and at Schützenstraße 9, 22761 Hamburg

Munich

• Allynet
  Bayerstraße 85, 80335 Munich
• Combinat 56
  Adams-Lehmann-Str. 56, 80797 Munich
• Idea Kitchen
  Hansastraße 181, 81373 Munich
• Nutrion
  Rosa-Bavarese-Strasse 3, 80639 Munich
• The Founders Hub
  Schopenhauerstrasse 71, 80807 Munich
• Plant1
  Grafinger Str. 6 81671 Munich

Guideline: Setting up your own business & business plan

You want to start your own business as a real estate agent or with another business idea? We support you with tips on your business plan and concept. Whether self-employed full-time or part-time self-employed: If you want to set up your own company, you have to think about a lot, in advance and in the operative business. From the right idea to health insurance – what needs to be considered if you want to become self-employed?

There is no training or further education for entrepreneurs. Managing director is you or not. Your own ambition is always important, because this is the only way to improve, every day.

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