Selling Property in New Development Areas

Extremely relevant factors for the sale of apartments in new construction are the equipment of the apartment itself, but also the equipment and technology in the communal areas and in the house itself. The market value assessment of apartments is generally more complex than for owner-occupied homes, which is why you should definitely aim for a professional value assessment for planned sales in new construction.

Influence of Location and Structure

In many cities, new development areas are emerging in the form of fully developed neighborhoods on the outskirts and in up-and-coming neighborhoods. For potential buyers, the location is as relevant as the structure of the area in which the apartment is offered. You have just planned a new development area and are looking for owners who are interested in your project as investors or want to buy the newly built apartment for their own use? It is common practice for developers to offer apartments in new development areas not only after completion. Since the equipment and all environmental factors of the new development areas are already determined in the planning phase, you can already at this point in time hire an experienced real estate agent who is familiar with new development areas and have the offer presented.

Real Estate as Capital Investment: Special

• Part 1: Classical or exotic investment – Which real estate is suitable as capital investment?
• Part 2: Real estate as capital investment – What do I have to pay attention to?

In practice, it has been shown that new development areas designed with green spaces and a good infrastructure are highly attractive and ensure that all apartments are sold quickly. The offer price is determined on the basis of your construction and planning costs, the data relevant to the property and the comparison prices of similarly located and designed new development areas. Would you like to sell your apartment in a new development area and avoid losses when selling it? If so, you should opt for a professional sale and hire real estate agents who are well versed in new construction and who offer you comprehensive service in all phases of the sale.

Apartments or Houses for Capital Investors

With apartments in new buildings you address two different target groups. On the one hand, a newly built apartment is a good and high-yield capital investment and on the other hand, more and more families are looking for an apartment for sale in a newly developed residential area. In addition to condominiums, new construction areas with owner-occupied homes or terraced and semi-detached houses are also interesting and popular. If you would like to offer a property or an apartment in a newly developed area, you should definitely hire an estate agent and in this way ensure the greatest interest in your offer. The exposé for investors requires a different structure and density of information than the presentation of the apartment to be sold to owner-occupiers. You want to achieve the best price and gain the certainty that your offer will sell immediately in the new development area.

With Lukinski, you decide, in addition to professional brokerage, for a full service support, which includes the examination of the solvency of buyers and prevents unrealizable sales contracts. The completeness of all documents and an exposé geared to the target group are sales-promoting. Especially if you want to address professional buyers in the form of capital investors, your sales appearance should be characterized by professionalism and expertise.

New not More Expensive than Old: The Facts

Many prospective buyers assume that the costs of apartments and houses in new construction areas are much higher than in old buildings. Certainly, the asking price is usually higher than the amount you have to pay for an existing property or a condominium in a second occupation. But the purchase price is only one cost factor and therefore not the only factor when it comes to deciding between an old building and a new building.

In the new building area you acquire a modern apartment in which no costs are incurred for renovation. Newly built areas are state-of-the-art and offer a high quality of living. For you as a potential owner, this means that with the purchase you acquire an apartment ready for occupancy and therefore only invest the purchase price and the costs for interior design work. For existing properties and apartments in old buildings, extensive modernization measures may be necessary and increase your costs to the actual purchase price. It is therefore always worthwhile to weigh up concretely and calculate the purchase on the basis of the market value assessment and the necessary renovation measures. In the end, your decision to move to a new development area or an older property will of course also be based on your own preferences and the idea of your new home or a profitable capital investment.

Move to a New Development?

Tips for potential condominium buyers – Anyone who wants to buy an apartment or house and move in immediately, without renovation and modernization, will generally focus on a new development area. Are you looking for a new building and want to save yourself a lot of time with your own research? At Lukinski, we not only look after owners, but are also happy to support you in your search for a new apartment or house. Tell us your explicit wishes and have a look around our portfolio where we might already have an offer for you. If you decide to buy an apartment in a new development area that is only just being planned, you have a lot of leeway for organizing the financing.

We will be happy to advise you and help you find a favorable real estate loan for your apartment and complete the purchase without complications. Since we at Lukinski work for various owners and developers, we have some attractive new development areas in our portfolio. Furthermore, we already know before construction where new development areas will be built and which target group the apartments should reach.

Build an Apartment House: Building Interest and Construction Financing

Construction interest rates have been at rock bottom for several years. A building interest comparison is worthwhile, because: How long will it remain like this? Many of our customers approach us with the question whether it is worth waiting or whether the interest rates will rise again in the future. Building interest rates do not just stand on their own, but also have a significant influence on mortgage interest rates. In our consultation you will find out quickly and reliably when and how you can best finance and secure the favourable building interest rates.

The current building interest rates form the foundation of every real estate financing, including the development of building interest rates. This is because the building interest rates are responsible for the additional costs of your building loan as a net amount. The more expensive the building interest is at the time of your financing, the more money you have to pay back to the bank. Conversely, you can save money by choosing the right time and financing when the interest rates are at a low point. Mortgage interest is not a static figure. The interest rate can change at any time and either rise or fall.

Time for financing

You choose the right time for a mortgage loan primarily based on your personal preferences and focus on when you want to buy a home. However, your personal circumstances are not the only factor that should underpin your decision. It is just as important that you keep an eye on the external conditions and finance at the moment when building interest rates follow a downward trend. As a potential owner, you do not need to know the market or delve deeper into the interest rate policy.

Factors that influence the building interest rates

One of the main factors influencing building interest rates is the economic situation of a country. Germany’s economy is booming, which is naturally reflected in the building interest rates. The better the economic situation, the cheaper you can finance construction. Since construction financing is largely handled via mortgage bond transactions, low interest rates for government bonds are the best basis for your real estate financing. If you finance now, you will benefit from amazingly low construction and mortgage interest rates. The performance of government bonds in combination with low interest rates for mortgage bonds results in a chain reaction that results in the most favorable construction interest rates. Many of our customers assume that the construction interest rates are related to the key interest rate of the ECB. Although this is currently also more favorable than ever, the key interest rate does not directly influence the construction interest rates. On the other hand, your personal requirements such as the equity capital you bring with you, the term and the repayment amount have a great influence on the individually calculated building interest.

You should pay the greatest attention to the debit interest when calculating your construction financing. Because the debit interest influences the entire interest commitment for your building loan and is therefore a fundamental factor if you want to finance cheaply and advantageously. We will be happy to advise you on your individual options and support you in finding the optimum repayment for you and calculating your monthly installments based on your own ideas. The lower the debit interest rate, the cheaper your construction financing will be.

Development of the interest rate

For some years now, building interest rates have been stable and low. But which trend will the building interest development follow and is it worthwhile to fix a long debit interest commitment now and to protect against a possible rise in interest rates? Or will the building interest rates continue to fall and you are financing too expensively if you decide now for a fixed interest rate with a term of 10 or even 20 years? If you understand the type of interest rate and apply the interest barometer correctly, you will get a transparent overview of the current and future development of building interest rates.

Mortgage interest rates: effects & possibilities of influence

The term mortgage interest is now replaced by the term construction interest. The building interest, or mortgage interest, determines whether a construction loan is cheap or expensive. Due to the current historically low building interest rates, you can finance your real estate at a very favourable rate and secure an advantage that has a lasting effect on the overall financing costs.

Effective interest rate for mortgage loans

From 1994 to 2018 (last survey), the effective interest rate for mortgage loans (construction interest) fell by -6.4% to just 1.4%. Effective interest rate for mortgage loans in Germany over time:

• 1994: 8.8%
• 1998: 5.3%
• 2004: 4.4%
• 2008: 4.8%
• 2014: 2.2%
• 2018: 1.4%

Heating System: Energy & Saving Money

The topic of heating is not only interesting for building owners, but also for property owners. Heaters are not only necessary in a real estate, but also legally required. What types of heating are there, how do they have to be maintained and are there legal subsidies for the construction of certain types of heating or do the costs have to be paid completely by the owner?

• The whole guide: Heating system

Solar heat: solar energy

Solar thermal is the process by which solar energy is converted into usable heat. In residential properties, the heat produced is usually used to heat water or for heating. Depending on the location and conditions of the property, this system can completely replace the previously used heating system.

State subsidy of 2,000 euros

Gas heating: heating with natural gas, liquid gas or biogas

Gas heating is probably the most widespread type of heating in Germany and rightly so, because the system offers many advantages. Modern technology, efficiency and inexpensive offers characterize the gas heating. In addition, they are easy to combine with renewable energies, save space and can be easily installed during modernization and renovation.

Oil heating: heating with fuel oil or bio fuel oil

Oil heatings are after gas heatings the probably most frequently occurring systems in Germany. The function mode is simple and works for decades in the same way. The fuel fuel oil is pumped over an oil pipe to the heating system where it is sprayed and burned. The heat generated during this process is used to warm up the heating water and thus to heat the house. Most of these components can be found in the boiler, which now takes up little more than one square meter of space and can even be hung on the wall, depending on the model.

Pellet heating: ovens with pressed wood residues

A modern pellet heating system is known for low fuel costs as well as for environmentally friendly heating and is therefore one step ahead of conventional gas and oil heating systems. Also the function mode is relatively simple. The wood pellets are periodically delivered to the combustion chamber by means of a feeder, so the correct filling is fully automatic. The heat generated by burning the pellets is used in a separate boiler to heat the water. Thus, both the heating can be operated and the hot water can be produced.

Heat pump: heating with the heat of the environment

Technically speaking, a heat pump is a system that can extract thermal energy from a medium with low temperatures through technical work and supplied working energy. That sounds first once quite complicated, the principle of the heat pump is however actually quite simple. The heat pump extracts heat from the different energy sources air, earth and water and uses it to heat water for heating purposes. For this purpose external electricity must be supplied, but not as much as would be necessary for a normal heating system.

• The whole guide: Heating system

Extra: infrared heating

Even if the conventional heating systems have proven themselves, infrared heating is definitely an alternative that should be considered. Although heating with electricity is generally considered expensive, there are other factors that make heating with electricity economical. Our detailed guide will tell you which points are important and when heating with electricity is worthwhile.

• Infrared heating

Extra: fireplace & stove

A fireplace provides relaxation, well-being and warmth. Therefore it is also not surprising that fire-places and other furnaces stand right at the top of the desire list of owners. Particularly on cold days there is nothing more beautiful, than to kuscheln itself before a cozy fire-place brimming with warmth and to enjoy the time. There are many different types of fireplaces. From open and closed up to tiled or pellet stoves which all have advantages and disadvantages.

• Chimney & stove

Rental: Laws, taxes & tenants

Renting a property can be a great extra income, but it can also become your main job. Landlords have many duties towards the tenant and have to take care of the property. However, if this is successful, a lot of profit can result. We will explain how you can best let your property and how to find the right tenant for you.

There is so much to learn!

The right tenants, suitable lease & Co.

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.

In addition come: Landlords have many duties and tasks, among these are for example the organization when changing tenants or the annual preparation of a service charge statement for the tenant. The rent can be set with the help of the local rent index, but it must always be considered whether the region concerned has a rent brake or not. The rental agreement should be fair for both tenant and landlord and should 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 – learn everything you need to know about renting your property in our article.

The correct tenants, suitable lease & Co. read on here:

• Renting out a house or apartment

Buying an apartment building: Valuation & investment

Compared to single-family homes and condominiums, multi-family homes offer greater investment stability. With several residential units, you spread the risk of rent losses and benefit from a continuous cash flow. However, it is important that you have the property professionally valued so that you neither buy too expensively nor overlook hidden risks.

PS: First investment? Here are 4 tips for your first investment with video.

Real estate valuation: What is important?

The valuation of a property is not only based on square meters and year of construction. Factors such as location (macro and micro), energy status, condition of the roof, pipes and heating, as well as rental contracts, vacancies and development potential are decisive. A rough online estimate is not enough here – it is better to have a valuation report drawn up or use professional valuation models with comparable properties.

• Valuate property

Reminder! Location, annual net cold rent + purchase price: This is how you can quickly evaluate an apartment building.

Recognize value enhancement & exploit potential

Are you looking for properties with development opportunities? Then look out for attics that can be converted, vacant properties that can be renovated or properties with potential for redensification. Converting to modern heating systems or adding balconies can also significantly increase the value. The decisive factor is cost-effectiveness: calculate each measure and compare it with the potential increase in rent or value.

Relationship between price, location and yield

In sought-after locations(A-locations, good B-locations), the purchase price is higher and the rental yield is usually lower. In structurally weak regions, you pay less – but also with a higher vacancy risk. The optimal balance lies in growing medium-sized cities with good infrastructure, stable demand and moderate prices. Pay attention to micro-location, transport links and demographics.

• A, B and C position

Calculate rental yield & value correctly

The gross rental yield shows you what percentage of the purchase price you will achieve annually through rental income. It is calculated very simply: annual net cold rent divided by the purchase price, multiplied by 100. A solid gross yield for apartment buildings is between 6 and 9 percent – lower in prime locations and often higher in structurally weak areas. But be careful: a high yield in a poor location can be deceptive if resale is problematic.

Annual net rent ÷ purchase price × 100 = gross rental yield

• Rental yield vs purchase price factor

Refurbishment property or fully let?

Refurbish & re-let

Buying a house in need of renovation can be worthwhile – if the location and substance are right. If you renovate efficiently, you can then rent it out again – at higher prices and to modern standards. In the case of vacant properties, make sure that there are no tenancies and find out about the renovation costs and possible subsidies in advance.

Fully let properties: Security & immediate income

A property that is already fully let generates income from day one. You should check all rental agreements here: Term, rent amount, indexation, graduated rents, notice periods. You should also ask for the tenants’ payment history. A mixed tenant structure without rent arrears is ideal.

Important: Tenancy law & limits of termination

You cannot give notice or raise the rent at will. Terminations are only permitted for personal use or breach of duty. Rent increases are limited by law – additional regulations apply in regions with rent control. Refurbishment costs may only be apportioned proportionately. Plan these aspects carefully.

Purchase contract & legal basis

Notary & contract review

The purchase contract is drawn up by the notary and must be notarized. The notary acts as a neutral third party and ensures that all legal conditions are met. You will receive a draft contract in advance, which you should check with your advisor or lawyer. At the notarization appointment, the contract is read aloud and any unanswered questions are clarified.

Land register, transfer of ownership & priority notice of conveyance

With the notarization, the purchase is legally binding – but you are not yet the owner. The transfer of ownership only takes place with the entry in the land register. Before this, a so-called priority notice of conveyance is entered to secure you. Prerequisite: The purchase price must be paid and the land transfer tax paid.

• Real estate purchase agreement

Taxes & ancillary purchase costs at a glance

Real estate transfer tax & ancillary costs

When buying a property, there are additional costs on top of the purchase price: Land transfer tax, notary fees, entry in the land register and, if applicable, estate agent’s commission. Depending on the federal state, these amount to 10 to 15 percent of the purchase price and usually have to be paid from equity. Sound financial planning takes these items into account from the outset.

• Real estate transfer tax

Real estate GmbH & family foundation

For larger portfolios, it is worth structuring via an asset-managing GmbH or a family foundation. This allows you to benefit from tax advantages – for example in the event of inheritance or sale after the speculation period. However, the establishment and ongoing administration require good tax and legal advice.

• Real Estate Ltd.
• Family foundation

Letting: Tenants, contracts & income

Successful letting starts with selecting the right tenants. In addition to creditworthiness and credit rating, personal impressions are also important. A clear, legally secure rental agreement protects both parties. The rent is based on the rent index, but must also match the furnishings and location. Pay attention to mandatory details such as operating costs, house rules, notice periods and rent adjustment clauses.

• Renting out a house & apartment

Conclusion: Strategy for success

An apartment building is not a short-term deal – it is a long-term investment that needs to be well planned. Anyone who knows the market, calculates the right key figures and strives for a legally compliant transaction will create a stable source of income and increase their assets in the long term. Take advantage of professional advice – for valuation, purchase, refurbishment or letting. This will help you avoid mistakes and ensure long-term success.