4 tips for “cheap” real estate

How do you find the real bargain houses and apartments? 4 basics to get you started with real estate & investments.

Neighborhood: make it known you’re buying real estate

The local neighborhood is often the best place to start your real estate acquisition.

People around you should know about your interest in real estate investing!

Because only if they hear about it, they can automatically send you offers or recommend you to potential sellers.

One way to increase your presence in the neighborhood is to attend local events. At these, you can start conversations about real estate and share your intentions. In addition, social media can be helpful in spreading your message. Remember that building trust in the neighborhood takes time, but can be the basis for many successful businesses in the long run.

• The local neighborhood should be the first to know about your intentions
• If no one in your area knows you’re looking to invest in real estate, potential deals and referrals will pass you by
• Use local events, social media and word of mouth to communicate your interest in real estate

Address B2B contacts: Networking with professionals

Working with business partners can be extremely valuable to your real estate acquisition efforts.

These include professional brokers, tradesmen and property managers.

These players often have access to properties even before they appear on the public market.

To work successfuly with these professionals, you should offer superior incentives that motivate them to send you information about real estate listings. Partnerships or tipster commission can be an effective way to pique their interest. A good relationship with B2B contacts can give you access to exclusive properties and give you a competitive advantage.

• Search for B2B contacts such as professional brokers, craftsmen or property managers
• These contacts often have access to properties before they appear on the market
• Consider how you can be attractive to these contacts, such as through partnerships or referral fees

Direct contact with owners: Actively search for real estate

Sometimes it is necessary to actively search for properties and contact owners directly. This means that you proactively look for properties, whether in your area or in specific regions that are interesting for your investments.

Research carefully to locate owners and have professional conversations to get their interest. It’s important to build trust and be respectful, as this increases the chances that owners will work with you and offer you their properties. This direct approach requires patience and persistence, but can often lead to great deals.

• Actively search for properties and talk directly to the owners
• Do research in your area or areas of interest for your investments
• Be respectful and professional in your conversations to gain the trust of owners

Continuity: patience and consistency

Successful real estate acquisition requires not only commitment, but also patience and consistency. It is unlikely to become a millionaire overnight.

Take a long-term approach and continually work on your acquisition strategy.

Be authoritative and serious in your appearance to leave a positive impression. Set realistic expectations and be patient. Real estate acquisition can take some time before the first successes become apparent. Hang in there and stick to your goal – sooner or later you will be able to reap the rewards of your work and make successful real estate investments.

• Continuity is key. Build a long-term strategy
• Be authoritative and serious in your appearance to make a good impression
• Don’t lose patience – real estate acquisition requires time and preliminary work

4 Basics: Acquisition with a system

Property acquisition is a crucial step for real estate investors to find the best deals. A well-built real estate acquisition system can significantly impact the success of your investments. Remember to involve the local neighborhood, use B2B contacts, approach owners directly, and be continuous and patient. For more valuable insights and tips, check out my YouTube video on real estate acquisition basics.

Lukinski YouTube: Yield, Capital Investment & Co.

Discover with me the decisive factors, key figures and basics of real estate investment. Compared to other forms of investment, real estate offers a ‘safer’ way to invest capital with consistent returns and long-term appreciation. Want to invest your money wisely? My recommendation: Real estate, passive income and a good life.

• Lukinski YouTube

Crowdinvesting: explanation, advantages and disadvantages

Too little equity, too little time, no problem! Crowdinvesting in real estate allows you to invest with smallest amounts. My recommendation for small investments starting at 500 euros are providers like Exporo and InRento.

Let’s start with basics:

What is crowdinvesting?

First of all, what is crowdinvesting?

A very simple comparison would be “a corporation“. The company sells various shares to individuals and institutions. Thus, many “participate” in a company and give it the necessary financing for growth. It works the same way with crowdinvesting in real estate.

Instead of one large investor, shares are spread to many “small” investors. This allows people to invest in real estate who either do not have the necessary credit rating, not enough equity or both. There are several providers for this, such as Bergfürst, Engel & Völkers, Exporo or also InRento, which you will also find in a list later.

More and more want to participate in the real estate market. Also Haufe reports this month“The swarm flies on real estate“, let’s look at the advantages and disadvantages.

Advantages of real estate crowdinvesting

As already learned in the introduction, you as an investor have some advantages, such as the low equity, the various properties as investment options, risk minimization through capital diversification, but also an extensive participation (fixed interest rate, profit-related distribution and participation upon sale).

• Little equity – start from 50 – 100 Euro
• Once registered, various investment options
• Transparency – contact with construction companies possible (information)
• Risk minimization – capital spread over several projects

Compensation and Disbursements:

• Fixed interest rate
• Profit-related distribution
• Participation in the exit case (sale of the property)

Disadvantages and risks for investors

As always, there are advantages, but also disadvantages that you should consider. Here also a more detailed article in Capital“Risky game“. After that you will know all the disadvantages and risks in detail.

• No right of co-determination (participatory loan)
• Capital commitment over a long period 5+ years
• Total loss when projects fail
• Too much participation – loss of overview

How does crowdinvesting in real estate work?

In the vast majority of cases, a property is to be developed (renovated or completely rebuilt).

With regular real estate investment, one would now specifically look for a partner for financing. With crowdinvestment, however, owners talk to the crowdinvestment platforms, which in turn take care of the distribution of the shares. Online platforms then broker real estate shares to investors.

This crowdinvestment platform then takes over the entire presentation to the individual investors and the owners can take care of their core business, construction and development. So with crowdinvesting, you don’t give a “typical” loan to the respective developer, you participate in the property with a participatory loan. This also means you have no say in the matter.

Participation in the real estate does not mean, of course, that you can move in tomorrow and take 0.5 square meters. The real estate will be managed afterwards, you are only a capital investor. From this you achieve a return in the form of the fixed interest rate and the profit-dependent distribution.

Once again the remuneration and payment:

• Fixed interest rate
• Profit-related distribution
• Participation in the exit case (sale of the property)

So a few euros become more and more.

Crowdinvestment provider

Which crowdfunding platform is the best? Where can you invest? There are various, reputable providers for crowdinvesting. Here is a small market overview. The minimum investments differ, depending on the projects on the platforms.

As a rule, the minimum deposits are between 100 and 1,000 euros.

List of providers:

• Bergfürst
• Crowdinvest real estate
• Scroogeinvest
• Engel & Völkers Digital Invest
• Exporo
• Immofunding
• InRento
• Linus
• Rendity
• Savings Bank
• Interest module

What makes real estate so attractive as an investment?

Does real estate investment make sense?

There is a second advantage from crowdinvesting, for you personally!

With every new real estate listing and offer, you get to know the real estate market and learn to evaluate properties accordingly. Be sure to read my article on calculating rental yields here, as this will allow you to calculate the attractiveness of real estate investments in advance.

Real estate is extremely interesting as a capital investment, due to many aspects. A very important reason for real estate as a capital investment, especially with regard to one’s own retirement provision, real estate is not subject to inflation. The material value of a property protects it from the devaluation of money. Looking at the inflation table and the development in the next 25 – 30 years shows that real estate has many advantages, especially compared to financial investments such as savings accounts or Riester pensions for retirement.

Inflation and demonetization: effects

Example: In 30 years, inflation will have risen to the point where the purchasing power of 1,000 euros will be minimized to only 600 euros. In other words, if you spend 1,000 euros in 30 years, you will only receive goods worth 600 euros today. So (circa) 40% less, after inflation.

• 1,000 euros in the savings book in 30 years = 600 euros real value

Now we come directly back to the advantage of a property as an investment. This is rented out. Accordingly, the tenant pays an equivalent value (rent) for the monthly use of the tangible asset (real estate). If money is worth 40% less, your tenant has to pay 40% more rent. Accordingly, the rental income increases from 1,000 euros to 1,400 euros. So (circa) 40% more, after inflation, respectively no real value loss.

• 1.000 Euro rent in 30 years = No loss (1.400 Euro)

So if you had invested your money in a financial product, let’s take the classic savings book, you would have had a real loss of 40%.

When you invest your money in real estate, you are protected from the effects of inflation. Even better, you additionally benefit from the increase in value of the property. Germany is a booming real estate market, not only in recent years, also when looking at the last decades.

The population is growing, housing is scarce.

This way you additionally profit from the rent increases.

No fluctuation like shares & Co.

Real estate also has the advantage that it is hardly subject to fluctuations. If you actively trade currency, invest in stocks or buy cryptocurrency, for example, you will experience constant fluctuations in prices. Depending on the type of investment, currency, stock or crypto, more or less. Leases are long-term, rent is transferred monthly and the amount remains the same, tends to even increase due to rent adjustment.

• Real estate is stable in value
• Real estate offers inflation protection
• Real estate values do not fluctuate (like stocks, cryptocurrencies, and other financial products)

Major construction site in Stuttgart, profit, thanks to crowdinvesting.

Equity: Entry into real estate investment

The biggest sticking point for most is equity.

Especially when it is no longer about condominiums worth 100,000 euros (15,000 euros equity), but about investments in large cities with apartment prices of 400,000 euros, 500,000 euros and more. For a property with a purchase price of 500,000 euros (including ancillary costs), you would have to have 75,000 euros of equity ready.

Equity share in the purchase of real estate: security of the bank

First, let’s ask the question:

How much equity do you need for a regular property?

The answer differs, especially according to the real estate location. A condominium in Munich, unaffordable for most, even in the wider Speckgürtel around Nuremberg, Freiburg.

It is no different in the other major cities, Berlin, Hamburg, Düsseldorf or Frankfurt. So the purchase price of a property varies extremely, between 50,000 euros (in C-location) and 400,000 (in B-location). Of course, more if we talk about very good micro-location within the A-locations. e.g. Munich-Mitte, Berlin-Mitte, Hamburg-Mitte, Düsseldorf-Mitte and so on.

Calculate equity ratio: Here’s how

Whether 50,000 euros or 100,000 euros, the bank requires for the financing of a property, usually 15% equity. Especially if it is your first property.

In addition to the purchase price of the property, there are also the ancillary purchase costs. Depending on the federal state, including land transfer tax, notary costs and land registry entry, the total is approximately 7% to 10% extra.

Service charges idR. 7% – 10% yes according to federal state + broker (if involved)

The fluctuation comes on the one hand from the land transfer tax, which differs in each state. On the other hand, the question, was a broker commissioned? Here, too, the brokerage costs differ depending on the federal state. In the case of a private purchase, the buyer and seller must each share 50% of the brokerage costs. Ultimately, this results in the total purchase price of the property, including ancillary purchase costs.

This is how you calculate the equity ratio:

• Financing request: 100.000 Euro
  (purchase price plus ancillary costs)
• Equity: 15.000 Euro
• Loan from the bank: 85,000 euros

Purchase price calculation with additional costs:

• Purchase price: 100.000 Euro
• Real estate transfer tax example NRW (6.5%): 6,500 euros
• Notary fees (1.5%): 1,500 euros
• Land register entry (0.5%): 500 euros
• Brokerage commission (3.57% [3,570 / 2]): 1,785 euros

Credit rating for financing: crowdinvesting as an alternative

Not everyone has the necessary credit rating for such a large financing. Even if the equity would be available. e.g. because regular income counts (self-employed). Even more, however, do not even have the necessary equity available. For those who do not want to wait, there is a great alternative, even to invest in real estate as an investment.

Many reasons that speak for real estate as an investment and if the equity is not yet enough, for crowdinvesting in real estate.

Residential neighborhood with many condominiums (new construction):

Find profitable real estate

Crowdinvestment does not take away from you the decision in which property you invest. Therefore, here again the question opened:

How to find profitable real estate?

You still have to decide for yourself in which property you want to invest your money. Perhaps you already know my detailed guide on the subject of buying your first property? Here you will learn about the different types of real estate, the difference between yield real estate and investment real estate but also (very important) the real estate yield.

The real estate yield is a simple calculation once you know and understand it. It looks at the investment amount (purchase price and incidental purchase costs) and the monthly income (rental income). The result is a percentage.

If this is above 6%, all costs are usually covered by the repayment of the financing, interest and reserves for maintenance. Any return above 6% means additional wealth accumulation for you. Accordingly, the real estate yield is an extremely important factor for real estate investors. Because with this single key figure, you can evaluate the attractiveness of a real estate investment, but also compare different investment properties with each other.

Let’s first look at the simple formula of rental yield:

Annual net income / investment * 100 = rental yield

The rental yield is subdivided once again into the net rental yield and gross rental yield. Where is the difference?

• Net rental return = incl. incidental purchase costs
• Gross rental yield = excl. incidental purchase costs

With this knowledge, you can act much better as an investor and thus find really profitable properties for your investment.

Once you have registered in a crowdinvestment platforms, browse through the individual investment properties and compare them based on the return. Of course, you won’t get 100% of the rental payments, but you will see the yield on all platforms. Now you know what it’s all about!

Earn rental income today with investments starting at 500 euros. My recommendation:

• InRento

Financial check

Financial Check: Saving – Who would like to save money should not start for it with things like clothes or the like. No, who would like to save correctly should do that with the finances! We have compiled a few tips for you with which it will certainly be easy for you to save more money in the future. The goal when it comes to saving money is always “Save like the Swabians”. So that you achieve exactly that, we have many different tips on dealing with your finances together. Even if you try to follow only 1 tip, you will notice changes.

• Finance Check: Save on loans, taxes, accounts and credit cards

Save in everyday life

Save money in everyday life – In this day and age, many things are becoming more and more expensive. For this reason, it is important to know how to save money properly and where it is really worth it. You don’t always have to make a specific plan to save money. Even small changes in everyday life like using different light bulbs, using services of trainees or other things can already contribute a big part to minimize the expenses.

• Save money in everyday life: Heating, clothing, light and teeth – 14 tips

Checklists: Save on subscriptions, shopping, household, electricity & Co.

We also have many individual areas where a lot of money can easily be saved. Every week, every month, so that a solid financial basis is getting closer and closer:

• Save subscriptions
• Save Shopping
• Save Driving
• Save free time
• Saving budget
• Save Travel
• Save electricity
• Save relocation

Subscriptions

Saving money through subscriptions is a nice option. But taking out a subscription is not always the right choice. In this article you will learn when a subscription is worthwhile and in which areas a subscription could be useful. A subscription is an agreement to purchase certain services for a longer period of time at a reduced price. These include not only gym memberships or the purchase of newspapers, but also the purchase of tickets, TV connections or music services. The purpose of subscriptions is to enable people to obtain certain services on a regular basis for a fee.

• Subscription: Insurance, comparison, mobile phone & trial subscription – How to save properly

Shopping

When you hear the word shopping, you probably think of spending money instead of saving money. If shopping is still a big passion of yours and you want to learn how to save money, you should read each of our tips carefully. Buying used, bargaining, visiting outlets or making shopping lists are just a few of the ways we want to introduce you to. Shopping is one of the most important consumer goods for people. It is now no longer just about necessary purchases like food or clothes, but nowadays you can also go shopping to pass the time. The tips on how and where to save money on shopping have been recorded for you below.

• Shopping tips: hire purchase, discounts and 10-minute rule

Driving

You think there is no alternative to leaving your car at home, except using public transport? Wrong guess. This article proves you wrong and provides 18 other options. Besides public transportation, you can walk, bike, carpool, or compare gas prices. If you want to save money on transportation, you don’t have to use public transportation directly. Of course, these are a cheaper alternative to the car, but in the following we have collected a few tips on how you can save money not only by giving up the car, but also the car itself.

• Save money: Cheap travel by car, taxi and bike

Free time

Free time is an important part of a person’s life. You are not only free from any obligations, but you also have the opportunity to shape them as you want. There is a whole range of leisure activities but they are anything but easy on the wallet. Those who do not know how to spend their free time without spending a lot of money should have a look at the following suggestions. You not only have the opportunity to make new contacts, but you can also make new experiences. So it does not always have to be an expensive hobby that you pursue in his spare time, there are also a lot of cheaper or even free alternatives.

• Save money on leisure: Free events, movie nights and gift ideas – Tips

Budget

Saving money in the household – government grants, appliance use, environmentally conscious laundry, or waste separation. No matter in which household area: You can save a lot of money everywhere. We show you how, where and when you can save money and thus increase your wealth. You can just as easily save money in everyday life, at home, when shopping or in your leisure time. Your tax advisor will also be happy to help you save on your taxes.

Travel

It is always a nice thing to travel. Due to the fact that it is rather the rarer case that one travels monthly, it is often an exception when going on vacation. And although or just because it is an exception, you often spend a lot of money on many, often unnecessary, things just on vacation. For this reason, we have compiled a few important tips for you below, with which you can save money not only before your upcoming vacation, but also on vacation itself. 14 practical experiences from everyday life, especially for young families and people, with less budget. After all, it’s not about the money, it’s about the people you have with you, the experiences and the adventure, it doesn’t take much!

• Saving on travel: Hotels, flight bookings, food & Co. – 14 tips for your holidays

Power

Saving electricity is becoming increasingly important. Energy consumption in particular is responsible for high costs. If prices continue to rise, then it is always worth taking a closer look at the large energy consumption. Of course, a lot of money can be saved by changing the electricity provider, but you can also do a lot in everyday life, so that the electricity bill lowers. If you want to avoid high electricity costs, here are the most important tips at a glance! How to save electricity and money.

• Electricity comparison: Save electricity, time & money – The biggest energy consumers in the household

Move

The next move is coming up, whether you’re moving for the first time or you’ve already moved a few times, each time presents new challenges. There are a few organizational basics that will help you quickly and easily organize the move. In a direct price comparison with moving companies, it is worth moving on your own, which can save you money. How to organize your move, our guideline.

• Moving Checklist: Move, Schedule & Pack – Save Time and Money

Wealth building: Real estate, stocks, cryptocurrency … ?!

When does it make sense to start building wealth through strategically intelligent investment? At 20, 30, 40 or even at 50? Is there a simple formula or tips for investing with good returns? What about risk, depending on the type of investment? Here’s an in-depth look at wealth building, for beginners. Without equity and with little equity. From the principle of effective trading (saving), calculation examples, investment impulses and first tips.

Long-term wealth accumulation does not start when assets are needed in a timely manner. That means, for example, shortly before retirement or shortly before a decision when money “must” be spent. For example at the end of the year or if it concerns larger investments, also before elections, for example the federal election (up-to-date with donation / WEG establishment). But – we want to stay at the very beginning.

• Wealth building: Real estate, stocks, cryptocurrency … ?! Capital accumulation with 20, 30, 40 years – tips