First Investment: Quick Check for Beginners

Not every real estate is automatically a good investment – quite the opposite. About 70 % of beginners buy the wrong real estate because they focus on the purchase price instead of the key figures. The decisive size for success or failure is the rental yield in combination with the cash flow. How high your yield really is, shows our article Calculate Rental Yield. More about Yield Value Method and when it is applied.

Before you start with the numbers, you must understand the basics: market situation, interest rates, equity, location strategy and taxes. This article guides you step by step through each point – with concrete calculation examples.

• Understand the market situation and use negotiation leeway
• Use equity realistically (rule of thumb: purchase ancillary costs plus reserve)
• Calculate rental yield and cash flow before you sign
• Plan tax levers such as depreciation and advertising costs

Video: No desire to read?

Watch my video with all the thoughts, example calculations and tips:

Another tip: Use my free real estate calculators on ImmobilienGuru.One – there you can directly calculate rental yield, cash flow and follow-up financing.

Current Market Situation: Use Uncertainty as an Opportunity

Why buyer hesitation is your chance

Germany is in an economic turning point. Several years of weak conjuncture have changed the real estate market. Many buyers are cautious and waiting – a classic mistake, because exactly that opens up room for active investors. While the majority hesitates, you can specifically search for real estate that is sold below market value, for example by inheritance communities, during divorces or through bank special repayments.

Rental demand remains a structural driver

At the same time, rental demand remains high. The population in urban areas continues to grow, the number of households increases due to the single trend and immigration, while housing construction has been below demand for years. The result: well-located apartments are almost immediately rented even in times of crisis.

• Less buying competition means a better negotiation position – realistically 5 to 15 % below the asking price possible
• Rents continue to rise because the housing supply is structurally limited
• Especially A- and B-locations offer stable value development and long-term security
• Sellers under pressure (inheritance, divorce, bank) are significantly more willing to negotiate in this phase

Interest Rates: No Fear of Financing Costs

Historical Context of Interest Rate Levels

Construction interest rates have stabilized after a long high phase and are currently moving in the range of about 3 to 3.8 % with 10 years interest binding. Many investors perceive this as high because they are used to the low interest years with 1 to 2 %. A look at the history quickly relativizes this:

• 1970s: mortgage interest rates 8 to 10 %
• 1980s: temporarily over 9%
• 90er Jahre: rund 7 bis 8 %
• 2000er: 4 bis 6 %
• 2015 to 2021: historical exception phase with 1 to 2%

Das aktuelle Niveau ist also der historische Normalfall, nicht die Ausnahme. Vermögensaufbau mit Immobilien hat in jeder dieser Phasen funktioniert.

Kluge Strategie statt Zinsangst

Wichtiger als der absolute Zinssatz ist eine Finanzierung, die zu deiner Strategie passt. Kalkuliere konservativ und stelle sicher, dass du auch bei einer Anschlussfinanzierung mit höherem Zinsniveau noch positiven Cashflow erzielst. Wie du positiven Cashflow rechnest: Cashflow Immobilie.

Wer heute finanziert, kann bei sinkendem Zinsniveau über Forward-Darlehen oder Umschuldung profitieren – Stichwort Vorfälligkeitsentschädigung richtig kalkulieren.

• 3% interest rates are moderate in historical comparison, no investment obstacle
• Additional prepayment rights (5 to 10% p.a.) in the contract ensure flexibility
• Lange Zinsbindung (15 oder 20 Jahre) bei aktueller Lage strategisch sinnvoll
• Forward loans allow interest rate protection for the subsequent financing

Equity: How much do you really need?

Rules of thumb for your first property

One of the most common beginner questions: How much equity is needed? Banks distinguish between loan-to-value (security for the bank) and purchase price. The most important scenarios:

• 110% financing: The bank finances the purchase price plus ancillary costs – only realistic with very good income, flawless Schufa and top location
• 100% financing: The purchase price is fully financed, ancillary costs from equity – frequently the standard for investors with good income
• 90% financing: 10% equity plus ancillary costs – cheapest interest rates, best negotiation position
• 80% financing: 20% equity plus ancillary costs – top conditions, but high capital requirement

Realistic example: Equity requirement

Purchase price 300,000 €, federal state NRW (6.5% GrESt), notary/land register 1.5%, real estate agent 3.57%:

• Land transfer tax: 19,500 €
• Notary and land register: 4,500 €
• Real estate agent commission: 10,710 €
• Total ancillary costs: about 34,700 € (11.6%)
• Plus liquidity reserve: at least 10,000 € for maintenance and rental default

Rule of thumb: For your first property, you should be able to provide at least the purchase ancillary costs plus a reserve from equity – realistically about 45,000 € for a 300,000 € property.

Strategy for beginners: Which properties are worth it?

Rent yield property versus appreciation property

The most important strategic decision before purchase: Do you want cash flow today or appreciation tomorrow? Both at the same time are almost never possible.

• Appreciation properties (A-locations Munich, Hamburg, Berlin, Frankfurt): Gross yield 2.5 to 3.5%, but high appreciation over 10 to 20 years. Cash flow is often negative, tax benefits compensate for this.
• Rent yield properties (B/C-locations, commuter belt, medium-sized cities): Gross yield 5 to 7%, immediately positive cash flow, lower appreciation, higher risk of rental default.

Location strategies compared

Purchase ancillary costs by federal state

The land transfer tax varies greatly between federal states. For a property worth 400,000 €, this quickly adds up to four-figure differences:

In addition, there are about 1.5 to 2% for notary and land register as well as possibly the real estate agent’s commission (usually split evenly between buyer and seller).

The most important criterion: Rent yield and cash flow

Correctly calculating net rent yield

No matter which strategy – the rent yield shows you whether your property is profitable. Calculate the net rent yield like this:

Net rent yield (%) = (Annual cold rent – non-recoverable costs) ÷ (Purchase price + purchase ancillary costs) × 100

Realistic example B-location commuter belt: Apartment 250,000 €, cold rent 950 €/month, non-recoverable management costs 1,800 €/year, ancillary costs 11% (27,500 €):

• Annual cold rent: 11,400 €
• Minus non-recoverable costs: –1,800 €
• Net cold rent: 9,600 €
• Total investment: 277,500 €
• Net rent yield: 3.46%

Cash flow calculation with financing

The rent yield alone is not enough – what remains after interest and repayment is decisive. Example above with 90% financing (225,000 €) at 3.5% interest, 2% repayment:

• Rent income cold rent: 950 €/month
• Annuity (interest + repayment): –1,031 €/month
• Non-recoverable costs: –150 €/month
• Cash flow before tax: –231 €/month
• Depreciation benefits and business expenses reduce tax burden – after tax often near zero or slightly positive

Realistic rules of thumb for net rental yield depending on location:

• A-location in a metropolis: 2.5 to 3.5 % – appreciation supports the case
• B-location / commuter belt: 3.5 to 5 % – mixed strategy, often the sweet spot for beginners
• C-location / mini-apartment: 5 to 7 % – cashflow-driven, higher operational risk

The “minimum yield of 8%” circulating on the internet only apply to risky C-locations or commercial properties – not for solid residential properties in German metropolitan areas.

Tax Leverage: The invisible yield booster

What many beginners underestimate: taxes can improve the effective yield by 1 to 2 percentage points. The most important levers:

• Linear depreciation: 2 % per year on building value (existing buildings), 3 % for new buildings from 2023 – reduces taxable income
• Advertising expenses: interest, management, repairs, travel costs, tax advisors – fully deductible
• Maintenance costs: repairs can be immediately deducted, modernization through depreciation
• Speculation period of 10 years: after 10 years of holding period, the capital gain from the sale is tax-free
• Special depreciation for monuments: up to 9 % per year for 8 years on renovation costs

Rule of thumb: with a top tax rate of 42 % and 6,000 € depreciation per year, you save about 2,520 € in taxes annually – this directly improves your cash flow.

Top-5-Mistakes for first-time investors

• Trash property due to supposedly high yield: 8 % gross yield in a C-location sounds good – until the first tenant dispute lawsuit and 6 months of vacancy
]]> https://lukinski.com/a-lage-real-estate-advantages-disadvantages-profit-in-sale-new-video/ Fri, 06 Oct 2023 06:44:55 +0000 https://lukinski.de/a-lage-real-estate-advantages-disadvantages-profit-in-sale-new-video/ Real Estate in A-locations – In my latest YouTube Video you will learn everything you need to know about A-locations in the real estate world. What advantages do they offer? What disadvantages should you be aware of? And how do they compare to B- and C-locations? Take a look at all 3 location types compared here.

Real Estate in A-locations: What is that?

Real Estate in A-locations are highly sought-after properties on the real estate market, located in first-class locations. But what exactly defines these A-locations, and what advantages and disadvantages arise for potential investors? In this article, we will take a closer look at real estate in A-locations and examine their characteristics as well as opportunities and risks.

A-location explained in under 60 seconds – Video

A-location compared to B-location of real estate.

Advantages of real estate in A-locations

This is what you need to know about condominiums and houses in A-locations:

1. Focus on land price increases
2. Security of the investment
3. High profits when selling
4. High demand, even in the long term

Focus on rising land prices

One of the main attractions of real estate in A-locations is the prospect of continuous land value appreciation. This is often due to the fact that these locations are situated in economically strong and well-developed areas.

Security of the investment

A-locations generally offer higher security for investors. The stability of the neighborhoods and the low crime rate contribute to investors feeling secure.

High profits when selling

After a certain holding period, real estate in A-locations can generate high profits when sold. In Germany, for example, after the end of a speculation period of 3 years for owner-occupied property or 10 years for rental, the sale is even tax-free.

High demand, even in the long term

The good development prospects, strong economy, and high income level in A-locations lead to high demand for real estate. This in turn drives up land prices, which can be advantageous for investors who are looking for long-term value appreciation.

Disadvantages of real estate in A-locations

The disadvantages of A-locations:

1. Lack of coverage through rental income
2. Difficulties in purchasing at a low price

Lack of coverage through rental income

Despite the high potential for value appreciation, rental income in A-locations often cannot cover the costs of the real estate and real estate financing. This leads to a negative cash flow, where investors have to pay monthly. Monthly surpluses calculated: passive income real estate.

Difficulties in purchasing at a low price

Acquiring affordable real estate in A-locations is extremely difficult. Unless you have a well-developed real estate acquisition strategy or close personal contacts in the market.

Example: A-locations in Germany & USA

Which cities, for example, belong to the A-locations in Germany and the USA, here 5 examples per country:

A-locations (Germany)

1. Munich
2. Berlin
3. Hamburg
4. Frankfurt am Main
5. Dusseldorf

A-locations (USA)

1. New York City
2. San Francisco
3. Los Angeles
4. Miami
5. Washington, D.C.

Comparison to B-locations

Compared to B-locations, there are some differences in real estate in A-locations. The increase in land prices is usually lower in B-locations, but the return can be slightly higher. Particularly interesting is the positive cash flow, where the rental income covers the ongoing costs and financing costs of the property. This means that your tenant finances your investment, not you yourself. This makes real estate investments in B-locations particularly attractive.

Discover the advantages of a:

• Real Estate in B-location

Comparison to C-locations

When it comes to C-locations, these are areas that are not yet well-developed. Here, a high return can be achieved if everything is done correctly. However, this comes with a higher risk. In C-locations, it is difficult to predict how prices, incomes, and the economy will develop. This uncertainty deters many investors, and there is generally less demand for real estate in C-locations. Nevertheless, the more affordable offer attracts some investors who are willing to take on the higher risk.

More risk, more profit, everything at:

• Real Estate in C-Location

Ultimately, the decision to invest in real estate in an A-location, B-location, or C-location depends on your individual goals, risk tolerance, and financial possibilities. Each location has its advantages and disadvantages, and it is important to carefully weigh which investment best suits your needs.

Where do most millionaires live?

Most income millionaires in Germany live in Bavaria! This is one of the reasons why there are several A-locations in Bavaria with high property prices.

]]> https://lukinski.com/immediate-purchase-we-buy-every-apartment-apartment-building/ Mon, 28 Aug 2023 15:22:20 +0000 https://lukinski.de/immediate-purchase-we-buy-every-apartment-apartment-building/ We buy every apartment – In a world where time often makes all the difference, it’s about solutions that are not only prompt, but also fair and uncomplicated. Selling your apartment could be an important step for your future, and we understand the urgency that comes with it. Exactly for this reason, we would like to introduce you to our immediate purchase service – a way to speed up the selling process and give you the freedom to focus on what really matters. When it comes to apartment sales and multi-family house sales, we are immediately available for you if you wish.

We buy your apartment immediately!

A home is not just a place, but a precious memory of moments that have shaped life. In the hustle of life, when time makes all the difference, speed alone is not enough – immediate action is required.

We buy real estate in NRW and Berlin discreetly, with fast processing. Find out more about us here: Direct Purchase Real Estate

We understand the value of your time and offer you more than just a quick process. We offer you the opportunity to sell your apartment without delays – immediately and uncomplicatedly. Your advantages are numerous:

No real estate agent fees
Fast processing and payout
Guaranteed at a fair price

Immediate Purchase: Our Contact

Immediate Purchase: We buy every apartment! We look forward to your call or email:

• Contact us

An alternative step-by-step guide for selling your apartment through real estate portals, with and without a real estate agent.



Faster and more straightforward sale of your apartment:

We buy your apartment immediately!

Selling an apartment can be a complex matter, accompanied by a variety of considerations and potentially hidden costs. With our instant purchase service, we place great value on transparency and offer you clear advantages that make your selling process pleasant and profitable.

No real estate agent fees: Your profit remains untouched

In the traditional sales process, real estate agent fees can be significant and make up a substantial portion of the sale price. We start here by offering you a solution where no real estate agent fees apply. Your profit is not reduced by hidden costs, and you retain the full sale proceeds.

Quick processing and fast payout

In the real estate industry, time is a scarce resource. We understand that every day counts and that a quick processing is of great importance. With our offer, we not only ensure a swift sales process but also a fast payout of the sale proceeds. Instead of waiting weeks or even months for the sale to conclude, you can free up your capital within the shortest time with our instant purchase service.

Fair price: market knowledge meets your interests

Determining an appropriate selling price is crucial for a successful sale. Our experts have in-depth market knowledge and carefully analyze current conditions. The evaluation of your property is objective and takes into account various factors. We guarantee you a fair price that considers not only your interests but also our obligations. Your apartment will be appropriately valued, so you can confidently enter the selling process.

Our Mission

Our Mission is to make the sale of your apartment as smooth and transparent as possible. We know that trust and satisfaction are the keys to a successful collaboration. With our instant purchase service, we offer you the opportunity to sell your apartment without unnecessary obstacles and delays, while benefiting from the clear advantages of a fair price and a quick process. Your sales success is our goal, and we are happy to support you in achieving it together.

The Instant Purchase: Your Contact Person

We are proud to present ourselves as your reliable partner in real estate sales. Our goal is to make the selling process as smooth as possible and give you the freedom to focus on what truly matters – your future. We buy every type of apartment! We look forward to hearing from you. Contact us either by phone or email to learn more about our offer and take the first step toward an immediate sale.

• Contact us

In a world where time is often a scarce resource, we offer a solution that is not only fast, but also fair and uncomplicated. Your apartment sale should not be hindered by bureaucratic obstacles or uncertain transactions. With our instant purchase service, we are setting a new standard for the real estate market and enabling you to focus on the next phase of your life.

]]> https://lukinski.com/apartment-building-sell-taxes-speculation-tax-own-use-heritage/ Mon, 06 Mar 2023 07:43:04 +0000 https://lukinski.de/selling-multi-family-house-taxes-speculation-tax-for-owner-occupancy-inheritance-co/ Sell an apartment building – Control – Do you want to sell your apartment building? This not only involves the usual costs for control, notary and land registry office, but also some control payments. Find out here which controls you have to consider when selling your apartment building. Additionally: How you can save on controls and what matters when selling an inherited apartment building. Questions? Write to me or call, completely non-committal: Contact us.

Control when selling an apartment building

Read more here:

• Control when selling an apartment building



Which taxes apply when selling an apartment building?

Selling an apartment building can be associated with significant tax payments. At a glance:

Tax type	Due	Amount	Avoidable?
Speculation tax	When selling within 10 years	Personal income tax rate (up to 45%)	Yes, after 10 years
Trade tax	Commercial real estate trading	15–17% + municipal surcharge	Yes, with the right structure
Value added tax	Only if VAT option is chosen	19%	Yes, standard case tax-free
Corporate tax	When selling through a GmbH	15% + solidarity surcharge	–

Speculation tax on an apartment building

Also for multi-family homes, the 10-year speculation period (§ 23 EStG) applies. The period begins with the notarized purchase contract. Decisive:

• After 10 years: Capital gain from sale fully tax-free (private individual)
• Under 10 years: The prize is taxed at the personal income tax rate
• Self-Occupancy: For MFH, the 3-year self-occupancy rule applies only to the unit occupied by the owner, not to the entire building.
• Exemption: 600 € per year (§ 23 Abs. 3 EStG) – usually not relevant for MFH sales

Calculation of the capital gain

Formel: Selling price − purchase costs − additional costs − depreciation (depreciation Real Estate Depreciation: Depreciation & Rates) + taxable depreciation amounts

Important: Depreciation already deducted (AfA) is added back to the taxable profit upon sale (AfA recalculation). This significantly increases the effective tax burden.

Commercial Tax: When Does It Apply?

Private individuals who hold real estate as an investment generally pay no commercial tax. The situation becomes risky with the so-called Three-Property Threshold:

• Anyone who buys and sells more than three properties within five years is considered a commercial real estate dealer
• Consequence: All profits – even retroactively – become subject to commercial tax
• Commercial tax: approximately 15 % corporate tax + local surcharge (effectively 30–40 %)
• The 10-year speculation exemption is lost in commercial trading!

Solution: Hold each property for longer than five years or structure ownership through separate GmbHs/holding structures.

Asset Deal vs. Share Deal in the Sale of MFHs

When selling larger multi-family homes owned by a company, there are two sale structures:

	Asset Deal	Share Deal
What is being sold?	The plot/building itself	Shares in the GmbH/KG that holds the MFH
Purchase tax buyer	Full 3.5–6.5 % applicable	For <90 % acquisition: waived (structuring model)
Tax seller	Corporate tax on profit (15 % + solidarity surcharge)	Partial income procedure (60 % taxable)
Buyer preference	Possible to increase depreciation	Saving on purchase tax
Risk	Higher transaction costs	Liability for old debts

Saving taxes: Strategies for MFH sellers

• Wait 10 years: For privately held MFH the simplest way to achieve tax exemption
• Sell in a bad income year: For example, after retirement or in a loss year
• Offset losses: Losses from other property sales in the same year reduce the profit
• Transfer to children before sale: Gift to children in a lower tax class (observe holding periods!)
• Limited liability company structure: MFHs sold within the GmbH structure are subject to only 1.5 % effective tax when retained (§ 8b KStG) — complex structure, tax advisor necessary
• 1031-Exchange Analogue (DE: Reinvestment): No direct equivalent, but tax advisors can delay the tax burden through clever reinvestment planning

MFH Inheritance: Taxes when selling an inherited apartment building

If an apartment building is inherited and then sold, special rules apply:

• The speculation period starts from the deceased’s purchase date – not from the inheritance
• If the deceased bought the MFH more than 10 years ago: Sale after inheritance is tax-free
• If the deceased lived in the MFH themselves (only one unit): The 3-year rule applies to this unit
• Inheritance tax and speculation tax can apply simultaneously – independent of each other
• Exemptions for inheritance tax: 400,000 € (children), 500,000 € (spouse)
]]> https://lukinski.com/typical-mistake-buying-your-first-property-what-can-go-wrong/ Sat, 03 Dec 2022 17:21:11 +0000 https://lukinski.de/?p=171232 Typical mistakes – Here with me you will learn a lot about the subject of yield, investment and sale of real estate in Germany. But rarely, do we talk more specifically about buying real estate for the first time. First-time real estate buyers should avoid three mistakes at all costs when looking for their first condo. These 3 tips will help you directly.

Buying in Germany: first property

Good things should be recommended and one of the largest knowledge platforms in Germany, is definitely one of them, more precisely: Immobilien-Erfahrung.de. Tip. Use the Google Translator to translate the know-how into your language!

• Read Immobilien-Erfahrung.de in English

3 typical mistakes of first-time buyers

Thorsten Bader, expert at B&B Optimal GmbH and managing director of Immobilien-Erfahrung.de, recommends potential buyers to consider their first property exclusively as a capital investment instead of using it themselves. In this case, there is namely the risk that the management costs, such as insurance, property tax and operating costs, which in addition increase in their amount every year by an average of 5 percent, affect the financial independence.

Purchasing without accurate knowledge of the market

Mistake number two is to engage in the purchase of a property without accurate knowledge of the market. Here, there is a risk of buying a condominium at an overpriced price or spending more on renovation work than actually planned. Therefore, potential buyers should carefully plan their finances in advance and be aware of the current market value and the costs involved.

Condition of the property

Mistake number three is not getting enough information about the condition of the property. Here, one should not only check the appearance, but also the technical condition and the structural substance in detail. Hidden defects such as moisture damage or problems with the electrical system can lead to unexpected costs later. A well-done appraisal by an expert is also advisable here.

In summary, when buying their first property, interested parties should make sure that they consider it exclusively as a capital investment, have precise knowledge of the market, inform themselves about the condition of the property and plan their finances carefully. With these tips, a financially sound capital investment in a condominium can be realized.

Why is a capital investment “better”?

Living for rent and renting out your property?

Real estate as an investment offers several advantages over using it as your own home:

1. Renting
2. Increase in value
3. Financial security

Renting instead of owner-occupying

Real estate can be rented out, which can generate regular income. Your tenant pays the installments of your financing with the monthly rent. At the same time, as a tenant, you have to take care of virtually nothing yourself. Self-use, on the other hand, means: If your salary fails, the repayment of the financing fails. If the heating is defective, you have to take care of everything and, so to speak, always have double damage.

Increase in value

Increase in value: real estate tends to have a stable increase in value, which allows the owner to enjoy an increase in value.

Financial Protection

Financial security: renting a property can provide financial security in retirement.

However, it is important to note that any investment carries some risk and it is important to consider an investor’s specific needs and goals before making a decision.



Investing in Germany

Learn more about interesting and attractive locations in Germany here:

• Capital Investment Atlas

Want to learn more about the real estate market in Germany? Use Google Translator to translate the know-how into your language!

• Read real estate-experience.com in English

With a few clicks you can translate the content of the knowledge platforms for German real estate into your language

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