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.

Foreword: Free tips for selling real estate? Yes!

All my tips in this guide are free of charge for you. As real estate agents we arrange real estates starting from 1 million Dollar value, thus real estates under the category luxury real estates. We give you here gladly Tipps and cheat for your sales, free of charge, in detail and step by step explained. Please also pay attention to our links, here you will find more detailed information on the individual topics.

Should you wish to sell your property with us: Do you know what our unbeatable advantage is? We independently reach over 250,000 readers per month, which means 3 million people per year. We are independent from common real estate portals and reach a solvent, special target group. In addition, we offer internal buyer groups and investors in our Off Market area, to whom you have no access via usual offers. Read more here: Real Estate Agents.

What distinguishes investor brokers from other companies is that we have our own money from our partners ready to buy your house. Our investor partners have been in the business for over 25 years and together have hundreds of years of experience. This allows us to have a fast sales process and means that if necessary, we are able to complete a purchase in just seven days.

For a quick, guaranteed cash sale, you won’t get a better offer from Privat for a quick house sale – sell to professionals who can and want to develop your property.

If you still want to sell privately, here is my XXL guide to selling real estate:

Sell real estate: What is to be considered ?

In this guide, you will learn everything you need to know for all types of real estate, from condominiums to apartment buildings and the sale of land. Let us start step by step into the subject of real estate sales.

In our consulting sessions, these are the 8 most frequent questions of our clients:

• How is the best way to sell a property?
• When should I sell my property? Or does it make sense to sell a property now?
• When is the sale of a property tax-free?
• What should you clarify before the start of the sale?
• At what price can you offer your property?
• Sell property privately or through an estate agent?
• Advertising, marketing or off market property?
• Which paragraphs should be in the sales contract and what not? And… (clears throat) should you mention any known defects in the contract of sale?

The sale of real estate can have most diverse reasons, from cases of hardship such as insolvency, divorce or also inheritance up to investment reasons around liquidity to create. Still others sell their property for relatively simple reasons, for example the new spouse and the move to a new city or even the career change, combined with a move.

Property types and basics

In all areas: Selling land, selling an apartment, selling a house, but also if you sell your apartment building, the location is decisive for the selling price of your property.

Selling “free of charge”, i.e. privately and without a real estate agent, carries risks and makes the sale and the entire transaction (valuation up to notary and contract of sale) prone to errors.

Selling real estate means that you need a good network of buyers. Often real estate is not presented publicly, but only internally as off market real estate.

Property valuation: Land and buildings

What else is my house worth? Whether house, plot of land, apartment or an entire apartment building, the foundation of a successful real estate transfer is always a solid, realistic valuation of your own property.

If the price demanded is far above the realistic market value, you will not sell / buyer will not strike

If the price is too low, you are giving away money, a too high purchase price alienates the real prospective buyers. Setting the right offer price is one of the most important points in selling real estate.

Evaluation of the individual real estate types:

• Real estate valuation
• Land
• Apartment
• House – Tip! Also row house, semi-detached house & Co.
• Apartment house

Sell land

The sale of a plot of land is a decision that you have thought about for a long time. There can be various reasons for the sale. But when it comes to the success of the sale, all owners agree. The property should be sold at the best price and without long waiting periods. If you decide to sell privately, you are faced with an enormous portfolio of tasks and organizational details. In practice, offering the property through a real estate agent with know-how has proven to be successful, because sources of error are eliminated and you can offer your property without stress and a reorganization of your everyday life.

• Selling a plot of land

Sale apartment / condo

Apartment sale – Many reasons in life make us think about selling the condominium. Especially in old age. Is it less suitable for senior-friendly living, difficult to reach or simply too large and too expensive? Is a job-related move in or has the apartment become too small for the family? Lukinski supports you competently and reliably in selling your apartment. Use our online service and get an evaluation of your residential property.

From the valuation to the speculation tax. In this guidebook you will find all important factors simply explained. Learn step by step how to sell an apartment and answer your questions: Selling with or without a real estate agent? The private sale of real estate involves many risks and sources of error, starting with the apartment valuation, the offer price and the individual marketing, from “advertising” to internal customer network and off market real estate sales. Learn in the following the answers to questions like: When is a good time to sell your apartment? What documents do you need in advance to sell? And can you sell your apartment if it has not yet been fully paid for?

• Selling an apartment
• Rate the apartment

Sale house

Selling a house – Single-family houses are characterized by the fact that they are inhabited only by a family, a couple or a person living alone. They have a garden, which is also owned by the owner. Not all single-family houses are inhabited by their owners. There is also the possibility to rent a family house with a garden. In almost all federal states, single-family houses are very popular as a form of living. The demand on the property market is correspondingly high.

• Selling a house
• Sell your house quickly

House types: Types

The sales process for the different types of houses is similar.

• Single-family house (and apartment building)
• Double house
• City villa
• Villa
• Designer house
• Country house
• Half-timbered house
• Building house / Cube
• Mediterranean house
• More special (Captain’s house, Frisian house, pent roof house, Sweden house or bungalow)

In order to provide you with the best possible support in selling the property, we recommend that you prepare the necessary documents in the best possible way before the appointment.

• Selling a house

Sell your house quickly? Tips

Sell a house quickly – Selling a house is a complex matter and involves many different steps. From the creation of an attractive advertisement to the valuation of the property and the subsequent legal steps, such as the purchase contract and the appointments with the notary. During all these steps, various points must be considered in order to complete the sale of the property as profitably and quickly as possible.

Selling a property successfuly as quickly as possible is harder than you think. There are many things to consider and many mistakes that can be made. So you should inform yourself about the procedures from the beginning and be sure that you do everything right. Made easier, this process will only be easier for you if you have the right expertise and the right support on the subject.

• You do not have time? Sell your house quickly

Sell apartment house

Selling an apartment house – You want to sell? If you should decide to sell your house privately, this means a lot of time investment. Months pass without market knowledge from the appraisal to the preparation of the exposé, to customer contact and the sales phase.

Therefore the A&O for private sellers, always estimate the time planning realistically! Because even before the sale starts, you should not underestimate the preparation time. Be realistic and be honest with yourself, for example regarding the possible renovation backlog. In addition to all the work on the condominium or the house, there are also all the preparations for the sale.

Fundamental questions arise well before the sale. Here is a quick overview of the most important questions before the sale of your apartment building: Do you have a follow-up property in prospect? Is there a need for renovation / refurbishment? Do you have all documents (land register map, extract from the land register, floor plans, energy performance certificate)?

• Selling an apartment house

Sell real estate: Divorce

Those who choose to marry and be married, in most cases, have the intention to spend their life with their spouse forever and share everything that belongs to them. Nobody thinks during a marriage about the fact that there might be a divorce one day and that there might even be arguments about belongings. But in 2017 the divorce rate in Germany was over 36 percent, which shows that unfortunately not all marriages last forever. Often fraud, daily life including routine or even financial problems are the reasons for divorce.

• Selling property: Divorce

Sell property: Inheritance

Inherited house selling – There are general questions that reach us, such as “When can I sell an inherited house?” and especially many variants around one topic: taxes on the sale. Is the sale of an inherited house taxable? How is an inherited house taxed? How much is the inheritance tax for a house? Before the inherited house can be sold, it must first be decided whether the inheritance will be accepted at all. It should be noted that an inheritance can only be accepted as a whole. Not only land and property are acquired, but also the mortgage and any debts are accepted by the heir. Thus, not only rights but also obligations are incumbent on the heirs. You have six weeks to decide for or against the inheritance. Within this period, it is necessary to work out whether it is financially worthwhile to accept the inheritance.

• Sell property: Inheritance

In most cases, the heirs decide on the inheritance. Even if the property is located far from the heir’s place of residence. But in exactly this situation the question arises what to do with the property. If neither inhabiting nor renting the house is an option, the most common consideration is to sell the inherited house.

Insolvency of estates

Estate insolvency, what is that? The death of a person who was close to us is always a heavy burden. No matter whether it was already foreseeable that a person would not have long to live or whether it was a surprising stroke of fate, the situation is never easy for the relatives. The death of a person is usually not only associated with incriminating grief, but the issue of inheritance must also be dealt with. There are the most different situations: Some people have already thought about who should inherit which shares before their death and other people have not thought about it or have not had time to deal with the topic because they were surprised by a stroke of fate.

• Sell property: Insolvency of estate

Valuation at the sale of real estate: Calculation

All important information on the valuation of real estate sales summarized for you: Valuing real estate.

Ertermswertverfahren: Distribution of traffic & building income value

The income capitalization approach divides the property into the market value of the land and the building income value.

land value interest amount = 7 percent * 100,000 Euro = 7,000 Euro

Building yield value = 5.600 Euro * 12,50 (duplicator) = 70.000 Euro

This includes rental income, maintenance costs and costs for the management of land and buildings. This is compared with rental income less operating costs and the value of the land including interest.

• Income capitalization method

Material value procedure: Value for the reconstruction of a real estate property

The calculation first determines the market value of the floor with the floor standard value, then the building standard value is added.

The real value of the building is the building production costs minus any age reductions. The land value (market value of the land) and the building value are added and multiplied by a material value factor.

Natural value = (100,000 Dollar + 150,000 Dollar ) * 0.5 = 125,000 Dollar

The calculation of the asset value factor depends on the building type, the provisional asset value and the standard land value. The total real value determined in this way indicates the financial resources that would be required for a new construction of the property.

• Asset value method

Comparison_value method: Comparison of similar properties

The comparative value method compares your property with similar objects. It is used in particular for the sale of condominiums and apartment buildings. The comparative value can also be determined for undeveloped land.

square meter price of the comparison object = 300.000 Dollar / 100 sqm = 3.000 Dollar per sqm

Purchase price of the property to be valued = 3,000 Dollar * 200 sqm = 600,000 Dollar

Only objects in similar locations and with comparable cuts are taken into account in the comparison. The real estates entering into the valuation should come from direct proximity of the residential object. The comparative value procedure is considered as particularly realistic. It is very often used in the valuation of real estate, because the locations are regionally relatively well comparable.

• Comparison value method

Valuate apartment

Apartment valuation and value factors – You have a condominium and want to know what it is worth? Of course you can immediately go to an appraiser and/or real estate agent with this question. However, the exact valuation becomes important at the latest when you want to sell or bequeath the apartment. Even in the case of a mortgage – for example if you want to buy another property – the value should be determined very precisely. That is when the expert comes into play.

What influences the value of an apartment? Let’s stick to a very rough valuation. In order to determine the value of your apartment, a number of “soft” factors play a role.

• Rate the apartment

Rating a house

Purchase price roughly estimate or let estimate – If house or dwelling were bought not too long ago, building costs or the purchase price offer first appoximate values with the house evaluation. The most important criterion is the location. The real estate prices differed regionally partly substantially. Therefore only objects in the proximity may enter into the real estate comparison. With the house evaluation are likewise aspects of the micro and macro situations, as well as the direct location of the object of importance: Soundscape, view and lighting conditions interest potenzielle buyers and affect real estate value and the attainable price.

• Evaluate the house

Valuate apartment building

If you want to sell your apartment building, then one thing is important: A sound, market-oriented, realistic purchase price. The central questions of owners: What is my property worth? How do you calculate the value of an apartment building? How does the tax office determine the value of a house? Who determines the market value of a property? How does the bank value a property? Many questions and many facts that you will encounter when valuing an apartment building. To give you a first impression of the complexity of location, market value, comparative properties, building fabric & Co., we have written this guide on the subject of multi-family house valuation for you. Value factors, location, equipment, market value, realistic price:

• Evaluate apartment building

Valuing land

Determining market value, valuation and purchase price – How do you value a property? How to calculate the market value of a property Who may value a property? Who provides information about the standard land value?

• Valuate property

Creditworthiness: Who checks what here?

In modern business dealings, it is impossible to imagine business without the examination of creditworthiness – i.e. credit rating. The reliability in payment matters is already checked with each purchase with a credit card. Installment purchases in the electrical goods market, for example, only work for the customer if the creditworthiness is checked immediately. The classic institution for credit information of any kind is the Schufa. Since 1927, this credit agency, which is organized privately as a public limited company, has been early to assess the reliability of people in terms of their ability and dependability to pay.

Before someone else checks my own creditworthiness, I can always do it myself. Here too, the classic way is to enquire at the Schufa. The first (usually postal) inquiry with Schufa is free of charge. For each further one the Schufa charges a fee of 30,- €. The answer is then also sent by post. For both landlords and tenants, Schufa offers special service packages with which credit information is formally correct.

Of course, there are now also numerous ways to determine your creditworthiness online. The advantage: it is faster and I can look at my own data at any time. If an error is noted there, it can be corrected very quickly. No matter whether Schufa or one of the online providers: Without the use of an ID card, no one can access their credit ratings.

Credits: Current and long-term liabilities

In the first step, for example, information on current or terminated loans, credit cards or credit periods is recorded in the credit check.

Accounts: Bank, shares Depot & Co.

Furthermore, the auditors obtain information from the buyer about his own bank or current accounts, as well as overdraft facilities, mail order accounts or account terminations.

Contracts: Telephone, leasing, payment by installments.

Here, for example, information on the conclusion of contracts, contract cancellations and individual contracts is collected.

Debt: Debtor directories (like Schufa)

This step checks whether entries have already been made in debtor directories. However, such companies also store information on dunning notices, insolvency applications, foreclosures and also on affidavits.

Check Schufa and evaluate data correctly

By obtaining information from a credit investigation agency (Schufa) you create a foundation. But before you decide on a tenant, you should evaluate the data correctly, for which you need a lot of expertise and experience in “reading” the score values. If you make the wrong decision on this point, this circumstance can lead to high follow-up costs and much trouble.

In real estate transactions – and also in the case of letting – the commissioning of a real estate agent naturally also includes checking the creditworthiness of interested parties. This gives you the security to rent to a really solvent applicant. You yourself have no work with the inquiry at the Schufa, since this service belongs to the achievements of the assigned real estate agent.

Likewise, you can be sure that you will only receive recommendations for those applicants who are eligible based on their income and creditworthiness. The evaluation of creditworthiness is carried out according to your criteria as owner. Do you have a very specific idea of the income, or rather the income level of your new tenant? If so, this important basis for you will be taken into account in the search for tenants and included in the screening of potential applicants. The pre-selection sent to you will save you a lot of time and nerves. Your gain is a maximum of security that you have found the right tenant for your property.

Letting with brokers? All advantages at a glance

Whoever thinks of renting out as a real estate owner does not always have an estate agent in mind at first. After all, the use of an estate agent costs money: Since June 1, 2015, the buyer principle has been in force in Germany for the procurement of living space: If you appoint an estate agent, you pay him. If the landlord appoints a broker to act as an agent, he must also pay him. If the broker finds a prospective tenant, the future tenant does not have to pay the broker anything.

What the broker costs when renting out

The amount of the commission is in principle freely negotiable for landlords. Usually it is between 1.5 and 2 net cold rents plus VAT. For tenants, the amount of commission is clearly limited by law: It may not exceed two net cold rents plus value added tax.

But: A real estate agent…

• Saves time and effort
  A good real estate agent takes over the time-consuming search for tenants on site.
• Offers more security!
  A good real estate agent checks the creditworthiness of potential tenants.
• Top rental agreement!
  A good real estate agent ensures a good tenancy agreement.
• Brings tax advantages!

Brokerage costs are tax deductible for the landlord.