Explainer video: 3 advantages in 4 minutes

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Advantage 1: protection against inflation

Inflation can quickly devalue your savings. For example, if you have €100,000 and inflation is at 5%, you lose 5% of your money every year. After two years, your €100,000 is worth only €90,500. Real estate offers effective protection against inflation, because rents usually rise with inflation. If inflation is at 5%, your rental income also rises by 5%. This means you benefit from rising rental income in the long term, and your investment is protected against the effects of inflation.

• Assets: €100,000
• Inflation 5%, purchasing power after 1 year: €95,000
• Inflation 5%, purchasing power after 2 years: €90,500
• …

Bonus tip! The effect of inflation on loans and repayment

Suppose you’ve taken out a loan of €100,000. In times of inflation, your money gradually loses value. This means your money’s purchasing power decreases while prices for goods and services rise.

Here’s the interesting part: while prices rise and incomes increase, your loan’s monthly repayment rate stays unchanged. This means that over time you keep repaying the same fixed instalment, which decreases in real purchasing power.

This has two important effects:

Your debt gets “devalued”

Inflation causes your debt to decrease in real terms. This means the originally borrowed loan amount of €100,000 is worth less in real purchasing power over time. In other words, you effectively repay less once you factor in inflation.

Rising income can make repayment easier

If your income rises over time due to inflation, it becomes easier to manage your monthly repayment instalment. This means you may have more financial leeway to make other investments or reach your financial goals faster.

Advantage 2: your tenant pays off your investment

One of the best features of real estate investments is that your tenants pay off your investment. The bank grants you a mortgage loan that you don’t have to earn yourself. Your tenant pays the monthly rent, which covers part of the financing. Once the financing is paid off, the property belongs to you entirely. On top of that, you benefit from the appreciation of the land. Even if land prices rise by only 5% per year, these gains add up over the years to a substantial sum of additional wealth.

• You only need 20% equity
• The bank provides the rest (debt capital)
• Who pays your loan? Your tenants!

Remember this sentence forever:

Your tenant pays off your investment!

Advantage 3: passive income

As soon as your monthly rental income covers your monthly costs, you generate passive income. This means you earn extra money every month without having to work actively. This passive income can help you achieve financial independence and give you the freedom to enjoy more of your life. For example, if you have monthly costs of €1,000 and monthly rental income of €1,100, you generate a monthly passive income of €100.

• “Costs” of your property p.a. = €12,000
• Net cold rent p.a. = €13,200
• Surplus = €1,200

Why does a property make sense as a capital investment?

Hopefully you no longer ask yourself this question after these 3 key advantages!

Real estate investments offer effective protection against inflation, the opportunity to build wealth while your tenant pays off the investment, and the chance of passive income. If you enjoyed this video, don’t forget to like it and subscribe to my new channel. Stay tuned for more insightful content on real estate investing. Thank you for watching!

Tip: Capital investment guide

Where to invest? A, B or C locations

Where to invest? The 3 location types quickly explained:

1. Properties in A-locations promise high profits on sale, but rental income often doesn’t cover the costs Primary goal: profit on sale
2. Properties in B-locations offer positive cash flow and are ideal for beginners, with positive economic development and good infrastructure Primary goal: positive cash flow
3. Properties in C-locations carry risks with poor prospects, low income and high crime, which can lead to falling prices and vacancies Primary goal: low purchase price, high yields

Explainer video: Real estate location at a glance

My walking route through Inglewood

From Phil’s Barbecue to the Mega Donut through Inglewood.

A-location: high profit on sale, but…

In my video I explain what it means to invest in an A-location. These locations, such as in Munich, Berlin or Hamburg, often promise high profits on sale thanks to the constant increase in land prices. However, rental income here can’t always cover the costs (yield), which means you pay extra every month. This is called investment property in an A-location.

• A-location stands for prestigious locations in cities like Munich, Berlin and Hamburg
• High profits on sale beckon here, as land prices rise continuously
• However, rental income often can’t cover the high costs, which can burden investors on a monthly basis
• Investment properties in A-locations are known for long-term appreciation, but require patience and capital

B-location: positive cash flow and ideal for beginners

The B-location is a different story. Here, rental income is often sufficient to cover the costs (repayment, interest, maintenance reserve) and even generate positive cash flow. These locations offer positive economic development, a growing population and good infrastructure. B-locations are often found in the commuter belt around A-locations or in individual major cities and are an ideal investment, especially for beginners.

• B-location refers to locations in the commuter belt of A-locations or in up-and-coming major cities
• Here rental income is often sufficient to cover costs and achieve a positive cash flow
• These locations offer positive economic development, growing population figures and good infrastructure
• B-locations are ideal for beginners looking for stable investment opportunities

Invest in A-location or B-location?

• A-location = profit only on sale (annual net cold rent < cost of the property)
• B-location = direct positive cash flow (annual net cold rent > cost of the property)

C-location: don’t underestimate the risk

Then there’s the C-location, and here you really need to be careful. These are districts or cities such as Duisburg Marxloh, where prospects are poor, income is low and crime is high. Nobody wants to buy here, and prices are often cheap. However, there’s a risk that land prices will stagnate or even fall, offering no protection against inflation. Add to that the local clientele, vacancies and possibly rent nomads.

• C-locations are risky locations with unfavourable prospects, low income and high crime
• Investors might find cheap purchase prices, but there’s a risk that land prices will stagnate or fall, with no protection against inflation
• Vacancies and possible rent nomads are typical of C-locations, and potential tenants may be hesitant
• These locations require comprehensive risk analysis and can be challenging for inexperienced investors

More details in the video!

If you want to know exactly how to assess the location of a property and decide where and when to invest, check out my new video. I give you all the important information and advice you need to make smart decisions in real estate investment.

Don’t forget to subscribe to my real estate YouTube channel so you don’t miss any updates. The world of real estate investment is diverse, and I’m happy to help you understand it better!

Lukinski YouTube: yield, investment property & co.

Discover with me the key factors, metrics and fundamentals 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.

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Apartment: What is it? Definition and other terms

The name says it all when it comes to apartments. Because what constitutes a floor apartment is that the apartment extends over an entire floor of an apartment building. But this is exactly what sometimes leads to confusion, because many think that a floor apartment includes several floors. Unfortunately, this is wrong. If you are looking for an apartment on several floors, you might want to read up on maisonettes, gallery apartments or duplex apartments.

Are you looking for a suitable apartment – whether as a tenant or investor? Then take a look at our guide to apartment types A-Z!

Apartment vs. bunkhouse: what makes the difference in living arrangements?

The form of housing with which the floor apartment could be most closely compared is probably the apartment. Because apartments are also premises that are located only on one floor of the residential building. The apartment is basically a special form of the apartment, which is instead of, of over a part of the house floor over the entire floor.

When looking for an apartment, it is important to pay attention to what you see and the information you get directly from the landlord. These should be questioned, but especially when it comes to the definition of apartment types, people do not always agree. Also landlords and sellers are not always professional in the field of real estate and of course have the additional interest to make the apartment palatable to you. For this reason, it is advisable to consider in advance the basic demands that you make on an apartment and perhaps even write them down. In this way, it is easier to find a suitable apartment, because you can also ask much more specifically for certain properties.

Advantages & disadvantages of a floor apartment: living space, neighbours and more

Every type of apartment has its advantages and disadvantages. The apartment also comes not only with positive aspects, but has a few negative sides that can limit the living happiness. So that you are prepared, especially before buying, here is an overview of the biggest advantages and disadvantages that you should take into account in your decision-making.

Advantages: Large living space?

The advantages of a floor apartment arise primarily from the nature of this form of housing. On the one hand, a flat on a floor often offers more space than some apartments, as they take up the entire living space of a floor. This room layout also means that the apartments are easy to design barrier-free.

• Spacious
• Barrier-free

Disadvantages: High utility costs?

Especially the size of the apartment also brings disadvantages, for example, increased utility costs. With several people, this is not a problem, since the per capita bill in this case somewhat compensates for the cost trap. In itself, however, apartments are very suitable for families and flat-sharing communities.

• Higher heating costs
• Ambient noise

Size and price: Perfect for families and shared apartments

You finally want to buy your own home for you and your family? Then a floor apartment could be just the thing for you, because it offers you a lot of space and often also gives everyone the opportunity to have a room that can be furnished according to their own wishes and requirements.

One huge advantage of bunk homes is that you can find them in almost any location. Whether it’s in the countryside, the suburbs, or the middle of the city, these large apartment units are more common than you might think. However, prices vary extremely depending on the location, of course. So if you’re looking for a bunkhouse, look location specific for your choice and don’t rely too much on rough estimates.

Rent indexes are also helpful in finding the right price and not paying too much for your new home. Rent indexes tell you the average price per square metre in a residential area. However, this doesn’t mean that there can’t be apartments for sale there that may be far above or below the price listed. The general condition of the building can also give you information about the pricing.

Viewing appointment: checklist, preparation and tips

Especially apartments in the city and suburbs are currently highly competitive, but every viewing appointment should be prepared to guarantee that you get your dream apartment. Because viewing appointments are basically like job interviews between owner and tenant or buyer.

Preparation: Research and more

Just as renters and buyers use the Internet as a resource, landlords and sellers look at tips that help determine who to consider. Reliability and likeability are at the top of the list here. So be relaxed and try to prove your sense of duty and reliability by asking specific questions. And above all, try not to hide anything, because a tenancy based on false statements can quickly become unpleasant.

It is also worth having personal details with you or sending them electronically to the vendor or agent before or after the viewing appointment. The following documents can be important:

• Salary statement
• Schufa information
• Guarantee notice
• Contact details of former landlord
• Personal data

Viewing: Tips on living environment, owner/landlord, price & Co.

Not only do you get to know each other, but you also try to gauge whether the person is the optimal match for the property. For this reason, you should look closely at the ad and information about the living environment to get a sense of what the listing agent is looking for and whether you fit into that picture. No one wants to house a noisy apartment community in an apartment building, but if you appear professional and a good fit, the landlords will love you.

The same goes for families. Feel free to bring your kids along to the viewing appointment, but only if you’re sure the little ones won’t put a spoke in your wheel. An appointment like this can quickly become boring for children and your child will be looking for ways to occupy themselves. So take your child with you, but remember to have something to keep them occupied. You should also consider the area of the apartment. So if you want to live in an upscale area, you can find all the information about the most expensive streets in Germany here.

Checklist apartment: surroundings, property and rental prices

After preparation and during the viewing appointment it is advantageous to have a checklist. We have already recommended this at the beginning of the article to start the apartment search, but also during the active part should not take a back seat.

Information such as price range, distance to public transport and the like should still be kept in mind. Your checklist should be personal and reflect your personal wishes. At the same time, you should also think about whether your ideas are realistic. If you are a family, try to include everyone’s ideas in the list, but prioritise them.

In general, there are certain items that your checklist should definitely include. These are the points you should consider:

• Price range
• Residential
• Proximity to public transport
• Parking spaces and car parking area
• Room layout
• Kindergartens and school nearby
• Equipment (kitchen, wet rooms etc.)
• Service charges (possibly check statements of previous tenants)
• Neighbourhood (minutes of owners’ meetings?)

Buying and selling a property: land transfer tax, buying an apartment & Co.

Buying a property is a big step and as a buyer you have to prepare yourself accordingly. Here you will find some additional articles on topics such as buying an apartment, land transfer tax & Co. to make the purchase of your condominium as relaxed as possible.

Buying an apartment: Agents, costs & renting – Tips

The decision to buy a condominium (ETW) is made by most buyers for two reasons: The buyer either wants to use the apartment to live in it himself. Or the buyer is looking for a financial investment that should bring a good profit in the medium or long term. What there is to consider when buying an apartment, and renting and ownership exactly run, you will learn in the following article.

• Buy apartment

Real estate transfer tax: tips, amount & costs

When buying a property – whether an apartment or a house – the so-called land transfer tax is incurred. Many prospective buyers do not consider these additional costs in their initial calculation. However, the land transfer tax must be paid in any case, and varies in amount depending on the federal state. In the article linked here, you can find out what the land transfer tax is, how high it is in the federal state of your property, and what else needs to be considered in this topic.

• Calculate real estate transfer tax

Valuation: Calculate purchase price and sell condominium

You have a condo and want to know what it’s 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 inherit the apartment. Also in the case of mortgaging – for example because you want to buy another property – the value should be determined very precisely. Then the expert comes into play. Value factors, location, furnishings, market value, realistic price: This is how you can value your apartment.

• Rate apartment