Real estate makes sense as an investment? benefits and more

Wealth accumulation by renting out your property as an investment

In times of low interest rates, there is increasing demand for alternatives to traditional savings accounts. One possibility is to use a property not for personal use, but for wealth accumulation. In this way, the monthly rental payments can be collected at the latest after the repayment of a possible loan. In many cases, this is an important building block for the later pension in retirement. In order to prevent possible difficulties from arising in the first place, professional support on this topic is very important. In particular, since real estate only makes sense as a capital investment if it does not cause any major additional expenditure and therefore no opportunity costs.

4 reasons why real estate makes sense as an investment

1. Reason

There are several reasons why real estate makes sense as a capital investment.

First of all, real estate is a material asset and not a monetary value, such as a savings account. While the real rate of return is reduced by inflation in the case of a monetary value, inflation in the case of a material value causes prices to rise and thus leads to compensation for the depreciation of the currency.

2. Reason

Furthermore, it is an investment with very stable payouts. Due to the monthly rental payments, you acquire a high level of planning security for the future. This makes a property ideal for retirement planning.

3. Reason

In addition, we currently have the situation in Germany that more properties are disappearing from the housing market every year than new ones are being created. In addition, the number of single households is increasing from year to year and that with a slightly growing population. Logically, this results in a severe shortage, which leads to rising rents and, in the further course, to rising real estate prices. Politicians have now also recognized this fact. However, since this shortage cannot be changed in the short term, property owners will continue to benefit from this development.

4. Reason

The tax aspect should also not be ignored: For example, for a rented apartment in an old building, 2% of the acquisition costs can be claimed each year as depreciation over a 50-year period . The modernization costs of buildings that are listed monuments can even be claimed for tax purposes over a very short period of twelve years. The interest on the loan can also be deducted from tax. In this way, considerable tax advantages can be achieved in some cases. And? Do you think real estate makes sense as an investment?

5 possible pitfalls that you have to consider when investing in real estate

1. Pitfall

Especially if the property you bought as an investment is not in your own place of residence, you can face considerable costs as an investor. Because as soon as the tenant has a problem with the property, you as the owner are obliged to take care of it.

2. Pitfall

Even if a tenant moves out, you have to be there and try to find a new tenant.

3. Pitfall

Owners’ meetings and the preparation of utility bills will also demand time and nerves from you.

4. Pitfall

If your property ever sits vacant for a month or two, your return on investment will be drastically reduced. A tenant who does not pay rent or who even trashes the apartment is probably the end of any return expectations.

5. Pitfall

In addition, there are many other questions that need to be answered in a well-founded manner. So it is of course very important in which location you buy. How do I find an interesting property? Should I Hire a Realtor? How much equity do I have to raise and how do I find suitable financing?