How to make money on real estate: rent and resale in Germany

How to make money on real estate: the relevance of the issue + ways to earn money on the sale of real estate + 4 types of rent + tips for those who want to make money on real estate in 2019.

According to the newspaper "Kommersant", the housing market in 2019 continues to sink, especially the primary segment of luxury real estate, which only in the spring lost 20% of the cost.

The secondary market is falling a little slower.

However, all those who are familiar with economic trends, begin to buy housing at bargain prices. Why? — Because everyone expects that economic growth will start from the end of 2019.

Buy when it's cheap-sell when it's expensive. So, it's time to think about how to make money on real estate.

Briefly about the relevance of housing operations

Given the constant decline in housing prices, both primary and secondary, the article on how to make money on real estate does not look quite appropriate. But this is only at first glance.

The real estate market is indeed unstable, but shows some signs of recovery.

So, in General, it continued to fall, but surprisingly increased by 30% business class housing market. Also, the price of retail real estate and office centers is growing (though only in Moscow).

But since this is a completely different weight category of business, we will not consider the segment of commercial real estate – it is very few people can afford.

Also, we will not dwell in great detail on the secondary land market, as it has not just collapsed, but has become almost hopeless (with the exception of some regions).

The fact that agricultural land and in the city at bargain prices sold by the state at auction, but because the demand in the secondary market is not very high-why pay?

Yes, you can buy/rent land from the state, and then try to make money on real estate, renting it to less cunning customers, but there is a risk to stay out of business – such figures in our time quite a lot, and the demand is small.

The real estate market is falling almost everywhere. Thus, from the point of view of how to make money on real estate outside the city, has its own specifics and considerable risks.

Housing is another matter.

This area provides encouraging signals for investors since the beginning of the year:

Is there a chance to make money on real estate during the crisis?

Yes, there is, and the sudden growth of housing business-class proof.

Why so suddenly and unexpectedly he grew up?

The reason is that in economy and premium class there is too much supply with low demand. According to the same" Kommersant", this summer 65% of the owners of Moscow luxury real estate are ready to reduce prices so that their premises are not empty.

For cheap apartments, such a survey was not conducted, but there the rental price if it stopped falling, and shows no signs of growth.

The decline in the lower segment did not stop even numerous state and municipal programs aimed at replacing the old housing stock with new buildings. Not particularly helped and mortgage programs - this market is still going through hard times.

That is, neither cheap nor very expensive real estate will make good money now. Thus, the grounds for growth remain only in the previously undervalued business segment.

It is believed that Germany is not very developed middle class, but a lot of poor and rich (relative to the rest of the population). Therefore, most investors paid little attention to the middle price segment, trying to earn either on very expensive square meters, or on very cheap (but massively).

As a result, there was a delayed demand in the business segment, which is now trying to saturate the builders and those who managed to hurry up in time, to catch the conjuncture "by the tail".

When the decline in prices was the maximum (in 2018), the secondary market could buy such an apartment is relatively inexpensive-for 100-150 000 euros (under construction – for 60 — 80 000).

Now, two years later, they can be sold for about 160 000 – 180 000 Euro.

Is it much? Not really – prices are rising by an average of 1% per quarter. But they grow, and their dynamics says about acceleration. So those who are willing to wait, will be able to make good money on this property next year.

How to make money on real estate in Germany?

And now let's go directly to the possibilities of earnings.

But before proceeding to the recommendations on how to make money on real estate, it is necessary to specify the basic ways of working with housing.

So, real estate can be:

Buy / sell.
All this can be done as a private person or as a legal entity.

You can invest in housing in the following ways:

Investment at the construction stage.
Buying ready-made housing in the primary market.
Buying a home on the secondary market.
What to invest in Euro: 10 popular ways

You can earn income in the following ways:

Sale of "primary" in the secondary market.
Sale of "secondary" in the secondary market.
Rent gives a relatively small, but constant income.

The first option is really beneficial only if you have invested in it at the construction stage, and if you did not do it in 2013 – after the collapse of prices sometimes even return the investment is problematic.

Selling bought on the secondary market housing is even less profitable, but it is practiced very often-it is believed that housing is a reliable way to save capital, not its multiplication.

However, this is not always true-even in times of crisis, there are ways to make money on real estate, which we will discuss further.

1) how to make money on real estate through resale?

Let's start with the sale of real estate.

Resale as a market is based on measures to increase the market value of objects. Otherwise, you will sell at a loss.

These operations include repairs (including major repairs), landscaping, building, upgrading the interior and exterior, household, etc.

Considered example:

There is an old private house in Moscow. It already requires major repairs, but is quite profitable near the metro station, near retail outlets, etc.

Since it is in poor condition, it can be bought relatively cheaply in the secondary market.

Then major repairs are made, and the building is sold with a serious margin.

Especially strongly increases the cost of such housing construction of new metro stations. The difference in the price of the same house before the construction of the subway and after can be 30 percent or more.

However, such operations in the secondary market are considered risky given the economic instability, which is always the first thing hits the real estate market.

As can be seen in the previous chart, it was the same in 2008 and 2018.

2) is it possible to make money on real estate, which is in the process of construction?

Most often invest in the construction stage or even the design of a multi-storey building to sell the property after construction.

It is always profitable, as the price of building materials is definitely cheaper than the finished housing.

However, the percentage of profitability is currently difficult to calculate – it depends on the class of the object and its territorial location.

In General, the yield is 50-80%, but it is rarely possible to sell all apartments in one year.

Suffice it to say that only during the construction of the house real estate prices in promising areas of the city grow by about 30%, which is almost twice as high as Bank deposits.

In the same plan it is possible to consider investment in cottage or low-rise construction. That our dilapidated house from the first example can be demolished and in its place to build a more modern housing with a larger area.

Also, the land can be cheaper to buy from the state, to build a cottage there, which then sell after a certain time. Cottages in our time are built very quickly, because it is realistic to double the initial investment in six months.

It is not necessary to have huge capital for this kind of investment.

Often you can find associations of small investors in funds that invest 500 000, 1 000 000 or 1 500 000 euros, but a lot of them, and it allows you to build a multi-storey house with a good footage. And, respectively, well then earn.

But here you need to be very careful, as not rare cases of freezing of construction, as well as fraud pseudo-developers.

3) How to make money on the housing problem?

We have already mentioned such an opportunity to make money on real estate as the improvement of housing in poor condition.

PS. According to real estate market players, simple non-capital repairs increases the price of an apartment in the secondary market by about 25-30%, which is also much higher than Bank deposits.

Depending on the complexity of the repair and the situation with the prices on the market, you can get from 50 to 100% yield.

The problem of real estate include not only wrecks, but also those apartments and houses that are collateral. Banks and other lenders often get rid of such property in a hurry, because they are ready to sell it cheaply.

Of course, this segment is "fed" by numerous intermediaries, but if you want you will certainly be able to find a suitable auction for the sale of real estate collateral.

Here, the yield also reaches 25-30% per annum, and much faster than in the case of construction, although not everyone is willing to spend time on the complex bureaucratic and legal red tape associated with auctions.

How to make money on rental property?

Even if you want to eventually sell the property, it makes no sense to pay taxes and utilities for it – while waiting for the price increase, it is better to rent it out.

Types of lease in the context of how to make money on real estate, distinguish the following:
Term rental.
Short-term rental (daily, hourly).
Collective rent.
Other rental types.
1. Long-term rental of residential real estate.
This is a classic rental apartments or houses. You have an "extra" apartment-you rent it to those who have nowhere to live, for which you receive income and the status of "rentier".

In fact, this is one of the most popular opportunities today to make money on real estate. Especially in big cities.

In this case, rent varies by type of housing:

The level of "economy".
Middle level ("business").
The level of "elite".
All this leads to a serious difference in price, and accordingly, to the indicators of profitability in percent.

You can find a tenant for any type of housing – from communal to luxury penthouse, the only question is the price. Repair can increase the cost of rent, but if you intend to sell it, you should calculate the situation in the market and the amount of costs for this event.

By the way, some are trying to earn on the purchase of apartments, even without start-up capital. To do this, buy a house in the mortgage, and then rent it out.

Of course, the profitability of such a scheme is far from ideal. But here, too, there is an interesting nuance: you can take a home in the mortgage without repair, then make this repair and rent out in a completely different class.

And in the end to sell with great benefit-recall, housing prices are constantly rising. While you pay the mortgage, earning on rent (and it is not less than 5 years), the price in Euro for certain will grow percent so on 100 — 200% and at least on 50% in at.e.

The peculiarity of long-term lease is that it is long-term. That is, they found someone suitable, and he lives there for years, paying the monthly agreed amount.

Really passive income. However, the downside is the yield only 3 — 5% per year, making the opportunity to cash in on real estate using the return on investment is very long – 20 years.

2. How to make money on real estate in the short-term lease?

In this section, we consider ways to make money on real estate with the help of daily and even hourly rental.

This way of earning is considered "aggressive" and very troublesome. In fact, it's almost a business hotel – you have to take in boarders for the night, they live there, pay you a certain amount, and then you have to clean them, to wash linen, etc to provide a full proper service.

It is characteristic that for such earnings on real estate is often used sublease – that is, you take a long-term rental apartment, and then retake it on an hourly basis to other people.

So you can make money on real estate those 3-5% of purchase price per year.

If we consider that the apartment you did not buy (ie, minimum investment – all paid by the end user), it is also quite good.

3. How to make money on townhouses?
The townhouse is new-fangled residential buildings low-rise buildings according to European standards.

It just is, most often, housing business class-not expensive enough for the" elite", but can not afford people with modest incomes.

Often the townhouses for rent the whole special control companies looking for end tenants to sublease, etc. it is also Possible the collective ownership of the townhouse through pool of investors.

You can rent and individual apartments or even rooms, although for this category of real estate is often rented apartments as a whole.

Note that the townhouses do sometimes tiered, allowing them to split, just making small alterations. Thus get more apartments, but they will still be business class (at a price of 1 sq.m.), which means that the income will be higher.

The yield on the rental of townhouses is much greater than the usual long-term lease. When divided into smaller apartments and at a relatively low price of construction, rapid construction, profitability can reach 100% per annum.

However, the townhouses have disadvantages. The first-this type of houses is not very popular in Germany, as little is known, and secondly-the decline in the purchasing power of Russians, for many it is now simply not affordable.

Nevertheless, with the expectation of future economic growth, it is the segment of business class housing that is now revived, which indicates the high expectations of investors and their desire to earn as much as possible on real estate in a changing environment.

4. Rent of country houses-one more option of earnings on real estate.

Continuing the theme of renting low-rise housing, it is impossible to ignore how to make money on real estate outside the city. This villas and cottages with 1-2 floors (sometimes with a attic) with an area of approximately 120 sq m and a small plot of land.

This type of lease is gaining popularity in the summer, when citizens are trying to get out of the "stone jungle" in a simple familiar forest of the middle lane. Ecology is in fashion now.

This type of lease can generate income up to 30% per annum, depending on the geography (in the resort area all 200% on an hourly basis). However, it is characterized by high seasonality, and also requires some care.

5. Hostel and apartments.
We have considered all the most popular options of how to make money on real estate, renting it out. However, there are more exotic options for earning. These may well include the transformation of the apartment into a hostel.

Hostel-it's a little refined Nochlezhka for those who can not afford an ordinary hotel. Recently, they are very popular among students.

The essence of such earnings is reduced to the fact that a multi-room apartment is furnished with beds with two or even three floors, and then rent not rooms, but beds.

Such a place is usually very cheap, but in one room can be stuffed like a sprat in a can, a lot of guests, which will provide a good yield, which can even exceed the income of traditional hoteliers.

So, if you settle in one room for 5-6 people, you can get up to 1000 euros per day.

In the case of some mass events, such as the football championship or the Olympics, the yield can grow to 1000 euros per hour, but such opportunities are extremely rare, although now some investors are looking for cheap apartments for hostels for the next world football championship.

PS. However, there is a nuance – according to the law, such mass settlements can be officially done only in a non – residential Fund-this requires special commercial real estate.

However, if there is a desire to earn and opportunities for this, why not try?

The scheme with the use of lease and sublease agreements allows you to rent accommodation to many people on an hourly basis-then the same hostel will be released.

Among the main drawbacks are the rapid deterioration of the repair of the apartment and the need for constant cleaning, which, however, is compensated by good income for residents of large cities or for earnings on real estate near the stations.

Rent a room in the apartment is similar, but not for rent a bed, and a room or apartment as a whole. In contrast to the traditional rental apartments, such property should have the status of commercial, and to bypass these restrictions as a hostel, it will be very problematic.

The profitability of earnings on the apartments up to 20% per year, but it is necessary to share with the state tax of 2%.

How to make money on non-residential real estate?

For the article to be complete, it is necessary to at least briefly mention the lease of non-residential real estate, such as garages, Parking space and Boxing.

To be a millionaire to rent (especially subleases) such premises is a challenge, but extra income never hurt anyone.

Suppose you have a box or garage in a co-op, or maybe just an extra Parking space that you do not intend to use. Let's say you had two cars, but during the crisis you sold the second, and now the place is empty.

You can also buy a garage or even a few specifically for the needs of earnings.

A full garage in 2019 prices costs about 300 000 euros. If you invest in the construction phase, it will be up to 200 000 euros. Its rent will cost 4 - 6 000 euros per month.

Pay off this "investment portfolio" will be quite a long time, but do not forget about inflation and devaluation.

Over the past 10 years, the Euro has fallen very much, and rental prices have risen. That is, it makes sense to do not so much as earnings, but to preserve their capital in the future. Garage after all can be and sell in case what.

In addition, in the countryside a variety of barns and technical buildings, greenhouses, etc., it is possible to rent as well as garages.

How to make money on real estate without starting capital?

All the secrets of creating passive income reveal in the video:

So how to make money on real estate in Germany in 2019?
In short, very carefully and with great care.

However, after the crisis of 2018, the situation began to improve, which means that it is time to think about how to make money on real estate – residential or commercial is not so important.

As we said, it is necessary to buy when prices fall (as now), and to sell when they grow, which, according to forecasts, will happen in the fourth quarter of 2019.

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