No, every era has or had its challenges. Knowing all the factors that make a sale easier and more secure is still helpful today.
Dealing with rising construction interest rates and record inflation
As an investor, you are a strategist through and through, with the goal of making your money work for you in the end. For a long time, many real estate buyers benefited from favorable real estate loans, high rental income, and rising real estate values, among other things. However, developments in recent weeks and months mean that this calculation no longer adds up: construction interest rates have risen by up to three times, making real estate financing significantly more expensive and, at first glance, less profitable. Inflation has reached a record level of up to 10% and is placing a particular burden on tenants due to extremely high heating and ancillary costs. This makes it difficult to implement planned, market-driven rent increases. Right now, many property owners and investors are asking themselves: Is it still worth pursuing real estate investments? How should I deal with my existing real estate investments?
Real estate is still considered one of the safest and most sought-after investments. Those who act correctly now and avoid mistakes can, in some cases, get back many times their investment. But when you buy real estate, you are investing more than just money—you also have to factor in the time you will need to invest. The question in both cases is: how much of this can and am I willing to afford? The answer is not always easy. Depending on your capital, resources, and experience, different strategies make sense—and, of course, depending on the goal you have in mind for the investment.
Your goal: A quiet and stable investment that requires little time
The buy-and-hold strategy is particularly suitable for beginners and people who are primarily concerned that their saved equity does not lose value due to high inflation. This means you make a one-time investment and let the property work for you "on the side" through rental income over the long term. Three factors must come together for this investment to be worthwhile:
First, the property must not be too old, as ongoing management and maintenance measures can otherwise have a negative impact on the performance of the investment. It should also be located in an area where it is easy to rent out, so that you can count on a steady income. Thirdly, the property should of course fit your budget, which is not an insignificant factor given a good location and a modern building. The right balance between your own capital and additional bank financing offers further potential returns.
Modern properties in good locations are still in high demand, so you may need to draw on a good network of contacts to find a property that meets all your requirements. In addition, analyzing the current real estate market in terms of location, rentability, and financing of potential properties is an important component of the buy-and-hold strategy. As experienced real estate agents, we are happy to help you find a suitable property. We know the region very well and can provide reliable value and rent forecasts.
Your goal: Optimize an inexpensive property to increase its value
This strategy does not necessarily see the increase in value of your property in terms of rental income. Here, the property is viewed as a business that can generate optimal revenue when its full potential has been realized. Conversely, this means that you also need to focus more intensively on optimization, financing, and taxation. A solid financial and tax concept is essential for this strategy.
The aim of this strategy is to purchase an older property at a reasonable price and then optimize it through renovation, extension, Renovations, etc., to improve its rental value and generate an additional return on the capital invested through resale at a later date. This approach is particularly suitable for experienced investors as an entertaining project that requires a lot of proximity to the property, contacts, and coordination of service providers.
In the right hands, this strategy can offer considerable potential. We would be happy to help you get the most out of your property and your investment. With our large network of regional service providers, such as tradespeople, tax advisors, lawyers, and many more, we can advise you and not only find you suitable properties, but also the right buyers.
What is the right strategy for you?
Whether you are looking to renovate an old property or invest in a new property for the long term, we understand the strategies of investors and the individual requirements and needs that come with them. With over 20 years of experience in the real estate market and a comprehensive real estate and customer database, we are confident that we can support you in every phase of your investment.
Contact us now for a no-obligation consultation. We look forward to hearing from you!