ATTRACTIVE YIELDS FOR MULTI-FAMILY HOUSES
Especially if you buy an apartment block in the city, you have the chance of attractive returns. The tenants of the property use some rooms jointly (e.g. garden, cellar, corridors, etc.) and pay for them individually. You can expect returns of more than 10% if things go well. Last but not least, you will increase your credit rating with the relevant bank. Please note, however, that in contrast to single-family homes, multi-family homes require a higher equity ratio: it goes without saying that the investment in a multi-family home is correspondingly higher. However, it pays off in the medium to long term.
As soon as you own your apartment building property and all flats are ready for occupancy, city flats in particular can be let quickly. This means you can expect your monthly rental income quickly.
If your apartment block is in a particularly good location, you can also expect a medium to long-term increase in value. This gives you the opportunity to sell your apartment block at a profit at a later date.
TAX ADVANTAGES WHEN BUYING YOUR MULTI-FAMILY HOUSE
Tax advantages result from the reduction in your taxable income. You have the option of claiming all costs incurred in relation to your apartment building investment (depreciation of rental income, debt interest and administration costs) against tax. You cover the costs of financing your apartment building with your rental income. The tax benefits for expenditure costs help you to do this. Further tax advantages result from renovations that you have carried out in your apartment building. You can also deduct these costs from your taxes.
DIVERSIFICATION (RISK SPREADING) FOR INVESTMENTS IN MULTI-FAMILY HOUSES
Have you ever heard of the so-called "bulk risk of private assets"? This refers to the largely private investment in a property. This mainly affects investors who invest in their own home or flat. Especially if you have taken out a loan for your investment, the "bulk risk" can harbour hurdles. This happens, for example, when tenants do not pay reliably. The resulting liquidity bottlenecks pose a risk if the property is your only source of income.
With apartment blocks, it is better to spread the risk because you are letting to more than one tenant. It is very rare that all or the majority of your tenants fail to pay on time. In addition, your returns help you to compensate for possible rent losses. With a multi-family home, you benefit from diversification (spreading the risk) because you have different sources of income at your disposal. In contrast to a single-family home, you are not dependent on just one source of rental income. If you do it skilfully, your apartment building will turn out to be a very profitable investment.
You can find out more about buying a house here https://www.wienroth-immobilien.de/immobilien/haeuser/.
LESS ADMINISTRATIVE WORK IN APARTMENT BLOCKS
If you order a handyman or gardener for a block of flats, you have the option of serving several tenants at the same time. The workload over the year is correspondingly lower than for a single-family home. Contracts with competent property management companies also relieve you of other organisational tasks.
Always consider the comparison: While you have to deal with several condominiums in different houses or even cities, you have much less administrative work in relation to a multi-family house. Here, the administration and maintenance of the house, garden and garage tract are centralised. This not only saves you time, but also money.
BE CLEVER WITH HOUSE HACKING
In contrast to a condominium, you do not lose your tax advantages when buying a multi-family home. The situation is different if you buy a single flat: as soon as you move into a condominium and register your own needs, the tax advantages become obsolete. In a block of flats, you live there yourself and rent out the remaining flats to other tenants. Your tax benefits remain valid if you rent out the majority of the apartment building to other tenants.
Smart tip: Buy an apartment block with a granny flat. This flat creates the feeling of an independent house. Calculate your investment from the outset so that your rental income covers your own rental costs. This means that you do not incur any monthly housing costs yourself.
YOU SHOULD DEFINITELY PAY ATTENTION TO THIS BEFORE BUYING A MULTI-FAMILY HOUSE
Buying an apartment block brings attractive advantages. However, be aware of possible obstacles before you buy. Avoid the following potential stumbling blocks from the outset:
- Poor location of the property
- poor state of repair of the apartment building -> pending renovation and repair costs
- Possible buildings in the neighbourhood / construction noise
- unreliable and demanding tenants in the apartment block
You should therefore choose your apartment block with care and caution. Pay attention to the location and renovation condition of the property. Choose reliable people as tenants.
CONCLUSION
Property is and will remain a reliable investment. With sufficient capital, an apartment block is particularly worthwhile as an investment. There is comparatively little administrative work involved and the returns are worthwhile. If you are looking for an attractive location, reliable tenants and sufficient creditworthiness, buying an apartment building is an interesting investment in your future.
Are you toying with the idea of buying an apartment block ? Find out more from your top estate agent for the region: https://www.wienroth-immobilien.de/immobilien/anlageobjekte/.
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