Calculations and numbers
Martin's answers to your questions...
Calculations and numbers
The profit on a rented property is generated on an ongoing monthly basis immediately upon purchase and additionally in the medium and long term during the rental phase and in the event of resale at a later date.
Let's assume in an example that the purchase of a condominium costs EUR 1,500 per month. Then the owner-occupant who moves into the property himself pays this 1,500 EUR himself. With the landlord this is completely different. There the tenant pays every month with the cold rent a considerable portion. Additionally there are current tax advantages with the acquisition of a rented real estate. It is often the case, to stay with the example, that tenant and tax office bear ¾ or more of the ongoing expense. In this case, therefore, EUR 1,175 every month.
The profit arises directly month by month from the beginning. Because every month others (here tenants and tax office) pay 1,175 EUR for your asset accumulation. So every year a passive income of 13.500 EUR flows. Over 10 years this is already 135,000 EUR real additional income.
Since with inflation the rents are adjusted every few years by the administration, the own contribution sinks as a rule ever further, until even the tenant and the tax office pay after some time the complete savings rate, which flows into the acquisition of the real estate, completely.
In our practice, it is very often the case that the buyer only pays ¼ or 1/5 of the purchase price of the property himself over the years. This means that he has already increased his own money extremely, often by four or five times. And since real estate as a tangible asset usually represents a compensation for inflation, the value of the property increases over the years. This is also very rewarding because when the property is sold at a later date, a higher value flows back. And this is possible for private capital investors tax-free from a period of 10 years.
Here is an example as well:
Purchase price of the property 400.000 EUR
Own expenditure over the entire years e.g. 1/5 = EUR 80,000 paid by the company itself
Tenant and tax office pay over the entire years in the case 4/5 of the purchase price
Value of the property after 30 years due to inflation adjustment e.g. 600,000 EUR
Tax-free profit for the landlord: 520,000 EUR, i.e. more than ½ million EUR with only 1 condo
A good apartment management costs about 13-16 EUR net per month. For this, it makes no sense to prepare a service charge statement yourself, to carry out a qualified rent increase yourself or to take care of things like rentals yourself. For that there are professional management specialists. These usually have no idea about building or property selection. The management is specialized to look after a property professionally, to relieve the owner of as much work as possible and to increase the value of the property significantly in the long term. This requires trained professionals on the part of a good administration. They also need to know the legal basics, so that, for example, regular rent increases are pronounced and implemented correctly. The bottom line is that good management does not cost money, but brings significant added profit and a high level of security.