Requirements for real estate

Unlike an owner-occupied property, in the case of a rented property it can make a lot of sense to finance as high a proportion of the purchase price as possible. The loan interest is tax-deductible here and thus brings massive tax advantages. In addition, the tenant also pays a large part of the monthly instalment, meaning that even with higher financing ratios, little or only minimal out-of-pocket contributions are possible. In our practice, around 7/10 of buyers finance their property in full. In that case, the equity required is simply the amount incurred for the additional purchase costs. Depending on the property, these amount to roughly €10,000 upwards. Of course, we also have 3/10 of buyers who contribute significantly more equity because it secures them better interest rates or protects their freely available savings from low interest rates on other investments and from inflation. And some investors even buy the property entirely out of equity, without financing anything at all. Accordingly, the answer to the question of how much money is needed to purchase a rented property is between €10,000 and €50,000, or even significantly more in the case of a purchase without financing.

Anyone in Germany can buy a rented property. In principle, anyone can initially generate passive income and property income. Since rent is paid by the tenant via standing order, the only real prerequisite is a bank account in Germany.

The advantage of a rented property is that the major part of the monthly expenditure is paid by the tenant. That is the idea of passive income and property income. Ongoing running costs are divided into recoverable and non-recoverable service charges. The recoverable service charges are passed on to the tenant by the management. These are, for example, insurance premiums for the building insurance, maintenance contract for the lift, quarterly council tax, caretaker, stairwell cleaning, lighting, waste collection, snow removal in winter, garden maintenance, heating costs, electricity costs.

That leaves hardly anything for the landlord. They only pay the non-recoverable costs themselves. These are administrative costs for property and tenancy management, routine repairs - if something breaks during the year - and the building of a maintenance reserve.

Regarding the repairs, it must also be noted that if something in the flat is accidentally damaged by the tenant, as a rule neither the tenant nor the landlord is held liable, but rather the tenant's personal liability insurance has to cover the costs. This is why a professional management company ensures that only tenants with personal liability insurance including cover for damage to rented property are able to rent a flat.