What is the right age for rented property?
In today's edition of our video blog you will learn whe right age for rented real estate.
Start the video here:
Frequently, capital investors ask themselves
- Is there a certain age at which you should buy a property?
- How to buy a property at a young age?
- What is the motive for older people to buy real estate?
- How can you still invest in real estate at retirement age?
- Can parents buy real estate for their children?
We answer these and many other questions in our video blog editions.
Here is the transcript of episode 18 to read:
The one right age to buy a property does not exist. If you are very young, e.g. 20, 25, maybe 30 years, you have a unique chance. Then a low monthly repayment for the bank loan is enough and your tenant pays back the property for you over a longer period. Because of the low repayment you have a minimal expense yourself and that is the advantage of buying at a young age.
I myself bought my first investment property when I was 21, 23, 24 years old, and then it went on. Over 30 years, maybe 35 years, my tenants paid off the properties for me. And if you do the same (and I have many customers), with whom I have done this, many young customers, then you will have the chance that when you are already 55, 58, so 12, 13 years before your retirement, the tenant has paid off the property for you and that you generate passive income well before you retire, maybe even stop working earlier.
Because if you imagine you have maybe three, four rented apartments, each apartment brings 750 € rental income and is paid off at 55, then you have 3,000 € a month and through inflation of course also increasing over the years. By the way, that doesn't mean when you're older that it's too late. I regularly have clients who buy real estate even when they are over 70 and even over 80.
But there the condition is different. If you are maybe 45, 50, 55 years old, you have a very high monthly income because you have made a career, but maybe you have big tax problems and tax challenges. Then it can be interesting to buy a property there. Often you can also invest a little more equity, because you have already saved a lot of money in your life and often find that it is lying around at the bank with poor interest rates.
So it's also an interesting target group. I myself am now 55 and still buy real estate regularly despite or precisely because I am now 55. And if you think about the pensioners who buy from me, the motive is a lot of liquid assets in a world without interest and with high inflation, because that means the desire for investment, alternatives and security.
Of course, the retiree brings in a very large share of equity, but even retirees often still finance part of the property. And sometimes it's just a matter of finding a safe investment yourself at retirement age, where you might later have something nice for your children or grandchildren, where they can inherit a tangible asset, or where you can later transfer a tangible asset to your children and grandchildren.
So you see, the simple answer to the question, "What is the right age?" There is no such thing. And I'll come back to young people. I've also had clients more often than not say, "My daughter or son is 5, 6 or 7 years old today. And I want to buy a nice, rented condominium for my child today as a parent and take part of the child benefit or the child benefit as the share that we pay in ourselves."
The tenant and the tax office pay the rest. And if you now imagine that the tenant and the tax office pay back the property over 30 years, then the child is 35 and then has a completely paid-off condominium and from then on 750 or 1,000 € rental income every month. And if you are perhaps in your mid-30s today, just imagine if your parents had bought a rented apartment for you when you were five years old.
And when you're 30 or 35, you find out that the tenant has already paid it back. That's certainly something we all dream of. But if you watch this video and have children of your own and say, I would like to buy a rented property for the children now, then that can also be the right age.
So we hold: at 5 can be the right age, at the beginning of 20 can be the right age, at mid 30 or 40 can be the right age and depending on the motive also at 60, 70 or 80 years. Investment property is an investment that pays off very well for many, people. If that interests you, then let's talk.
Real estate purchase, monthly repayment, capital investments, rental income, retirement, equity, renting out