How does the property investment pay off for me? After what period of time can I expect to make a profit?

We answer these and many other questions in our video blog episodes.

Here is the transcript of episode 4 to read through:

How does a property pay off for you? It is simple: when you buy an investment property, you have expenses and income on your account every month. On the expense side is the bank instalment (interest and repayment), as well as the non-recoverable ancillary costs (management, reserves, ongoing repairs).

On the income side, there is rental income and tax benefits. If you offset these and the buy-to-let property costs, say, €300 a month, the question might arise: "Why don't I have a surplus?".

Let's assume that the property costs €1,200 a month in interest, principal repayments and incidental costs. But the tenant and the tax office pay €900 between them, so you only have to pay €300 yourself. So, if 3/4 of the saving is paid by others, you have generated passive income. And yet the question arises: "What happens next?".

The following has been observed time and again when purchasing an investment property: in the event of inflation, the management increases the rent by 10–15% every 3/6/9 years. In other words, if you pay €300 today, you might only be paying €150 after 10 years and nothing at all after 15 years.

You can assume that every year you will have to pay less and less yourself. Many landlords of an investment property already have a surplus after 15 years, even though the mortgage is still being repaid. Ultimately, it can be stated that with a rented flat costing €400,000, only 1/5th, i.e. €80,000, has to be paid by yourself.

So if you spend €400,000 on a property, but only pay €40,000 yourself over the years, that is one of the best investments of your life.

If you are interested in this topic, come to our seminars and discover even more about property knowledge.

Keywords:
Real estate for a quarter, inflation, real estate investment, letting, capital growth, tax savings, inflation hedge, capital investment, property market, financing, advisory services