Equities, funds, savings account – or would you prefer real estate? Investing in houses, rental apartments, etc. has some advantages, but it is not suitable for everyone and should be carefully considered.
Investing in real estate offers an alternative to investing in shares, funds or other financial products. This article provides an overview of the pros and cons of various investment opportunities in the real estate industry.
Investing in your own property offers these advantages
Anyone who invests in their own property and rents it out benefits from fixed monthly rental income and can thus increase their pension or salary. This is not the case with a long-term investment in shares, for example. In addition to possible rental income if the property is rented out, investors often benefit from a higher resale value – especially if the area around the property has become more popular since it was purchased. Due to the increase in the value of real estate in Germany, which has been going on for several years (the ING quotes the DZ-Bank with a forecast of 7.5 to 9.5 percent for 2022) and due to the lack of living space in Germany, investors are also protected from inflation and can, as the Sparkasse explains, observe an annual increase in value of five to ten percent. On the other hand, if you deposit your money in a savings account, for example, you will normally receive well under 0.5 percent interest annually in the current low-interest phase.
These disadvantages arise when investing in your own property
There are also some disadvantageous factors: Since entire properties and also condominiums are significantly more expensive than a limited number of shares, investors have to take a lot of money at once and put everything in their hands for the success of this property – risk diversification is particularly important for small private investors, who only own one or a few properties tend to be low. If the investment loses value for unforeseeable reasons, this has a particularly strong impact on the capital investment. In addition, high (unpredictable) operating costs can arise if about[{” attribute=””>versteckte Mängel am Haus auftauchen. Nachteilig ist auch, dass in eigene Immobilien investiertes Kapital langfristig gebunden und nicht von einem auf den anderen Tag zugänglich ist.
Zudem weist die PSD-Bank darauf hin, dass die Wertsteigerung einer Immobilie nicht immer gewiss sei, da man auf die Stadtgestaltung keinen Einfluss hat. Werden nach ein paar Jahren etwa Gleise oder eine Autobahn in unmittelbarer Nähe gebaut, könne dies großen Einfluss auf die Wertentwicklung nehmen.
Vor- und Nachteile: Häuser, Wohnungen und Gewerbeimmobilien
Bei der Investition in eine eigene Immobilie (Wohnhaus, Eigentumswohnung, Gewerbefläche) gibt es verschiedene Vor- und Nachteile. So erklärt das Beratungsunternehmen für Baufinanzierungen Dr. Klein: „Unter steuerlichen Gesichtspunkten bieten Kapitalanlageimmobilien den Vorteil, dass Sie Kosten wie etwa den Erhaltungsaufwand geltend machen können. Zudem profitieren Sie von Abschreibungen in Höhe von jährlich zwei Prozent auf die Anschaffungs- und Sanierungskosten. Wer das Renditeobjekt frühestens nach zehn Jahren verkauft, erhält der [sic] Increase in value tax-free.”
Owners of condominiums benefit from less administrative effort than owners of apartment buildings, for example – but are part of a community of owners and therefore dependent on democratic votes on the future of the house. Multi-family houses or houses with several residential units are very profitable, especially if they have a large floor area. High rents can also be achieved with commercial real estate, although this already belongs to the category of risky investments. This explains MH Gewerbe-Immobilien, a specialist in commercial real estate in the Rhine-Main region. During the lockdowns and with the obligation to work from home as part of the corona pandemic, it became clear how strongly the value of commercial space depends on market developments in a wide variety of sectors.
Pros and cons: real estate funds and crowd investing
Investing in open (or closed) real estate funds offers a greater spread of risk than investing in your own real estate: Here, several investors invest in several properties and share the returns. Investing in real estate funds also eliminates the high administrative costs and individual investors do not have to take out a loan, but can take as much money as they already have at their disposal. Especially with closed real estate funds, however, the money is not accessible from one day to the next.
Another way of investing in real estate is to participate in crowdinvesting projects – the Sparkasse advises small investors not to do this, however: For large investors such as banks, a land charge is usually made in the land register registered so that they get their money refunded before everyone else if the real estate project is not successful. In the worst case, a small investor could lose money here.
Image sources: Andrii Yalanskyi / Shutterstock.com