SERVICE HOTLINE: +49 40/210 91 73 00 | MON - FRI 9:00 AM - 8:00 PM

INVESTMENT IN REAL ESTATE

Capital investment in real estate with a 5 - 6% return per year

1. Key facts

A real estate investment today does not have to be expensive or complex. Exporo offers you a progressive capital investment.

  • ATTRACTIVE INTEREST RATE OF 5 - 6% PA
  • SHORT TERM WITH NO ADDITIONAL COSTS
  • ALREADY FROM SMALL INVESTMENTS

Invest jointly with other investors via Exporo digital in promising real estate. Invest your money directly in lucrative real estate projects with high returns. The innovative capital investment supplements your portfolio with the real estate component and helps your portfolio to diversify your risk broadly. Equity crowdfunding for real estate pays off.

2. FOR WHOM IS THE CAPITAL INVESTMENT INTERESTING?

An investment in real estate is not only interesting as an alternative to low interest rates , but also makes sense for all capital investors. With real estate, every asset is appropriately diversified. As solid, stable property, they are considered to be safe investments. In terms of their value development, properties, apartments and houses have little or no correlation with other asset classes such as stocks or bonds. Also as a retirement plan or to protect against inflation real estate is suitable. In particular, young people with relatively secure jobs and investors with savings can invest part of their capital in real estate. Since real estate is long-lived, investors benefit from the return on the investment for a long time, provided they dare to take the step at a younger age. For beginners, for example, buying a condominium is a good way of gaining experience in renting out real estate. In the case of condominiums, special features must be taken into account, because not only the separate living space, but also shares and rights to joint and individual property can be acquired. Apartment owners are also members of the community of owners, which jointly decides on changes, acquisitions and repairs within the residential complex.

To get a reasonable return In order to achieve this, the investment property must generate regular income and the house or apartment must be rented out. In the case of a home, the economic effect is realized through the rent savings, plus a psychological return through beautiful living and well-being in your own four walls. Investment or home ownership - this is the question many real estate investors are faced with at the beginning. The capital investment in a real estate object brings a positive return flow from the investment from the first month. The home pays off when it is later sold and the proceeds are higher than the purchase price. So if you want to generate a continuous inflow of liquid funds during the entire investment period, you have to spend money on rented properties. To decide on a property as an investment, however, there may also be other reasons, such as a professional move by the owner or the inheritance of a house. In addition, in later years of life, the opposite route from landlord to owner-occupier is also possible. Investors can choose to rent the following types of property as an investment:

Created with Highcharts 9.0.1In ProzentChart context menuINFLATION RATE IN SELECTED WORLD REGIONS IN 2016 (COMPARED TO THE PREVIOUS YEAR)Source: IMF - International Monetary Fund , Oktober 2017Inflation rate compared to previous yearIndustrialized countriesEuro-ZoneEUSchwellen- undDeveloping countriesThreshold andDeveloping countriesAsiaLatin America/CaribbeanMiddle East andNorth africaAfrika Sub-Sahara051015Highcharts.com

3. THE MOST IMPORTANT SUCCESS FACTORS

The return is used to assess whether the purchase of a property as an investment is worthwhile. In real estate projects, investors primarily focus on future increases in the value of the property. The profit lies with real estate purchasing. The purchase price is an essential criterion for whether the investment is worthwhile. This depends primarily on the location and surroundings of the property as well as the age, condition and equipment of the building. It is therefore imperative to pay great attention to the selection of the investment property to lay or invest a lot of time for it. In areas with exorbitantly high rents, there is a greater risk of vacancy than in regions with average rent levels. The additional costs of purchasing the property, which are between 10 and 15 percent of the purchase price, must also be taken into account as expenses. These include notary and court fees , brokerage commissions and real estate transfer taxwhich differs according to federal states. The lower the purchase price or the acquisition costs of the property in relation to the proceeds achieved, the higher the profitability of the property. However, the lower purchase price alone does not guarantee a high real estate return if this is due to a lack of infrastructure or a rural location with no growth potential. If the property is to be sold once, the return depends primarily on the sales proceeds. Whether an investment in real estate is ultimately profitable depends heavily on the modernization of the property and the long-term development of its location as well as the general real estate market. Property value increases and rental price increases only occur in areas with population growth. The acquisition costs must also be set in relation to the possible income. The income regularly flows from the rental of the property to the investor in the form of rental income. The rental yield is determined from this, whereby a distinction must be made between gross and net rental yield.

Decisive for the comparison with other investments or real estate is the net rental return. This includes both the ancillary costs of the property purchase and the administrative costs that cannot be passed on to the tenants as well as the annual reserves for repairs. The annual net income for the landlord is calculated from the difference between the net rent and the annual administration and maintenance costs. This is then divided by the investment volume, including the ancillary purchase costs, so that the net rental return results. The expected useful life also plays an important role when considering the return on real estate, as it has a direct impact on the volume of rental income. Owners of condominiums are faced with additional burdens such as the monthly house money from property managers ongoing operating and property maintenance costs that have a negative impact on returns. The apartment owners form one for major renovations Maintenance reserve , only heating and operating costs can be passed on to the tenants.

However, the rental yield does not do justice to an exact economic approach to the property. Also to be considered are the tax components of the real estate investment and how the property is financed. These two factors are reflected in the determination of the return on property or return on equity. The investor's personal tax rate is part of the property return calculation. The property return results from the difference between the net annual rental income and maintenance costs of the property as well as the tax burden on the private investor. The leverage effect of a loan taken out for the purchase of real estate can significantly increase the investor's return on equity. Borrowing ensures a high return on equity for real estate compared to other investments.

4. ADVANTAGES OF REAL ESTATE INVESTMENT

The advantages of real estate investment are obvious, neither deflation nor inflation consume the value of a property. Additional income can be generated with a rental property, and owner-occupiers can save on rental payments. Real estate is a crisis-proof investment for retirement. The price fluctuations of real estate are relatively small; viewed over a longer period of time, real estate usually shows increases in value. If the property serves as a capital investment, financial advantages are possible through tax-favorable depreciation, especially in the case of listed properties. The tax savings opportunities are far better for rented residential properties than for homeowners. Investors can write off the building value of their property, and every investment in the rented building is tax deductible. Owners who have financed their property with debt from the bank can also claim the loan interest on their income tax return. Properties with sales profits can be sold tax-free after ten years. Real estate can be lent at any time, and the owner is always creditworthy. Real estate has a long lifespan and can secure stable income for the owner over the long term.

5. DISADVANTAGES OF REAL ESTATE INVESTMENT

Despite the advantages of real estate investments, the disadvantages of investment properties are not negligible. The example of an apartment building is the best way to illustrate how closely the advantages and disadvantages of a real estate investment can be. Due to the multiple rental income, the rental yield is exceptionally high, but this is offset by the considerable administrative and repair costs of a large property. In general, the rental prices are not to be increased indefinitely and the rental income is taxable. The capital in land and buildings is tied up in the long term; if necessary, they cannot simply be sold overnight. Property prices could drop and then fall below the purchase price.

Finding a profitable property takes a lot of time and effort. The ancillary purchase costs and ongoing operating costs are often underestimated by investors. Small investors need to take out loans and get into heavy debt to purchase a property. This gives you a cluster risk in your portfolio and a poor risk distribution of your assets. Vacancy reduces the rental yield that was calculated on the purchase. Trouble with and arrears from tenants increase rental losses. After purchasing the property, hidden defects can become visible and the result can be burdened by high and unplanned repair costs. Owner-occupiers usually do not benefit from increases in value and usually have to provide evidence of a minimum equity participation in the property financing.

6. CONCLUSION

However, you can avoid these disadvantages from the outset and still invest in real estate; you neither have to rent nor buy a house.

  • In addition to classic real estate capital investments, new forms of investment make it easy to invest in real estate. With crowdinvesting for real estate, it is impossible for you to have to worry about reducing vacancies, the creditworthiness of tenants or permanent repairs.

You can participate in attractive real estate projects online via the Exporo portal , handling is very easy, investing is transparent. You get a higher return compared to conventional real estate investments. With small investment amounts you are able to spread your real estate investment broadly over many projects. Each investor decides for himself which properties he will provide money for. Private investors know exactly which project they are financing.

The development properties or existing properties are checked in advance by Exporo for their prospects and classified using a special investment rating so that investors can better compare the properties.

You can use the conditions of the subordinated loan to measure the risks of the properties relatively easily. Against the total loss of your system, it also helps that you spread your capital investment over a large number of projects. Exporo also provides you with various online guides on buying and living in investment properties. As an alternative to the stock market, investments in interesting real estate projects can bring you an above-average return without large price fluctuations occurring and without having to forego your money for a very long time. Since you do not have to bear any additional closing costs, equity crowdfunding for real estate brings you significantly higher returns than other secure forms of investment.