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Apartment buildings as an investment? Investors should pay attention to this

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Apartment buildings are often referred to as concrete gold and often give their owners attractive returns.

But investing in large properties with or without commercial space is not entirely risk-free. Investors must pay attention to this.

What needs to be considered?

Buying your own property is very risky. Especially when the price is high and the location is popular. Managing Director of E & V Commercial Rheinland, Ulrich Dahl, therefore recommends potential investors to take as little risk as possible. Accordingly, you should ideally already have 30 to 40 percent of the purchase price plus additional costs as equity. In addition, according to Dahl, it is also important to take a special look at the location. Locations that are too expensive as well as “deceptively cheap” should be used with caution by investors.

Large cities, for example, are considered to be particularly expensive locations that are being targeted by many investors. However, given the currently possible gross purchase yields of less than three percent, there is hardly any possibility of making profits. In cheaper regions, owners often have the problem that the microstructure is incorrect: there is often no quick access to educational institutions or shops, the area is characterized by noise pollution or has no proper infrastructure.

It is therefore important to buy a property with perspective. According to the industry expert, medium-sized cities with population growth, in which rising rents are expected, are best suited for this.

Single owner or community of owners?

There are other factors that should be considered when deciding and choosing the property. For example, the structure of the building should be carefully inspected and examined for any damage. In the case of an apartment building with several tenants, an examination of the rental contracts and the solvency of the tenants is essential. Because problems with late or unpaid rent contributions are almost part of a landlord’s everyday life.

But there are also a number of advantages with regard to the purchase of an apartment building: rent-free living in old age as well as incoming rental income, potential for property appreciation in popular locations and solid inflation protection. Last but not least, an owner of an apartment building has the advantage that he is the only owner of the property and has the sole right to make decisions. He does not have to agree with owner communities on decision-making questions and has an overview of his entire property.

Image sources: Barabaszka / Shutterstock.com





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