Theses, success stories, and recipes on how can property investment make you rich.
Can property investment make you rich – you need to be ready to face a lot of other people who want to do the same thing. After all, it’s a very appealing idea to want to own your own property that brings in money on its own. In fact, about 2% of make enough money from their homes to support themselves.
Rich from real estate: Four ways to be successful
Probably the most common way for private investors to make money in the real estate market is to buy a property, rent it out, and then make money from it again. In fact, this is only one of the ways to get concrete gold. Here are some others:
- Getting and renting property
- Take advantage of the rise in price.
- Buy, fix up, and sell houses.
- Putting money into real estate through crowdsourcing
1. Getting and renting property
Investors still like real estate a lot, whether it’s because of the low-interest rates or the steady profits. Especially in big German cities, housing is in high demand, and many property owners make a lot of money from it.
But getting in is hard for many private people because they can’t buy their own apartment. Most of the time, you need between 10 and 20% of the purchase price as a down payment to learn how to do this.
Tip: If you want to know how to buy your first home, you can read about it here.
Homeowners also need to know about the cons of concrete gold: Only part of a property is liquid. If you want your investment to really pay off, you have to keep it for ten years. Only then can a property be sold again without paying tax.
Depending on the situation and environment, you may also need to do a detailed analysis of the real estate market. For example, right now, it’s better to rent out smaller apartments than big houses. The simple reason for this is that many people in Germany live alone and don’t need expensive, big apartments. The relatively higher rent is also a sign of smaller apartments, but you have to look at each area more closely in this case.
2. Get rich by making a property more valuable.
The value of a property that has already been bought going up is another thing that shouldn’t be overlooked. Due to rising demand, the value of real estate has gone up a lot in the past few years. Anyone who has ever bought an apartment has benefited from both the rental income and the value going up over time.
Of course, a lot of things play a role in this. For example, a property’s location is a good indicator of whether or not it will go up in value over time. But a property’s value going up is not the most important factor. After all, a property can also lose value. This happened, for example, during the financial crisis of 2008.
3. The recipe for real estate: buy, fix up, and sell
This variation requires time and money, but it can also pay off in the end. The idea is that you buy an apartment in a good area that needs a lot of work, fixes it up from scratch, and then sells it for more than you paid for it.
This project is based on a detailed cost estimate and the search for an object that is good to buy and is in an interesting place. You can use our “Checklist for Buying a House” to help you.
With this strategy, you should also think about the next 10 years: If you sell a property before this time, you will have to pay a speculation tax. If you fix something up, keep it for ten years, and then sell it tax-free, you will make more money. Our guide to saving money on taxes with real estate has more information about this.
4. Invest in real estate through crowd investing without putting up a lot of money.
With the real estate wealth-building strategies we’ve talked about so far, it was always necessary to have a pretty high amount of equity capital. But crowd investing in real estate is a different story. Here, you can invest as little as 500 euros in the projects of well-known project developers and get good rates of return: