In principle, there are four different types of property that are suitable as investment properties. These have individual advantages and disadvantages:
Single-family and semi-detached houses with a high ratio of land are usually a valuable investment, as their resale value increases. Multi-family houses, on the other hand, often have a higher return than single-family houses or condominiums, but investors have to take the risk of vacancies and problematic tenants into account.
If you want to buy a condominium, you usually have to invest less capital, but the absolute return on investment is often lower. Buyers of individual apartments are usually part of the community of owners of a house. Problems with the community of owners can arise, for example due to issues such as upcoming renovation work, which must be discussed.
Commercial real estate:
Although commercial real estate is often characterized by high returns, there is a high level of risk due to new market trends. The future demand for commercial space is very difficult to predict due to new office structures such as home offices or increased online trading. In strong locations, an investment in a commercial property can still be very lucrative.
Real estate fund:
By investing in a real estate fund, the investor acquires shares in real estate. As such, it’s more of an indirect investment in real estate. The use of capital is no longer the same as it was a few years ago, because the banks have developed very modern products in replacement, which you can get into with less capital. Your advantage is that the fund managers take care of the management and the investor is thus relieved of the responsibility.
Which properties are best suited as a capital investment depends on the individual’s willingness to take risks, the capital employed as well as the expected return. In order to achieve a high return, however, investors should always pay attention to the purchase-rental ratio, i.e. ensure that the purchase price in relation to the possible rental income is not too high.
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How is the return calculated?
If a suitable investment property has been found, the profitability of the property must first be checked before buying. In the case of investment properties, rental income is the basis for profitability. They measure the return on the investment over a certain period of time.
Returns are given in percent and are used to evaluate investments, e.g. for stocks, bonds, funds, precious metals and real estate. There are different types and types of returns and a variety of calculation options.