Real estate - a crucial component of asset building
In today's world, inflation- and asset protection has become an order of the day, consequently real estate with its tangible value is becoming an ever so growing economic drive and the number one recommendation when it comes to capital-investment, simply because no other low-risk instruments generate the same yields and financial advisors have nothing else up their sleeves.
With real estate as a capital investment there are not many factors that count, yet due to the big numbers involved, the few that do have a significant influence on whether the investment will perform or is doomed to fail from the very beginning. Too often private investors start off on the wrong foot because they are easily impressed by unique opportunities and promises by the selling party that all is just a walk in the park; so they can they see into the future … no!
The most important factors are location and purchase price and as long as these aspects tally, all the others become secondary. If the property is in perfect condition, there will not be any nasty surprises in future. Far away from vacancy risks residential properties in cutting-edge cities and agglomeration areas profit best from the high demand to rent.
real estate lexicon
- Housing Costs
In German this is called "Hausgeld", and refers to the funds paid monthly by the owners for the management, administration and maintenance of the common property in a condominium. It is not the same as Housing Allowance!
As a rule of thumb, the house charges are usually estimated to be 20% - 30% more expensive than a tenant's ancillary costs because their are costs that are not transmissible. These are:
- Administration costs
- Banking fees or other related charges
- Maintenance and repair costs
- Maintenance reserve
- One-off expenses, e.g. vermin control
- Housing Allowance
Germans call this "Wohngeld", and it is a social benefit from the state in which low-income citizens are grante a rent subsidy.