Renting out real estate: Is the business worth it?

Renting out real estate: Is the business worth it?

Turned upside down: art installation of a house in Trassenheide on Usedom.
Image: picture-alliance

If you rent a house, you should check whether the deal is worthwhile. Increased loan interest cloud the enjoyment of the rented property as soon as the loan has to be extended. But there are alternatives.

DLoan extensions are no picnic at the moment. Who ten years ago a mortgage has taken out, which cost 2.50 percent per year, must now adjust to costs of 4 percent per year if the loan is extended. That’s an increase of 60 percent! What do you think of that, dear readers? Should people stand firm and just smile away at such rate hikes? Or should they become “fickle” and question the “things” that have been paid for with those loans? It won’t surprise you that I vote for the second solution because I love to shine my light into dark corners.

Today’s protagonist is 60 years old and a notary by profession. He bought a small apartment building ten years ago, which cost a total of 2,200,000 euros. Of this, around 500,000 euros went to the property, around 1,500,000 euros to the building and around 200,000 euros to ancillary costs. The property was paid for with the help of an inheritance of one million euros and one loan in the amount of 1.2 million euros. The annual nominal interest rate was 2.50 percent and was fixed for ten years. The rate for interest and repayment was 5,500 euros per month, which reduced the remaining debt to 791,484 euros. Also, you should know that the value of the property today is 3,000,000 euros and the monthly rent has increased over the years from 6,000 euros to 7,171 euros.

Source link