Real estate is a good investment
10 reasons why you should definitely invest in real estate
Do you want to invest your money profitably?
There are two options for remuneration: an investment in monetary assets such as a call money account and the like, or an investment in material assets.
More and more people are choosing to invest in real assets, so property, And with good reason.
A property retains its value even if the money is devalued by inflation and regular income can be achieved through rent. Tax advantages also play a role in real estate investments. In this article I want to introduce you to today Name 10 good reasons why you should invest your money in tangible assets such as real estate.
10 reasons to invest in real estate
Real estate ownership is often associated with wealth.
It is true that rich people very often own numerous properties or use residential complexes as capital investments. Numerous studies from the past have shown this: 9 out of 10 wealthy people acquired their wealth by investing in real estate.
This is confirmed by a quote from the banker Freiherr von Bethmann, who emphasized:
"The only way to build wealth is by borrowing in kind."
The principle is very simple: you buy a property with the help of outside capital and repay interest and repayment of the outside capital by taking tax advantages and rents.
Table of Contents
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In the following, I'll tell you 10 good reasons why you should definitely invest your money in real estate.
1. No risk of inflation
Real estate does not lose value, on the contrary. At a Investment in real estate the investor can be sure that his money will be preserved.
It has happened again and again in the past that this Money devalued by inflation has been. The term inflation comes from economics and describes an increase in consumer prices. The rise in prices can be caused by a change in the exchange ratio of goods and money, if the money supply increases without the production of goods increasing at the same time.
The current inflation is particularly caused by the decline in the price of petroleum products / energy. Only services and apartment rents increased by 1.4% and 1.3% respectively compared to the same period of the previous year.
Even if we are fortunate a comparatively low inflation rate in Germany have, but the creeping devaluation eats up a lot of wealth every year. Some savings accounts or savings contracts often even post a negative return after deducting taxes and inflation. Property owners face this situation.
The Rent can be adjusted to the course of inflation. In the case of borrowed financing, inflation actually reduces loan repayment.
Hence the fact that real value beats monetary value.
Everything that has a negative impact on the value of money is used in a positive way thanks to our economic system. Those who made provisions through a real estate investment got their money.
2. Direct interest and rental income
A real estate investment offers one direct interest and regular rental income.
The investor gets with one Investment in real estate not his money from the bank, but he rents the apartment and regularly receives his money from the tenant. That makes him independent of the bank's decision.
The monthly rent of your property is your regular passive income. However, one shouldn't buy just any house or apartment. Because only in selected regions with certain conditions can higher rents be achieved over the years.
You can also get help from a real estate advisor. Because expert knowledge is necessary to be able to make a good choice when buying the property.
If the investor puts his money in a normal savings account, he can hardly get any compensation for the depreciation of inflation. With a higher interest rate, the risk increases at the same time.
Many fortunes after the war are through Real estate ownership originated. For example, anyone who bought a house or a condominium in a big city like Augsburg or Munich in the 1960s has multiplied their wealth to this day.
The demand for living space in metropolitan areas will therefore increase continuously.
Owning real estate is an excellent opportunity to create assets cheaply and, moreover, to increase it without the risk of inflation or, in particular, with the help of inflation. In addition, the inhabited square meters per capita and apartment are increasing continuously. The number of single households is also growing.
With a real estate investment, the investor gets both: A high interest rate from rental income and a low risk.
3. Real estate increases in value
Real estate ownership is one of the main pillars of tax-free asset accumulation in Germany.
Not only the classic home, but also rented properties such as residential real estate, apartment buildings and condominiums are therefore an excellent capital investment.
Only real estate in this network offers a high level of security, protection against inflation, tax advantages, returns and a source of income in old age.
Those who invest wisely here will not only get a good one Return from the rental income, but can also have a Increase in value looking forward.
The real estate market in recent years has shown that houses and land are increasing in value.
How much the increase in value of your property is actually in your own hands. There are districts that will grow strongly in the future. Investing in these regions in Germany is particularly worthwhile.
Development in the value of residential property up to 2025
Real estate prices in Germany rose sharply last year. A year ago the IMX real estate index for new build properties was 110.4 for new condominiums, it is currently 115.7 for November. The prices for existing properties rose less sharply from 100.9 to 101.9.
Then there is the Real estate intrinsic value. Real estate is a classic investment that survives all crises and bad times. Land was and is always valuable. For years there has been talk of the highest prices in the real estate trade. At the same time, these maximum prices continue to rise steadily.
Compared to large cities in other countries, property prices are still cheap across Germany. The property survives crises and inflation. This guarantees their intrinsic value.
In the end it is Real estate is the only capital investment with a steady and constant increase in returns. No other investment can claim that.
I have already shown in detail in my own article what you should look out for when choosing an investment property.
4. Tax benefits
The state directs investments in its favor through fixed tax concessions that are precisely defined in the Income Tax Act.
This creates extremely interesting opportunities for you as a real estate investor to allow the state to participate in your wealth accumulation.
This is going to be really interesting Save taxes with real estatewhen it comes to investment properties. In this area there are numerous possibilities with which you as an investor, Deduct real estate for tax purposes can.
This is possible both when buying a plot of land, when building on your own or with a developer and when buying a new building or a used property.
In the case of a rented property, numerous expenses come into consideration as deductible costs. First and foremost, of course, the purchase price and construction costs, but also compensation payments for parts of the facility, necessary repairs in an old building and the preparation of the garden. This also includes ancillary costs for the purchase and even food for the craftsmen at the topping-out ceremony.
The advertising expenses are particularly interesting. In certain cases, the tax office also accepts debt interest under this heading for the financing of the acquisition.
If you want to deduct the purchase of real estate for tax purposes in this way, you should make sure that real estate financiers and tax advisors coordinate with each other.
The state demands 25% flat tax on interest. These taxes do not apply to real estate.
You just have to tax the rental income received like normal income. There are no other taxes.
Should you sell the property, the profit will remain tax-free if it has been rented out and has been in your possession for at least ten years. If you should instead use the property yourself and sell it at a profit after two years, then you will need it too no taxes to pay.
5. Retirement benefits
Retirement provision with real estate
If you start investing in real estate at a young age, you are debt-free in old age and have a property for which you do not have to pay rent. This takes a lot of pressure off your account, because in old age there is often a gap in supply that you can bridge with a real estate investment.
Frequent reallocation of investments leads to a reduced return. This is due to the transaction costs on the one hand, and the difficulty in finding the right time to enter and exit a market on the other. That is why there is a saying on the stock exchange: “Back and forth, empty your pockets”.
An investment in real estate should therefore always be medium or long term to be viewed as. The financing should also be coordinated with your goals and time horizons.
The statutory pension system is no longer sufficient to maintain the standard of living in old age. Anyone who operates private provision here is well advised. Owning real estate brings continuous rental income and thus secures income beyond professional life.
In this way you have made provisions for later and a safe one Retirement provision through real estate met.
6. Independence from monetary policy
The ECB and its monetary policy
If you've ever invested in stocks, you know how disastrous even small decisions can be for the price of stocks. If a decision maker just expresses an idea, prices are already reacting and you can lose half of your wealth in a matter of seconds.
The loose monetary policy of the European Central Bank is still particularly favorable for buyers of houses and apartments. Interest rates are lower than ever before and thanks to the ailing southern European countries, the central bank once again had little scope to raise interest rates in 2015.
The people who finance their houses and apartments with bank loans therefore save thousands of euros. To service a EUR 200,000 loan, for example, the borrowers would have to shell out EUR 2,000 less per year with every falling percentage point of the building interest.
A real estate investment is therefore perfect independent of decision makers in politics or in business.
7. Real assets can be inherited
Inheriting real estate tax-free
Passing property assets on to the children being able to do so is a worthwhile goal. Through the Increase in the gift allowances Here too, the state has done its part to ensure that real estate can be maintained by the heirs and thus the advantages described are maintained.
The property is connected to you after your death and reminds you of you, while a large amount of money is impersonal and after a while no one thinks that the money came from you.
8. With real estate, greater financial leeway
Real estate increases your creditworthiness
If you already have a fully or partially paid property, you can secure significantly better terms from the bank when financing a new property investment or home. Here, the financial institutions offer you numerous possibilities and options when designing your loan.
A customer who has been continuously servicing one financing for years is at the bank for another Investment or financing a welcome contact. What's more ... you very often get cheaper interest rates.
If you have financial difficulties, the bank can access the property and use it to pay off the debts.
9. Independence from a landlord
Trouble with the landlord
There are many points where opinions differ. The heating is switched on too late or the lawn is not mowed in time.
These problems do not exist in your own four walls and the homeowner can start the day relaxed, because he knows that in his own home no one can dictate to him.
However, it does matter whether you buy or build your own home or whether you acquire a property with the aim of investing. Because with residential real estate, you are the landlord and may have trouble with the tenants.
Nevertheless it is your own property is always an advantage, since you have the power to make decisions here.
10. You pay for your own apartment
Finance your own material assets
With a real estate investment, you have the good feeling that the money is flowing into your own four walls and that you are creating lasting value with the monthly installment.
With low interest rates and moderate real estate prices, the purchase serves to hedge and build wealth.
A property can also be a sensible investment for owner-occupiers: One that even brings considerable additional benefit compared to other forms of investment. Because unlike gold, federal treasury bills or shares, which are purely a store of value or speculative objects, apartments offer the benefit that you can live in your capital investment and save yourself the rent.
Otherwise you only pay your landlord and you have no gain in material assets.
As you can see, there are some unbeatable advantages for you as a real estate investor when you invest your capital in residential real estate or condominiums. For people who want good and stable interest rates, there is no way to get one Real estate investment past.
Why you should invest in real estate
Investing in real estate is a wise decision. There are many good reasons why you should invest in real estate. The most important points are summarized below:
- Real estate protects your money from inflation
- You receive regular income (rent)
- the demand for living space will continue to rise
- Real estate increases in value over time
- Rental income continues to rise as a result
- there are considerable tax advantages
- a property is a secure retirement provision
- a tangible asset such as real estate can be inherited
- a property increases your financial flexibility
- instead of renting, you pay off your property
Can you think of another reason why you should invest in real estate? If so, feel free to leave a comment.
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