Return on property purchase more important than tax benefits. When buying property as an investment, the main thing should be an attractive return. Tax benefits, which result from the financing of the purchase or other necessary work, are of course a pleasant side effect, which also has an indirect effect on the return, however. Tax advantages should not be decisive for the purchase. You can visit https://cristalcellar.com/ now for the perfect property choices now.
Correctly calculate costs when buying property
Unfortunately, when buying a single property, investors all too often forget about the incidental acquisition costs, such as real estate transfer tax, notary fees or a possible brokerage commission. Real estate funds also incur costs, such as management fees or fees for the fund manager. All of these costs should be included in the calculation of the return because this is the only way to get a realistic picture of the system.
Be careful when buying property abroad
Foreign real estate can be a useful addition to an open-ended real estate fund, but a closed-end fund that invests in foreign properties or buying real estate abroad is only recommended for people with extensive specialist knowledge. It is practically impossible for laypersons to realistically assess the profitability of a foreign property. In addition to the normal risks, there is often also a currency risk, so that such an investment can be classified as very risky.
Use equity when buying property
When buying a single property, you should definitely finance a large part of the purchase price via equity, because this will give you more favorable conditions for the remaining financing. In the case of funds, you should generally refrain from loan financing, because the returns are rarely so high that the investment minus the loan interest would still be worthwhile.
Good administration is important
Managing the property is very important whether you choose an open or closed fund or a property within a community of owners. The house or fund management takes care of the entire administration of the property, from checking the property itself to calculating the additional costs and commissioning craftsmen to carry out repairs. In the case of funds, the manager even takes care of the rental of the property, so it is fundamentally important to have an experienced property manager.
A thorough examination of the documents before buying property
If you want to invest in an existing property, for example by buying a condominium in an apartment building, then take a close look at the existing documents before buying. The minutes of the owners’ meetings, in particular, can be very informative here, as you can observe the development of costs. You can also find out whether major investments for renovation or maintenance work are planned.
Don’t just look at the object itself
Even if an object looks very convincing, you should also take a look at the location, because this has a significant influence on the development of the rental price. The rent index, which is issued by many cities and municipalities, can be a good guide here. If possible, you should also personally get an idea of the location of the property.