The rush on rented condominiums as an investment is fairly large. Because the interest on demand loan and fixed-term deposits are very low for quite some time and also the yields on corporate bonds have fallen significantly. Therefore, investors are increasingly focusing on residential property in order to benefit from rental income and capital gains. Eventually, you can achieve good to excellent yields with such property investment in the right areas and locations. Rented condominiums are therefore an attractive alternative to other forms of investment. However, as with all investments shall: You should know exactly what you want.
Proper property for personal investment strategy
The current home ownership report of Accentro shows that in 2012 in the 82 largest German cities about 130.000 condominiums changed their ownership. The new owners often expect a rental growth and high returns - and this may could be disappointing, at least the second point. Since real estate is very popular at the moment, purchase prices are rising. According to the German Pfandbrief Banks condominium purchase prices were about six percent higher in the second quarter of 2013 than in the same period of last year. In even more populated areas the price increase was even higher. Since the rental incomes in many areas have not increased to the same extent, the average rental yields have decreased though. For investors, where the focus is on the long-term value and appreciation value, this is not a problem.
The area and location is essential
Existing homes that are generally kept and are located in medium and good areas are relatively safe investments. In the areas of medium and large cities the demand for residential property will continue to rise in the upcoming years, so those condominiums can be permanently rented well – and therefore the future rental income will be good. Besides a lot of green, for example, good transportation connections and an all-round range of infrastructure facilities such as schools, doctors or stores have an advantageous effect on the rental opportunities. It is also important that the building fabrics of house and apartment are in order. If you want to buy a condominium and rent it, you should always ask yourself: What apartments are in demand and where is potentially the largest group of tenants? Exactly in those areas and locations you should invest.