It is almost frightening how the individual real estate markets in Germany have developed over the last few years. While prices are stagnating or even falling, especially in rural areas, they have increased significantly in many cities. Cities like Frankfurt am Main and Munich have been making headlines for years, home ownership is becoming more and more expensive.
This development is not ignoring private investors
This development is not ignoring private investors. Real estate investments have always been very popular in Germany. No wonder many people are looking for objects to put their savings into. However, it is noticeable in this context that more and more speculation is being made about rapid increases in value. This means that real estate is bought in regions from which the buyers hope to achieve considerable growth in value in order to be able to sell with full profits in a few years.
It should not be all about value
However, such an approach is risky. It is questionable whether the real estate boom will continue in this form. Every market has a price limit – if it is exceeded, prospects lose interest in buying and looking at other markets. Ultimately, real estate investments that focus on direct value growth are nothing but speculation and thus not suitable for every private investor.
A significant safer approach is to make investment decisions on real estate based on rental yield. The principle of this approach is simple. It is determined in relation to the achievable rent stands for the purchase price. The higher the revenue in relation to the purchase price, the better the return.
Highest rental yields are achieved
Who now suspects that the highest rental yields are achieved in the aforementioned metropolitan cities, is completely wrong. For example, the city of Munich is known for its extremely high rents, but in return, the landlords have to take the object very deep into the bag. In many other cities, significantly better returns can be achieved.