Why investing in properties?



The generous possibilities of depraciation, for example the listed properties, head to considerable advertising costs, which reduces your taxable income drastically. Big parts of your investment can be ensure by tax repayments. Workers can register an allowance in their income tax card, freelancers can cut their tax prepayment - you profit since the year of complementation directly at the end of month and you must not wait till the year end. Thus refurbishment and listed properties are the last bastion about to save the current taxes to convert it in your own assets. By a selling after ten years even complete taxless !


The rents fits on the behaviour of inflation. The inflation reduces the repayment of credits by a financing with external funds. You absorb credits by cheap conditions (reconstruction loan corporation and commercial bank loans), purchase inflation-protected material assets and repay your credits with many time. The instalments stay constant, but the buying power of the instalments falls during the rents rises continual. So, you repay the "good" money with "bad" money!



If you have located EUR 100.000 under your pillow before 30 years, the buying power had be EUR 40.016 today. So you had lost 60% of your buying power. If you had invest the same amount in a solid property, so you had a value of EUR 333.480. The underlying appreciation value is calculated with 1% about the historical inflation rate of 3,1%.



As a investor you are glad about rising rents and as a owner-occupier of a property you do not have to be annoyed of rent increases. "According to the Federal Statistics Office, tenants' households spent on average 24% of their net income for rent in Germany in April 1998. In 1993, it was just 19%." (utilities for the heater is disregarded now). The trend will reinforce the coming years, because the discontinuation of first-home buyer allowance and the low new-construction activity manages valuable housings far less than requested. Bad locations and too small flats were less often searched - in consequence the prices of cheap apartments and small flats are falling further. Against this , attractive flats are often hired out before completion.



In our opinion the slogan is not effective enough. If a location is good or bad is dependent of the setting, because the locations rises and are not fixed by beginning. So before 30 years, the satellite towns with their prefabricated buildings were in great demand, the ruinous streets by art nouveau were not too esteemed. The rethinking of town planning had result, that historic districts and redevelopment areas count to demanded, expensive and attractive living quarters. Exists jobs? How is the infrastructure? Is the area livable? Exists a cultural offer? Short: would people like to move there? But also yields and financial feasibility are important reasons. A solid property in Wiesbaden or Mainz can exhibit more perspectives and appreciation opportunities, than a expensive buying in München or Frankfurt. 



By many studies, property owners command about higher average income in age. The properties work well for collateralisation of credits. The increasing rent fits to the inflation. So, the finance requirements in age can be effected by means of selling. Therefore results the saying: "You do not sell properties - you inherit it." The pension is uncertain in its height and after death away. Rented out properties, also in solid listed houses, exists since more than 150 years and they will exist also in 100 years.



Properties are an important part at asset allocation. Admittedly good stocks provide a high appreciation value chance, therefor are stock prices very dependent on economic trends - since 2009 are yields taxable and a tax funding of stock purchase do not exist. Only the combination of different investments like stocks or equity funds, properties, Venture Capital or shares in a company gives a solid base. Properties suit very good as a basement. They provide constant yields of the rent and high tax repayments (for example at listed properties). The tax reapayments can be invest in different asset classes. So occurs a reasonable Asset-Location by based investment in a listed property, which were not possible without the tax repayments - consequently property ownership is a lucrative possibility to made asset cheap, to distribute it and to increase the inflation risk.



Big assets are originated in property ownership after the war. Who had purchased a house or a flat in 1955, had multiplied his asset by ten (x10) today. The development of housing need speaks for a property. So the housing area need increases, although the population is falling. This is down to the number of singles and separated menages and basically to the continual increasing claims on living area. 40 years ago was it usual to have an childroom for 3 or more children, and a single was content with a living area of 25 square meters. Today should every children have an own room and 80% of the singles live on more than 80 square meters. Furthermore comes the wish of qualitative and valuable living in attractive location - the own flat becomes more and more a wellness and comfort zone and is no longer just the room for sleeping and eating.



For some people is an investion in properties neither as a contributor of capital nor as a owner-occupier inadvisable. This can be the case for example when the income is too less and in this way are teax repayments not expected - or a longer migration from germany is duing. Then also the anxious person exists, who never wants to raise a credit - we have sympathy for it, because sleeping with a good decision is more important than tax refunds of EUR 30.000. We advise you  with an open solution approach and we will suggest you to other alternatives, if we think they were better.