Real estate has always been regarded as a stable investment that retains its value. Especially in times of economic uncertainty and low interest rates, many investors are looking for safe alternatives to traditional financial products. However, as with any form of investment, there are also opportunities and risks with real estate investments. In this article, you will find out what is important, how returns are calculated and how to find the right property.

1. advantages of real estate investments

- Long-term value stability: real estate is considered an inflation-proof form of investment
- Regular income: Letting generates regular rental income
- Tax advantages: Depreciation, debt interest and value-preserving investments can be claimed for tax purposes
- Low volatility: Compared to shares, real estate is generally less susceptible to fluctuations
- Tangible value: Real estate offers a real equivalent value - this provides security

2 Possible risks and disadvantages

- High capital requirement: The acquisition of a property requires considerable equity
- Liquidity commitment: Real estate is more difficult to sell than shares or funds, for example
- Administrative expenses: letting, maintenance and vacancies require time and organization
- Location dependency: the development of the value depends heavily on the regional market
- Market and interest rate risks: Changes in interest rates or demand can affect profitability

3. calculation of returns on real estate

The yield is a key factor in the attractiveness of a real estate investment. A distinction is made between gross and net yield:

- Gross yield = (annual rental income / purchase price) × 100
- Net yield = ((annual rental income - operating costs) / purchase price incl. ancillary costs) × 100

While the gross yield provides a quick overview, the net yield shows the actual ratio of income to equity and is therefore more meaningful.

4. selection of suitable objects

Not every property is automatically suitable as an investment. Pay particular attention to the following criteria:

- Location: micro-location and macro-location influence demand, rental potential and resale value
- Condition and building fabric: the need for renovation can reduce returns, but offers development potential
- Tenancy: existing tenancy agreements offer security - vacancy is a risk
- Yield potential: are the purchase price, rental income and running costs in a sensible relationship?
- Development prospects: what are the long-term plans in the region (e.g. infrastructure, demographics)?

5. conclusion

Real estate as a capital investment can be a stable and high-yield addition to a portfolio - provided that the property is selected carefully and on a sound basis. A clear calculation of returns, realistic assessments of costs and risks and a clear strategy are essential. If you think long-term and pay attention to quality, you can benefit sustainably from the substance and income streams of a property.

We will be happy to advise you personally on the selection and evaluation of suitable investment properties.

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