How to invest money in real estate

Overview of worthwhile investment properties

1. Living in your own property

Owning your own property pays off! Because it is a good building block for retirement planning. Would you like to know how much money you pay to your landlord over the years? Find out with our rent calculator! If you were to use this money to pay off your own property every month, you would have lower housing costs in old age - especially if the property is debt-free by then. This is worthwhile, because housing costs usually make up the largest share of fixed costs.

The statistics prove it: The housing costs of owners are significantly lower in old age than those of tenants - whereby the statistics are linked to the net household income in each case.

2. Renting out a property

Regular rental income boosts the bank account. Provided that the income from the rent is higher than the expenses of renting. Whether or not this works depends primarily on the condition of the property and its location. How high are your maintenance costs? Is the area in demand with tenants? How are rents and utility costs trending locally? Is there a legal rent cap in the community? Important aspects that you should clarify before you rent out a property.

Tip: Is renting out your property a worthwhile investment? Find out with our rental yield calculators.

3. Buy real estate funds

Real estate funds finance real estate projects with the money of several investors together. These are, for example, retirement homes, shopping centers or hotels, but also residential properties. Companies or private individuals can rent these properties. The rental income and the increase in value when the property is sold form the investors' return. In open-end real estate funds, investors can buy units and sell them after two years at the earliest. They must give at least one year's notice before selling. In most cases, open-end real estate funds invest in several properties. This spreads the risk of rent defaults.

Closed-end real estate funds usually invest in only one real estate project. When there is enough capital for financing, investors can no longer buy shares. Selling shares is more complicated than with open-end real estate funds.

Tip: Contact us. We will be happy to advise you on how to invest money in real estate funds.

4. Crowdinvesting for real estate - beware of risk!

Crowdinvesting is another way to invest money in real estate. Companies present their real estate projects on crowdinvesting platforms on the Internet. Investors can often invest small amounts here. The companies use the money to implement the projects. The providers advertise attractive returns and not infrequently also a profit share. That sounds tempting. However, the investor usually only bears a small part of the overall project. If the project goes wrong, the big lenders usually get their money back first, i.e. the banks and project developers involved. This is because a land charge is often registered for them in the land register of the property. The crowd investors are treated as subordinate. In the worst case, they can lose all the money they have invested. Caution is therefore advisable with this type of investment.