ᐅ Rental House – Prefabricated House or Traditional Brick Construction

11ant schrieb:

Prefab house suppliers mostly build in the current fashionable styles ....

11ant schrieb:

Especially those suppliers with large market shares want to maintain these and have been trendsetters when it comes to custom planning.
....

11ant schrieb:

By the way, this also exists with prefab house manufacturers.

I’m curious to know when you will finally let the cat out of the bag?

11ant schrieb:
How nice that you come straight from Smartyville.

That’s just the right person to say that ...

First, contact a tax advisor and get the reality check about 100% equity financing. It’s a return killer.

Nordlys schrieb:
First question: What type of property rents well in this area? Is there a university nearby? Is it rural or urban? Rule of thumb: the smaller the size, the higher the price per square meter.

Who do I want to rent to? A three-room apartment works for both a young family with one child and older tenants. A 45cm (18 inches) apartment is more suitable for singles. Four rooms is the right size for fairly large families. It’s best to clarify these questions during a consultation at the landlords’ association. That’s basically the landlord club. You’ll want to join anyway, at least for the legal advice they offer.

The trick to achieving at least a 5% return before taxes is to build attractively but cost-effectively (for example, a new apartment doesn’t need a guest toilet). This must be discussed in detail with the contractor. That’s why the apartments typically look quite similar. That’s just how it’s done; otherwise, the numbers don’t add up. My two cents.

In general, I agree with you that smaller apartments can command a higher price per square meter, but as you also mentioned, it depends heavily on the type of tenants you are targeting. However, I don’t quite understand why four rooms are considered suitable for large families. Four rooms are enough for a maximum of two children, which is certainly above average but far from a large family…

Alex85 schrieb:
First, contact a tax advisor and have them explain why 100% equity financing is a deal-breaker for returns.

I wanted to add that as well. It doesn’t make sense to finance a property entirely with equity. Generally, we recommend using between 20% and 40% equity.

You need to distinguish between total return and return on equity. Return on equity essentially shows how much “interest” (return) you earn on YOUR own money.

Example:
You invest 500,000 and receive 2,500 per month in rent, which is 30,000 per year. If you finance everything with equity, your return is 6%.

If you finance 300,000 and only invest 200,000 equity, the calculation looks roughly like this:
With 60% loan-to-value and an assumed interest rate of 2% on the loan over a 30-year term, you pay about 1,100 per month to the bank, leaving you 1,400 for yourself.
This means for your invested 200,000, you receive 1,400, resulting in a return on equity of 7%.

Additionally, when you finance the entire amount with equity, you have to pay taxes on the full rental income, whereas in the second case, you can deduct the interest costs of the loan from your taxes.

Of course, you need to calculate all this precisely for your situation with your tax advisor, but as a general thought, it might make more sense to buy two properties and partially finance each one.

Peanuts74 schrieb:
Just a thought whether it might make more sense to buy two properties and partially finance each.

Well, then everything is clear: build your own two-family house with the home builder (first 40% equity), buy two additional residential units completed by them (second 40% equity), and invest the remaining 20% equity with staggered maturities so you can cover maintenance and repairs without increasing the financing.

After talking to the tax advisor, the floor plan and building material questions will seem less important ;-)

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Unfortunately, it’s not always that simple; you always have to consider each case individually...