ᐅ Is real estate rental profitable?

Steffi33 schrieb:

I was actually thinking of something very simple and everyday: I own a house... a young family is looking for housing. In the end, there’s some money left over... I admit, I probably won’t warm up to this either in the future.. 😉

The topic of renting out property is very complex. It can’t be summarized quickly.
Your personal situation also has a major impact on the return calculation, such as your own income tax rate.
Or you may be thinking on a scale where properties are directly purchased within an asset management company, for example.

Fundamentally, it is a form of investment that also involves quite a bit of work, especially if you handle utility billing yourself, take care of contractors personally, and don’t have a property management company for your multi-family houses, and so on.

Much of the return depends on good purchasing decisions. You should be able to properly assess the building condition, among other factors.

And then there is the unpredictable risk of property value development... so the topic is endless 😀

Schimi1791 schrieb:

He had already said goodbye. I believe the corresponding post was also deleted.

Although this is completely off-topic, the post can still be found via the Google cache --> "Farewell @n... after second account deletion"

Really a pity.

A quick note on the subject: Of course, "real estate rental is profitable." However, you need to be familiar with the specific markets, especially beyond residential rental properties. Logistics real estate has been one of the winners in recent years, while retail properties are currently and likely to remain challenging, as are hotels (obviously). Such an investment is usually made professionally or with professional support.

I believe that unless it is your own granny flat or a triple-family house in your local area, the entry barrier in the stock market is significantly lower and, of course, diversification risk is much smaller.

11ant schrieb:

By the way, where is @nordanney? He is the most knowledgeable on this topic here, right?

I'm back. Although under a fourth alias (please don’t tell 😉) and still using a VPN. Everything else got blocked 😎

Steffi33 schrieb:

In another post, I just read that people often invest leftover money in real estate properties to generate returns through renting. I am a complete beginner in this area. So far, we have mainly earned returns through investments in the stock market. I have often wondered how renting out property actually works. Do you earn returns primarily through rental income? Or is it more about saving taxes? Does it really pay off in the end? Maybe someone here can explain?

Well, you can make money with real estate in two ways.

1. Liquidity first
==> These are properties (preferably condominiums; single-family homes are usually terrible in terms of returns), where the return is basically calculated by the surplus of rental income after costs (loan payments, property management, and individual taxes). For example, you might get a 10% return if you buy in the Ruhr area.
2. Security and capital preservation/appreciation
==> Land. Similarly to 1., rental yield after taxes is more like 2-3% (if at all). But here you have the potential that the property will increase in value over time, especially in good locations.

First, you need to decide which risk profile suits you. Like with investments—fixed income versus speculative assets. Then you have to consider what kind of investment you are talking about. Can you afford to sometimes have no income or even put money into the property (vacancy, renovations, repairs, problem tenants, etc.)?

“Saving taxes” is always a popular phrase. Of course, you can "save taxes," but only if the property generates a negative cash flow for tax purposes. Unfortunately, that usually means you feel the financial impact in your wallet even before any tax benefits.

Overall, it’s not a simple topic. Personally, I tend to focus more on option 1.

.. great to have you back with us ... in this annoyingly managed forum