1. Choosing objects and funding

First you will need to develop a strategy. For this you have to decide on which kind of real estate you want to acquire. This decision can also be influenced by your equity – a single apartment can be less expensive, and therefore be attractive concerning price, but it offers a lower potential for income returns. Furthermore, a plan for the property should be decided on – simply retaining for your own portfolio, renovation and renting it out afterwards or reviewing rent are examples.

At the same time, you should think about how to fund the property. You could for example use borrowed capital to invest more than your own equity allows. With inflation rising you can even profit by doing so: Your loan loses value thanks to inflation decreasing the value of your debt as well. Furthermore, you will profit from fixed interest rates on your loan while interest rates develop upwards.

2. Your property

The first thing to consider is location. The property should be somewhere with a good infrastructure and an attractive inner city. This could be in a big city like Cologne or in surrounding towns oftentimes used by commuters. It is important to regard these things to avoid your property staying vacant.

Moreover, building substance is vital. It is best to personally check the property for this. Estimating maintenance costs is also important as the properties age is not always the sole crucial point in this. This is important for estimating the maintenance cost as age is not always the only crucial point for it.

3. Tenants

To even get any income returns with your property the most important part is obviously the rent. If there already are tenants living in the object you should check the rental agreements – e.g. does an effective beauty repair clause exist? Ascertain the value of security deposits and if the tenants keep to a regular payment schedule to assure your rental income. If the object is vacant inform yourself on local rental terms.  Not every application you will get is going to be reliable as experience shows paying rent long term is not possible for everyone. Examine your applicants thoroughly.

4. Expense budgeting

When buying an income property, you need to consider multiple expense factors – e.g. real estate transfer tax, broker fees and notary as well as land registry costs. In addition, there are possible funding, renovation and running repair costs. You get rental income at least high enough to cover expenses and at best higher in return. Your difference is your profit.