In times of volatile financial markets and ongoing inflation concerns , more and more investors are looking for stable investment opportunities. Multi-family homes have established themselves as a particularly stable and high-yield capital investment. But what should you look out for when buying a multi-family home? What factors influence the return on investment? And what tax aspects need to be taken into account? Our comprehensive guide provides valuable insights and practical tips for your investment in apartment buildings.
Why choose apartment buildings as an investment?
Before we get into the details, it is worth taking a look at the fundamental advantages of apartment buildings as an investment:
1. Stable cash flows and attractive returns
Multi-family homes offer continuous rental income through the letting of several residential units:
- Risk diversification: If one apartment is vacant, rent from the other units continues to flow in
- Current returns: Between 3.8% and 5.5% (gross rental yield)in our region
- Inflation protection: Rent adjustments can offset the effects of inflation
- Long-term appreciation: Historically, real estate values in good locations have risen over long periods of time
Multi-family homes offer an attractive combination of ongoing income and potential for value appreciation. Especially in our region with its stable economic development, we see constant demand for housing, which is advantageous for portfolio holders.
2. Tax advantages
Real estate investments offer numerous tax planning opportunities:
- Depreciation: 2% annual straight-line depreciation on the building portion
- Increased depreciation: For listed buildings or in redevelopment areas
- Immediate deduction: Maintenance costs and financing costs directly reduce the tax burden
- Tax-free sale: After a holding period of 10 years, the capital gain is tax-free
3. Building equity through leverage
The so-called "leverage effect" can significantly increase the return on equity:
- Debt financing: Use of low-interest loans to leverage equity
- Repayment by tenants: The tenants effectively repay your loan
- Asset accumulation: Continuous equity growth through repayment and appreciation
Location analysis: The key to success
The most important factor for the long-term success of a real estate investment is and remains the location. There are significant differences in our region between the Rhine district of Neuss, Wuppertal, the south of Essen, and Langenfeld:
Velbert:
Velbert-Langenberg: Historic district with increasing popularity, moderate purchase prices and stable rental potential
Velbert-Mitte: On the rise thanks to urban renewal, affordable entry prices with development potential
Velbert-Neviges: Quiet residential area with stable demand, especially among families
Ratingen:
Ratingen-Mitte and Ost: Established locations with high demand and corresponding purchase prices, secure but moderate returns
Ratingen-West: Transformation area with potential for above-average returns at higher risk
Ratingen-Hösel: Upscale residential area with stable value development but generally lower rental yields
Mettmann:
Mettmann-Zentrum: Solid infrastructure and good transport links, balanced relationship between purchase price and rent levels
Mettmann-Metzkausen: Popular residential area with stable demand and moderate entry prices
Mettmann-Obschwarzbach: Rural location with limited rental housing market, more for enthusiasts
"The micro-location within cities can be more decisive than the city itself," emphasizes Tim Kartheuser. "An apartment building in an up-and-coming location in Velbert can be a better investment than an overvalued property in a prime location in Ratingen."
Property analysis: These factors are crucial
In addition to location, the characteristics of the property itself are crucial to the success of the investment:
1. Building fabric and technical condition
A thorough inspection of the building fabric is essential:
- Year of construction and construction method: Different construction periods have typical strengths and weaknesses
- Renovation status: Evaluate renovations that havealready been carried out and those that are still pending
- Energy efficiency: Checkthe energy performance certificate , assess the heating system and insulation standard
- Building services: Checkthe condition of the electrical, plumbing, heating, and, if applicable, elevator systems
2. Apartment sizes and layouts
The structure of the residential units has a significant influence on rentability:
- Optimal apartment sizes: 2-3 room apartments (50-80 m²) are the most versatile in terms of rentability
- Functional floor plans: Efficient room layout without "lost" space
- Balconies/terraces: Outdoor areas significantly increase attractiveness
- Accessibility: Anincreasingly important factor in view of demographic change
3. Rental structure and tenant potential
The existing rental situation is a decisive factor:
- Current rental agreements: terms, rent levels compared to the rent index, graduated or index-linked rent agreements
- Tenant structure: age structure , turnover, payment behavior
- Rent increase potential: comparison with local comparative rents, modernization potential
- Vacancy risk: Analyze current vacancies and their causes
A fully let property with long-term, reliable tenants can be more valuable than a property with higher but uncertain rents.
Kartheuser Immobilien: Your partner for the secure sale and purchase of apartment buildings in Mettmann, Ratingen, and Velbert
Multi-family homes as a solid investment
In the current market phase, apartment buildings offer an attractive combination of ongoing income, protection against inflation, and long-term potential for value appreciation. Especially in our region, with its stable economic development and continuous demand for housing, well-selected properties can form a solid basis for wealth accumulation.
The key to success lies in careful location and property analysis, realistic return calculations, and financing and tax planning tailored to the individual situation.
. With the right strategy and professional support, both newcomers and experienced investors can be successful in this segment.
Our team at Kartheuser Immobilien and our partners are at your side with many years of experience and in-depth market knowledge – from the initial consultation and property search to long-term support for your real estate investment.
