An investment that pays off
Rental income is a hugely important factor in the financial returns from an investment property, and influence how profitable the investment is likely to be. Most apartments offered for sale are vacant, as, from a seller’s point of view, there is no distinction between purchase as an investment or for one’s own use.
However, at EverEstate many of our apartments are sold with a tenant already in place. This is more efficient in terms of rental income, and means that the details of the apartment and the existing rental contract are direct and up-to-date, enabling you to make a more reliable estimation of the future financial performance. It makes for an ideal pure investment property, but also raises other considerations.
Germany has relatively precise rules about tenants’ rights. Any tenancy agreement which is already in place will be automatically passed on to the new owner, so it is vitally important to make sure you understand the terms of the agreement. This will already set out the rental income, the duration of the lease, and certain other details.
Under German law, it is not possible for the landlord to immediately remove the tenant after purchase, and move in. In fact, in the case of most of the apartments in our portfolio, a landlord can only serve tenants notice that the owner will be moving into the apartment 10 years after the purchase.
Despite these considerations, buying a rented apartment has its advantages. Even though you may not be able to move into the apartment personally for 10 years, this comes with some tax advantages. A property is not liable for Capital Gains Tax if it has been held for 10 years or more.
Additionally, the entry price for this type of property is typically lower in comparison to vacant apartments. At Everestate, we also offer these rented apartments free of commission, making it a much more attractive investment prospect.