The decision to buy your first real estate is usually a big step that is also characterized by insecurity. Interested parties should therefore be sure to seek advice from experienced experts in the search for real estate and financing. There are many good reasons for investing in your own home. Here we show you the advantages of owning your own four walls. We have summarized five decisive advantages of real estate for you in our blog.
A key advantage of real estate over other forms of investment, such as stocks, is its long-term stability of value. There is hardly any other asset that impresses so much with stable returns and low risk at the same time. Largely independent of economic fluctuations and crises, investing in home ownership is very safe compared to other tangible assets thanks to the material intrinsic value of real estate. Stock prices, for example, are very dependent on economic conditions - in the event of sudden shocks, such as the corona pandemic, prices plummet. No wonder real estate is considered one of the oldest forms of investment in the world - demand for housing always exists and thus ensures that the value of real estate remains stable throughout time. Particularly in German metropolitan areas such as Berlin, both land and buildings remain scarce commodities with potential to increase in value for the long term.
Inflation has returned to Germany with full force, not least due to the massive price increases for energy as a result of the war in Ukraine. The German Federal Agency for Civic Education (Bundeszentrale für politische Bildung) defines inflation as the ongoing process of monetary devaluation, which is manifested by general price increases. Monetary assets, in cash or in an account, thus lose their value. Real estate, on the other hand, as a tangible asset, offers some protection against inflation due to its material utility - its long-term value remains, regardless of general price increases, economic fluctuations or other crises. Particularly against the backdrop of limited space, materials and skilled labor, residential real estate is today and will continue to be more scarce and highly sought-after commodities than ever before. Whether owner-occupied and thus independent of rent increases or as a rented capital investment that guarantees secure rental income, investing in real estate protects your financial assets.
Against the background of the first two advantages, advantage number three is a logical consequence. Due to the low risk, the long-term stability of value and the protection against inflation, a property is excellently suited as a retirement provision. If you rent out your property, you can be sure of a stable passive income upon retirement. But you can also use your property for your own purposes and save on high rent payments. Thus, ownership of an apartment or house contributes to financial freedom in old age and ensures that you can enjoy your well-deserved retirement to the fullest.
An owner-occupied home not only offers the stability of value already described, but also has great potential to increase in value. Particularly in metropolitan areas, an enormous rise in value has been observed in recent years. When reselling a residential property, for example in old age, high profits can thus be achieved. Of course, the value development of real estate is not linear and depends on many factors, such as the location and condition of a property as well as the general market situation. In the long term, however, the chance of making a profit is great - especially if you conscientiously care for and maintain your own four walls and buy in a promising location. There is little to suggest that the demand for housing will decline - so the overall outlook for homeowners is promising.
If you do not wish to live in your own apartment, and instead purchase it purely as an investment, you have the opportunity to build up a long-term and regular passive income. By renting out an apartment, you can generate a stable yield - ideally, you can even use it to pay off your monthly loan repayments. At the same time, you continue to benefit from the stable value and appreciation potential of your property, with the option of owner-occupancy still present in the future.