Real estate purchase

Five Good Reasons to Invest in a Property

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20.

January 2022

There are five good reasons to explain why this is a great time to invest in real estate. Principally speaking, a residential property investment is never a bad idea. But considering an investment in residential property is particularly sensible now because lending rates have stabilised on a relatively low level. Prospective buyers who continue to hesitate are well advised to consult an expert when looking for a suitable property and funding options. For starters, though, let us detail the aforementioned five reasons that always speak in favour of a residential property investment. After all, when taking the long-term perspective, buying real property remains one of the safest investment types.

Investing your wealth long-term in assets of lasting value

So, you want to invest your money safely? There is, of course, the frequently chosen option to buy stocks or bonds in the form of fixed-interest securities. But while stocks are subject to certain share price fluctuations and therefore riskier, and since even fixed income is very much exposed to risk, real estate investments come with many advantages. A residential property investment means to invest in tangible assets that are an excellent way to build up private wealth and to put your capital formation on a solid foundation. Real estate is an investment choice of lasting value because the underlying asset is not subject to fluctuations in value.

Inflation Protection

In national economics, the term inflation comes into play whenever a persistent process of monetary devaluation manifests itself in general price increases – according to a short definition by Germany’s Federal Centre for Political Education. It is perfectly natural for people to be concerned about inflation-safe assets and to consider investing in residential real estate. It is a wise decision to make, because residential real estate in particularly has outstanding inflation-hedging qualities. Moreover, properties of this kind provide inflation protection both when owner-occupied and as buy-to-let investment. Even when a residential property is not owner-occupied during times of inflation and rising costs, its value remains stable or indeed increases.

Retirement planning

Being free of financial cares in old age and simply enjoying one’s life instead is basically what we all dream of. For the advantages of investing in property even at a young age are perfectly obvious: You will be living rent-free in your retirement and will no longer have to think about recurring rent payments. If you intend to buy residential property in order to let it, and will not be occupying it in old age either, then you will benefit from the extra income in addition to your well-earned pension.

Property appreciation

Certain events can cause the value of equities to take a nosedive all of a sudden because they are subject to share price fluctuations on the stock market. Having invested in residential property, however, you will be protected against fluctuations in value. Not only is the value of a property stable, it actually appreciates over time – as illustrated lately by residential real estate in Germany’s metro areas. As a result, the performance of real estate may translate into actual profit. Just how the value of a property develops, however, depends on a variety of influencing factors, such as the location of that property, its specifications and its state of repair at the time it is sold. Other factors that define the value of a specific property include supply and demand.

Rental income

Apartments of any size and location that are bought as investment and not intended for owner-occupancy give investors an opportunity to generate rental revenues, to earn returns, and thus to build up a passive income. Rental income from properties can ideally imply recurring profits over long periods of time. It gets even better if your rental income suffices to cover the payments for the mortgage loan. Any way you play it, buying residential property is an investment that promises stability.

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