The topic of "own home", "condominium" comes up again and again - is it worth it, is it not worth it? Own use or renting?

Here is my little success story from 2020/2021 that makes me happy until today :)

One evening I was scrolling through EBay classifieds again, the TV was on and I was bored.

There I came across an apartment for sale ad of a broker. 99,000 € for a 2-room apartment in a town about 50 minutes drive away. Short research was clear, the apartment is too expensive compared to the prices of the place and the year of construction (1995).

My interest dwindled. But since my cousin lived in the place I wrote him a short message: "Hey, time for a Feierabendbier the days? And tell me, what can you realistically ask for rent per square meter?".

At the same time, I wrote to the real estate agent. He got in touch the next morning and said "Tomorrow, Wednesday, you can look at the apartment around 5 pm".

So it was clear: Wednesday after-work beer with the cousin and before briefly look at the apartment. Without much hope. I thought but to gain experience not wrong, you always learn something.

I used the day and placed a "dummy ad" on Ebay classifieds with the key data of the apartment I knew. Calculated rent, square meters, location, etc.. There were 3 interested parties in 4 hours. It was clear, the rental could work quickly.

On the same day I called two banks and arranged a consultation appointment on Thursday afternoon and one on Friday morning.

Also on the same day, I had a phone call with the local job center. They sent me a list with the maximum rental prices and the maximum number of square meters per person in the Harz 4 reference. So I had an orientation what I could get for the apartment at least - regardless of my rent idea.

During the viewing on the following day, the following picture emerged:

- Broker unmotivated

- Apartment has been for sale for 9 months

- Owners do not want to deviate from the purchase price, but are also frustrated that they do not get the apartment sold

- Apartment is (intentionally) empty, because better to sell.

Condition of the apartment inside:

- An old dark carpet

- Due to an "out of round washing machine" there were some damaged tiles (small chips) in the bathroom.

- The lighting was dim and dull, old "omal lamps" on the ceilings.

I was mentally calculating what I would have to put into the apartment to get it back up to a good standard. Floor renovation about 5,000 €, bathroom renovation complete about 15,000 €, "odds and ends" and lighting about 2,000 €.

I presented this bill to the real estate agent and said: for 78,000 I'll take the apartment.

The broker gave me no prospect of success, the price reduction was too high, the owners would not agree.

He handed me the printed exposé of the apartment and we said goodbye.

The following day was the first bacterial appointment.

Conditions: Full financing in the amount of 78,000 €, additional costs to be borne by the tenant, additional collateral (loan on existing apartment), interest rate 2.1% for a 10-year term.

Second bank appointment on Friday morning: full financing incl. ancillary costs (just under 88,000 €), no additional collateral, 1.29% interest for a 10-year term. I would only have to put up €1,552 myself.

After the bank appointment, I called the broker. I asked him, "tell the sellers I have the financing confirmation and I'm holding myself to my offer of €78,000 until Wednesday next week."

I tell you, I was so excited to see if this would work out.

On Monday afternoon, the broker called me. The owners had "gone soft" because they couldn't get rid of the apartment for so long and because in a few weeks (12/23/2020) a new regulation regarding brokerage fees would come into effect, according to which they would have to pay half of the brokerage costs.

So I actually had the consent, at least verbally. Now I just hoped that the owners do not back out.

After the owners had agreed to the deal, a notary appointment was actually arranged and the purchase contract was prepared. Date: one day before the expected date of birth of my daughter.

That was a good argument for me, because: Owners and realtors seemed happy that the sale was now close to closing. The sellers, as they were frustrated about the low price but slowly realized that they would not get rid of it expensively. And the broker, as his clients were certainly not the easiest. I think he just wanted THE CASE off the table.

So I authorized the broker to handle the purchase on my behalf. My daughter was born healthy on the day of the notary appointment. I was able to be there and drove a few days later to the notary to finally approve the purchase - effort including travel and waiting time at the notary: 25 minutes.

After the notary's notification that the purchase price was due, the owners had their money one day later, the handover took place and the rights (e.g. rental income) and obligations (e.g. maintenance) were transferred to me.

In the upper part of the story I had told you my cost estimate for the renovation. In fact, it was clear to me: a few new grout lines in the bathroom, replacing the shower fixtures, and changing all the lights to bright, warm LEDs would do for now. Depending on the tenant, I thought, the carpet can be talked about....

So after ordering the materials, I got to work and spent about a day in the apartment to get all the work done. Cost: one day of work and about 300 € for materials.

In the upper part I had already told you that I had placed a "dummy ad" before the purchase to "sniff" a bit in the tenant market. At that time, I also had a search query running automatically, which makes me aware of apartment requests from potential tenants.

This way I had already contacted a young man who was urgently looking for an apartment before the notary appointment. His problem, why he did not find an apartment: he was open about two things. 1. he was unemployed and that for a relatively long time (measured by his age). 2. he was mentally ill.

For landlords, these are usually two knock-out criteria.

Why? Mostly out of concern for the condition of the apartment and potential damage. And, incidentally, out of concern about complaints from neighbors. To make matters worse, mentally ill persons enjoy special protection against dismissal. So you can't get them out of the apartment that easily.

For me, these were initially criteria for which I thought: "Let's see what kind of person this is". But I didn't want to rule out renting to him from the outset.

The viewing appointment with the potential tenant took place 30 minutes after the apartment handover between the old owners and me, which I had with the owners and the broker on that day. So I did not have to drive up twice.

The following picture emerged: turned to, neatly dressed and well-groomed young man. Talkative but still politely distant. His life story remains private in detail, of course. But I can tell you this much: he was far from a supposed and clichéd "pschychic sick Harzer" and was in good health. He is closely looked after and accompanied and lived so far in the house next door. Thus, it was ensured that his parents still regularly look after him.

14 days later he moved in. The job center pays the rent and, in the best case, everyone is happy. Until today, anyway: "yes!"

Now a few data...

Timeline:

10/26: Apartment discovered

(30 min.)

10/27: Realtor contacted, dummy ad placed.

(30 min.)

28.10.: Apartment inspected

(1 hr.)

10/29: Bank appointment 1

(1 hr.)

30.10.: Bank appointment 2 (1.5 hrs.) Financing confirmation, submission of purchase offer to broker/owner (5 min.)

31.10.: Again everything exactly calculated.

(1 hr.)

02.11.: Acceptance of my offer by the owners (0 min.)

10.12.: Notary appointment

(0 min.)

16.12.: Approval of the purchase contract by me

(1,5 hrs. incl. reading the contract)

13.01.: Handing over of the apartment, inspection by potential tenants

(2 hrs.)

23.01.: Repairs and change lamps

(6 hrs.)

31.01.: Handover to tenant

(45 min.)

Time expenditure therefore 15 hrs. 50 min.

Good: Honesty includes a bit of "small stuff" such as travel times, writing the lease and various mails with tenant and bank and broker. But roughly it was in any case less than 24 hours.

Economic data

1.500 € equity capital (Corona premium of the employer)

78.000 € purchase price

8,190 € Incidental purchase costs

150 € bank appraiser

Result:

86.138 € credit

1,552 € Equity

plus 150 € bank appraiser, 300 € lamps and repair, 9,90 € rental agreement template

Rent monthly:

395 € cold

38 € Non apportionable service charges

30 € Community maintenance

40 € Maintenance condominium

92,59 € Interest costs

Rest therefore 194,41 €

Repayment: 1,8 % = 129,20 €

Cashflow: 65,21 € -> enough to pay the tax, after AfA and interest costs etc.

Am curious about your questions and feedback :)