Financial ruin because rental income is significantly lower than the loan?
Hello everyone, at the beginning of this year I bought a new apartment with 55 sq m of living space and a large private garden area for around €219,000.
I currently live in the apartment myself, but I wanted to rent it out soon, or so I thought…
I have a loan with 4% interest and 1.8% repayment and pay €1,250 per month, including the maintenance fee.
However, I can only rent the apartment for a maximum of €850-900 including utilities.
That means a loss of €300 per month. I thought I would get 2% of the purchase price back annually through depreciation, but apparently that's not the case.
Does it even make sense to rent out this property or should I sell it?
Which option would be better for me financially?
Greetings
(2 votes)
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Relevant is the cold rental after tax & cost. If you are very accurate, you should also make 1% reserves.
Depends on how the market is. 200k for 55m2 is already expensive. I hope this will justify the situation and state. However, you had purchase costs (Marker/Grunderwerbssteuer). They’re gone.
You should ask yourself what you really want. Why do you need a new apartment now? Can you do it more than 400-500?
If all this becomes too much, then swallow the losses, learn from them and invest in ETFs.
That was the first mistake, the price has been too high.
It’s not just that, it’s defakto. The FA does not pay advertising costs.
No, rent doesn’t make sense.
Do not sell under certain circumstances, because the question is what you get for the bud today.
Higher rent
higher rent is certainly very unlikely, which tenant pays for a 55sqm apartment 1250 Euro…then it would have to have a top position in Munich or another very sought-after place….where appropriate client can live and has enough money for it
Well, let’s be honest, the FS pays this almost straight
Property obligated…
When you sell, you’ll probably go out with a loss. First of all, because you’ve had purchase costs that no one will pay you back. Furthermore, since the beginning of the year, you have paid your credit mainly interest and barely paid. This means that a large part of the loan amount is still open. Lastly, it is added that due to the increased interest in 2023, the potential sales price could be below your original purchase price.
The rental seems more sensible to me. About 730€ cold you should request + additional costs. Will you find a tenant at this price?
Of course, you’ll have to pay for something in the end. Such a property is not a self-running, as it is used as a sales argument. That’s why you paid off the bud sometime and she’s your property.
With the effects (including tax) one should actually PRESENT the purchase. But that’s just my opinion.
If the numbers are correct, both variants are rather bad. In the current situation, a sale at a reasonable price will be rather difficult.
Why don’t you stay in the apartment? This is probably the best solution!
If a possible Undercovering at rental threatens to ruin you, only the sale stays empty!
For a new apartment with a living area of 55sqm and a further 55sqm “Garten” under “Exclusion of the other co-owners you should receive more than the purchase price paid at the time!
Taxes also in case of surpluses no problem, since no speculation tax is payable on sale of the self-used apartment, provided you have the built-in property between the purchase or have used the completion and sale as a private apartment; the sales proceeds remain tax-free.