My Investment

Why should you consider property investment?

Perhaps you have already heard that the real estate market can be a gold mine for investors.

You may also have an idea that you would like to start investing in real estate. What you need will often be knowledge or capital to get started. Therefore, I have compiled this here this guide helps you get an overview of the possibilities, advises on how to get started and show you what the pitfalls are.

Real estate investment can be a great way to diversify your investments by putting some of your money into bricks. On the other hand, it usually requires more capital than the other forms of investment.

At the same time, it also requires longer preparation to invest in properties. So what's the benefit? Well, as a rule, the return on real estate investment will often be very good and if you have put your money in a property, they are often safely located. Unlike shares or crowd loans, a property will never fall to $ 0. This means that there is less risk associated with property investment than other forms of investment.

This article is for you who are considering either investing in real estate in Denmark or renting out your current property, starting from scratch. If you get blood on your teeth after reading this article and want to know more, you will find links to other posts, where I go deeper with the various options for rental and investment in real estate.

What is my starting point for writing about real estate investment?

I have long been interested in real estate investment and even invested larger amounts in properties. Right now I own both an apartment and a summer house, just like I invest in crowded properties and plan to buy more apartments that I can rent and thereby get a fixed income. I invest in real estate as it gives a good return and spreads my investments. However, it should be noted that even my real estate investments are only slowing forward, as each new investment requires a fair amount of savings in advance.

Different types of real estate investment

The first thing to find out is what kind of real estate investment you want to make. Do you want to buy a property to rent it, or is it for selling the property again? Should it be an apartment, a house, a cottage or a business building, and where in the country should it be? After that, you must of course have counted on whether you can get the required amount and, secondly, if the expected return is the amount of money you invest. Again, it will be legal. You must check which conditions apply when renting out, such as how much you have to rent.

Short-term ownership

Perhaps you are one of the many who have been inspired to try out real estate investment after seeing Property Wars on the Discovery Channel. Here, a number of aggressive property investors offer properties that they have only seen from the outside in something resembling a forced sale - after which they renovate the property and resell it soon after. Often with big profits, but also sometimes with big losses as they can not see if there is a kitchen and a bathroom installed, whether the property is being eaten by termites or that there is a gap at a time.

I will never recommend you to buy in order for a property to resale immediately afterhand unless you are a craftsman. It is risky and requires that you have your hands screwed properly. In addition, you can never know with certainty whether you can get rid of the newly renovated house - or just get the price for what is the goal of the purchase price and the amount of time and money you have added to the renovation. Therefore, all my property investments are long-term and with a reasonable return. In return, it requires some capital, in addition to having the money to buy the properties, you should also be able to afford them until they are sold and possibly lose large sums on some of the properties.

The risk is less in Denmark, as you can always inspect a house before a forced sale. I also know more, who have been successful in refurbishing 1-2 houses, which they bought in forced sale and subsequently sold again. But there has also been more competition in this area, and it has become harder to find the good offers for forced sale.

Long term rental

Buying real estate for rent is the model most people use. Here you can create an annual dividend through the income from the rent, while at the same time expecting a good return through an increase in property prices. Since it is a long-term investment, you are not dependent on price fluctuations and decline in the real estate market. As long as the property is rented, you still earn money.

I have met investors who would only invest in newer apartments in Inner Copenhagen, and I also met investors who would only invest in B2B premises. It is up to you what you prefer, but the easiest way to get started is to invest in cheap apartments in areas with many students. Look at population growth for the area over the last 10 years to make sure that there is no area on retreat, and then look at the training opportunities in the area.

Once you have set up a suitable area, start looking for the good deals. Here comes the law inward and potentially buckle for you. For example, you must be sure that you are allowed to take a rent that covers your expenses. The tenancy agreement is quite strict, so why not buy a property or just an apartment that you lose money renting out. If you want to know more about the rules for rent regulation, you can read more about this here .

In general, it is always a good idea to find an accountant who can help the calculator and a lawyer who supervises the rental agreement, who can check the legal and help with the purchase and rental agreement once you have taken over the residence. In addition, the property is likely to be refurbished and prepared before it can be rented out. There must also be money, because you can not do this yourself, it will soon be a pleasure.

My goal of a property is an annual return of 10% and a 2% saving on unforeseen expenses after all is paid. I deduct the mortgage over 10 years and always invest myself 30-40% plus all foundation costs in the property so I have 60-70% loan. If the property can not meet this, I will continue for a new property in the same area. My goal is to have 5-10 apartments in the same area before switching to another area to get some benefits in terms of maintenance.

The risk of this strategy is that it can be difficult to sell the apartments again as they are located outside the big cities. On the other hand, I can get a good business on the primary business, and I can invest quite quickly in many small leases rather than a single large lease that would make the investment more risky.