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Financial investment - investing in real estate

Real estate is the safest investment? In principle, real estate investments are long-term and stable investments - if you know your way around and follow a few basic rules. We asked Bank Austria real estate experts Thomas Huebschmann and Rupert Vogler for brief instructions on buying real estate.

Private use vs. rental

Before you buy a property, you should clarify the most important question: Are you buying for your own use or should the apartment or house be rented out? And if for personal use: is it a second home or just an investment property? Why is it important? “This results in different approaches and calculations,” explains Rupert Vogler.

Keep your eyes open when buying real estate

THE CHECKLIST:

City or country:
All metropolitan areas with a positive migration balance are currently booming - especially those areas that are already very well developed in terms of infrastructure, especially Vienna.

Location of the property:
  • How is the infrastructure?
  • Can the property be reached quickly and easily by public transport?
  • How are the shopping opportunities?
  • Are there enough parking spaces or a garage?
Layout:
  • What is the floor plan of the apartment (or the apartments in an apartment building)?
  • What is the floor plan of the house?
Basement, cellar:
  • In what condition is the basement of the property?

Facility: The furnishings of the property should be in good to very good condition, especially if you want to sublet; the same goes for the floors. A kitchen should ideally be available.

Connections: Are all the necessary technical connections available - such as internet, cable, SAT?

Size of the property:
  • If you want to sublet, sizes of 45 and 80 square meters (1 to 3 rooms) are suitable.
  • For personal use: Here you are bound to your own ideas and budget. If you want to sublet the property later, you should consider whether you really need a lot more square meters, even if you are using it yourself. Larger apartments (over 100 square meters) are more difficult to sublet.
Old building or new building:
  • In the case of an old building, pay attention to how well the building is preserved.
  • In the case of a new building, it should be a new building with modern equipment (ideally a low-energy house to a passive standard house).
  • Note: Apartments built before 1945 ("old buildings") are subject to statutory rent ceilings in Vienna. As a landlord, you have to adhere to this.

How can you (as a layperson) determine the value of a property?

Before making a binding purchase, you should definitely bring an expert on board. For the first visit there are a few basic rules that laypersons can use as a guide.

  • Research: Research comparable objects on Internet platforms.
  • Price comparison: Use the property price comparison and note the prices per square meter.
  • Advice from the Bank Austria experts: "As a special service, the real estate experts at Bank Austria determine an internal market value within the framework of financing, which we will be happy to provide you with free of charge on request."

 

»Land and houses can also be suitable for investment. But no matter which object: There is no getting around a proper calculation. «
Thomas Huebschmann
An expert takes into account the following when making a calculation:
  • Acquisition costs and ancillary costs,
  • Maintenance costs and running costs compared to running income, taking into account the duration,
  • possibly changed conditions such as vacancy, changed tax legislation, change in the interest rate landscape and change in ongoing operating costs.

How much equity should you bring with you when you buy real estate for investment?

Vogler recommends an equity share of at least 10% to 33% of the total project volume. "Especially with pension real estate, we recommend going to a tax advisor for detailed advice."