RETIREMENT PROVISION: PROPERTY AS AN INVESTMENT – IS IT WORTH IT?

Living rent-free in old age? Or even earn extra income from the property you rent out? Property has a good reputation as a retirement provision – and for good reason. But only if you bear a few things in mind.

Concrete gold remains a safe investment

In times of low interest rates, investing money in savings accounts is not worthwhile. And investing your savings in shares instead? For many Germans, securities and equity funds are confusing and not very attractive. Those who are less willing to take risks are more likely to invest their money in property. Especially as the low interest rates are having a positive effect on building and property loans.

Property as security in old age

Residential property is suitable as a retirement provision in two respects:

To live rent-free yourself and have a secure home without, for example, the landlord increasing the rent or making a personal demand.
To benefit from rental income in old age if you offer the purchased property for rent in order to remain flexible.

If you want to live in the property yourself as a retirement provision, you should ask yourself the following question: Can I even live in the property in old age? Owning a home is often associated with many obstacles for older people. A condominium seems to be the better choice – provided it is easily accessible and has an age-appropriate infrastructure.

Alternatively, you could first use the property yourself and then rent it out (owner-occupied home) or first rent it out and then use it yourself (owner-occupied flat).

However, you should always bear in mind that the loan should be paid off by the time you retire, otherwise the property will become a burden in old age. As a landlord, you will have to build up reserves, pay tax on the rental income and take on maintenance work, which must also be taken into account.

Is a high renovation cost worthwhile for a capital investment?

If the property is to be let, the location, the market and possible market-regulating provisions determine whether a high renovation outlay is worthwhile. If rents are capped, high costs are not paid off so quickly. Depending on the type of renovation, the measures can be passed on as a rent increase. However, this must always be checked in detail.

Property annuitisation: house for a pension / partial sale

With property annuitisation or partial sale, owners, usually pensioners, sell their home at a calculated price. In return, they receive a lifelong right of residence and an additional pension.

With the partial property sale, LiquidHome now offers a customized solution: liquidity when you need it – without giving up the security of your own property. The partial sale offers a basis for a self-determined life within your own four walls.balance is crucial when living spaces change. Living in your own home and having money for new plans: A partial sale of up to 50% of the property value to LiquidHome makes it possible. A usufructuary right entered in the land register gives the owner additional security. The partial sale takes place at the current market value, which is determined by a neutral, certified valuer. LiquidHome bears the costs for the valuer, notary and land register entry.

Another advantage: owners retain sole control over their property and continue to participate in any increase in value with their share. This potential can be utilized when the property is sold at a later date. It is also possible to buy back the previously sold share at any time.

We would be happy to advise you individually on investing in property on the Berlin property market and search for suitable properties.