Hello everyone! Today Mathias talks with Ines about how to calculate if a property is worth buying: Ines has been our guest before and in this episode she shares with us her knowledge and first-hand experience of the real estate market, so whether or not you are planning to invest in real estate property you may find her insights very useful. Enjoy!
We also talk about:
- Evaluating a deal
- Credit score
- Renting in Germany and Portugal
- Airbnb renting
- Returns in European countries
- Where to invest
Wrong beliefs about real estate investing
Ines looks at some of the common misconceptions people have about real estate as an investing option. The main ones are comparing properties based on their price and not in terms of cash flow, and the confusion that is usually made between buying a property for investment or doing it for our own living. In Ines’ view it’s better to approach real estate investment with a completely neutral mindset.
Some useful metrics
Some indicators prove to be very useful in calculating the potential profit that can be generated by a deal. Price-to-rent ratio is very effective for long-term renting and is widely used by investors and even funds, annual cash flow can also be used for short-term rentals. The 1 per cent rule, as it is known in the US, has to be adapted to the European scenario but can prove useful as well
When it comes to loans for funding real estate investing there are very different approaches: while many gurus recommend to ask loans as much as possible in order to maximize investing power and buy more properties, Ines prefers to take a more cautious approach and use direct payment as much as she can, in order to minimize risk.
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