Hi Vixx! I am self employed and business is going very well! I am still young but do need to start investing in my retirement. I’ve heard of different options of doing this, from crypto to the stock market. Could you explain why I should invest in real estate?
Thanks for your question Milan! More and more banks use a negative interest rate on savings accounts, results from pension funds are decreasing and people have to take of their own pension more often than before. If you want to make some money on your savings, you will need to take action. Real estate is a great way to increase your assets, while enjoying the benefits now and in the future. We will explain in this blog why real estate is a great investment.
Once you have bought real estate, you will be renting it out. You will find a decent tenant and enter a contract with them. This contract will cover all that has been agreed between you. Including the rental costs. You will be assured of the return on your investement, unlike in case of stocks, shares and variable policies.
You have a lot of security. This gives you peace of mind and enables you to make clear calculations. You can choose who you want to rent the property to, the current scarcity on the housing market will give you plenty of tenants to choose from.
Three ways to make a profit, that might sound too good to be true. However, this is definitely possible if you handle your real estate properly. You will receive an income via your tenant. You will use this to pay off the mortgage on your buy-to-let property, thereby increasing your assets on a monthly basis.
You can also have money to spare every month if you deduct all costs from your income. We call this a positive cash flow, and you can use this money any way you want.
Third of all, you can benefit from a possible increase in value of you real estate when you decide to sell up.
Triple profit: growing your assets, a positive cash flow and increase in value of real estate.
If you finance part of your real estate with a mortgage, you get a return on investment on borrowed money. In the end, you will make more money. Simple calculation:
If you invest €50,000 in stocks and shares and your return on investment is 6%, you will make €3,000. Nice!
However, what if you purchase a property worth €300,000, using €50,000 of your own money and a mortgage? Your return of investment is 6% of €300,000, which sums up to €18,000 on a €50,000 investment.
This enables you to increase your return on investment by using less of your own money. The amounts mentioned above are indicative. Return on investments differs per individual situation.
Real estate to rent out is covered under ‘savings and investments’ and therefore taxed in so-called box 3. If you invest in real estate, your income is seen as a return on your investment. You haven’t actually worked to earn this income and you therefore don’t pay income tax. Your rental incomes is tax free. However, you will be taxed on the property. The exact amount differs per situation.
When you get the right assistance, all you have to do is make the right desicions. It is possible to outsource pretty much everything regarding your investments in real estate. From looking for the right property to the administrative processes and maintenance of your investment. This will come at a certain cost and will therefore decrease your return of investment. Vixx Real Estate can take care of everything relating to your real estate portfolio, enabling you to enjoy the things that really matter to you.
Due to the low interest rates, now is the time to start investing in real estate. Borrowing money is cheap and a lot of people have capital gain on their property. You can use this to buy a second property. Enabling a lot of people to invest in real estate.
Are you curious to find out what your options are? Get in touch with your Vixxer and we will calculate how you can start investing in real estate. No strings attached.
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Characters in this blog are fictional.
The situation described is a realistic scenario.