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Good with money
to help you get rid of your financial headaches.
This time: is real estate a smart investment in this crisis?
Tangible investment objects always become extra interesting during a recession.
One of these options is real estate.
For the small investor, this often means in practice buying an apartment to rent out.
Is this a convenient and sensible investment?
"Becoming a landlord can be very beneficial. It's a great way to put your savings to work," says financial planner Fleur Kroonbergs.
"Whether it is profitable or not? That mainly depends on how much money you have to borrow."
Demand for rental housing rises in times of crisis
What are the benefits of investing in real estate at the moment?
Firstly, the low interest rate, and secondly, the fact that the demand for rental housing typically rises in a financial crisis.
"Especially if you do not need a mortgage, it is possible to keep a monthly income."
Fleur Kroonbergs, financial planner
Earning money by becoming a landlord has become increasingly time-consuming since this year.
About twenty municipalities have introduced a self-occupancy obligation in new-build homes, and a rental ban can sometimes also be introduced for existing apartments.
The goal is precisely to stop real estate investors and prevent rents from getting too high.
Buying something to rent out to tourists has also become more difficult.
The rules for financing and rental have been further tightened, especially in the capital, where the municipality wants to limit the tourist flow even after the corona crisis.
Comparing rental properties and return is difficult
If you are still eligible to invest in rental properties despite the stricter rules, it can be quite profitable.
Even if we compare it with other places where you can spend your money, such as on the stock exchange or in a savings account.
The return (expressed as the rental income divided by the WOZ value) for private landlords is estimated at an average of 5.7 percent on an annual basis, according to the Land Registry.
This is a big deal, partly because comparing rental properties is difficult.
You often have to deduct a lot of costs from that 5.7 percent, such as for maintenance, administration, mortgage and taxes.
You guessed it: The fewer of these cost items you have, the more you have left.
"Especially if you don't need a mortgage, it is possible to keep a monthly income," says Kroonbergs.
Otherwise, borrowing for a house for rental usually has to be done with a so-called rental mortgage.
The interest here is currently 3 to 4 percent;
twice as high as with a regular mortgage.
See also: Good with money: This way you put enough money aside for your old age
No pension, but a paid house
Even with a mortgage, becoming a landlord can still be a lucrative project.
Then the profit may mainly lie in the sale of the paid-off house, far into the future.
Being a landlord can certainly be a nice extra for old age, for example for people who do not accrue pension through an employer, says pension advisor Jan Zwiers.
But: "This is certainly not for everyone, you have to be able to handle the risk."
"Investing to let is not something you do to sell again in a few years."
Jan Zwiers, pension advisor
This risk can be anything from major fungal damage and leaks to vacancy and a house price bubble.
As a layman, it is therefore wise to obtain financial advice before you get started, although that advice can quickly cost thousands of euros.
Zwiers: "Investing to let is not something you do to sell again in a few years."
To return to the question at the beginning of this story: investing in a rental apartment can certainly be sensible, but it is not easy or without risk.