The real estate location
Part II
What else should one pay attention to?

Should one buy in one's own city?

 

We keep getting asked “Do you have a property in the place where I live?” No matter whether the interested investor lives in Kassel, Heilbronn or Bremerhaven: if he buys a property it should best be where he would be able to see it every day.

Or they say: “Yes, I do want to acquire an apartment, but preferably near in my vicinity”. We give you an open statement to this, even though not very popular: usually “in the near vicinity” just means that one “would like to be close to the property in case something might occur”.

But: just ask yourself how often you have seen your landlord as a tenant, and how often you wished to see him – in case you ever lived for rent in your life. Because generally the case is that a tenant prefers that landlord with whom he will have least to do, or nothing at all. And what should happen to an apartment anyhow? Tenant change? No problem, that’s what you have estate agents for who love to see after re-letting. Water damage? That is what you have a janitor, the property management, the fire department and the building insurance for. Renovation needed? Usually this is the tenants job based on the rental contract. Outstanding rents need to be paid? Can happen, but this usually doesn’t get resolved by ringing at the tenant’s door.

Allowedly, an emotional connection to one’s own residential area also plays a certain role when purchasing a property. That is why the economic value of property location is rather secondary to someone using his property by himself. He buys where he lives or wants to live. He doesn’t buy based on the viewpoint of the performance.

Not so the capital investor: the first thing he should take care of is that he buys in cities which belong to the top locations of Germany. Of course part of these are large cities like Duesseldorf, Frankfurt am Main and Berlin. The entire Rhine-Ruhr area also belongs to it as well as the Rhine-Main area. After all most of the large German industry and service provider companies have their domicile there; international companies also have their domiciles there. Japanese companies for instance are settling in Duesseldorf or Frankfurt with hardly any exceptions. New international companies are following year after year. Locations like Berlin as the federal capital, Frankfurt or Cologne, Duesseldorf and Essen are enjoying their international reputation. (Also see the regional analysis and the top-12-hit list further below.)

Hence residential space in such places is more secure than elsewhere. It can be rented out easier and for higher rents. Since those cities cannot create more living space arbitrarily, a lot of existing properties constantly increase in value. The apartment rents are going up there, even if they drop somewhere else.

Culture, commerce, leisure time and shopping as well as surroundings with a lot of excursion and local recreation possibilities play a large role in the importance of these cities. The largest and most important airports of Germany, and yes, even of Europe, are here. In other words, here is where the wheel of economy is turning, here is from where the decisive impulses are emanating into the whole country, this place is throbbing with life.

As the owner of a real estate property you want two things: enduring yield and performance. However that means that you should purchase in one of the top locations, no matter where you yourself live.

 

Additionally to this there is another factor:

We, from AllGrund, have specialized on these locations, based on years of research, insider information and our own successful property purchases. Thus in most cases we can purchase for you at much lower prices than if you would buy from an agent in your region – of course always measured by the average sales prices. We can find bargains for you. Just to give you an example: it takes us a weekend to acquire any good property, without price advantage and including the brokerage fee. In order to find a bargain which is a real treat to the investor we need at least four to eight weeks.

Insiders know the market. They trace the development like with the eyes of a hawk. And just as a hawk does they pounce on to a chance as soon as it comes to their view. Those who perceive first and are able to purchase in this moment without hesitation have won.

Many professional property salesmen are working based on this principle. Many, or even most of them, do not pass on their advantage of purchasing to their customers however. They sell at prices common for the market and gain a high profit through this, especially when multi-level marketing has to be paid. We pass on the advantage to the customer. But we can only do so in our locations – usually not where you live.

Buy good locations – you will reach every of our locations within two to two and a half hours! And if you do not want to drive there by yourself then we represent you as you wish – e.g. if you need to find a new tenant, need to arrange something with the administration or need to meet the janitor. The tenants of our customers contact us if something is the matter. The owners usually have nothing to do with that. Let us be honest: is that a convenient capital investment or not? Isn’t that a comfortable and easy real estate investment?

And why do we mainly buy in the area of Rhine-Ruhr for our customers? Very simple: the area around the regional capital Duesseldorf is one of the most-growing regions in western Europe. The metropolitan area of Duesseldorf in the surroundings of up to 50 km is the most populated living space in Germany. Every seventh European – that is 44 million people – lives in a radius of 200 kilometres around Duesseldorf.

Out of the 13 metropolises in Germany with more than half a million residents there are five in the region of Rhine-Ruhr: these are Cologne, Dortmund, Essen, Duesseldorf and Duisburg. Out of 300 top companies in Germany there are 25 which have their headquarters in the regional capital Duesseldorf – and another 37 in Ruhr! The future prospects for the employment and residential market are promising. The demand for attractive living space is also secured in weaker times.

40 per cent of the entire export volume of the Federal Republic of Germany are coming from North-Rhine Westphalia; trade and service providing are characterizing the future-oriented tendencies of development of the middle-class and traditionally large enterprises. In 1990 for instance the gross value added in the Rhine-Ruhr region was double as high as in Munich.

The strongly expanding service sector in this region gains a lot of importance. Hundreds of enterprises attain a turnover of 500 billion D-mark per year.

This region, with its excellent infrastructure and its highly developed economy, hi-tech and numerous modern research facilities and universities as well as its central geographic location, holds good general conditions for investments in economy, trade, telecommunication, traffic and residential properties.

The traffic infrastructure is unique to Europe. Close meshed highway networks, two international airports, several regional airports, shipping traffic and a tested network of intercity- and regional train connections bring people and goods to their destination quickly.

The numerous nature reserves hold a lot of leisure time and resort areas and attract the townsfolk out into the green for taking a walk or for hiking, cycling or horse riding. The cultural offer in the cities Duesseldorf, Cologne, Duisburg, Dortmund and Essen does not only attract locals but also many visitors from the nearby Benelux and from all the regions of Germany. The trade fairs of Duesseldorf and Essen are the turning points and centres of international trade, economy and traffic. Reason enough to acquire an attractive capital investment in this metropolitan area, don’t you think?

 

IMPORTANT NOTE:

The AllGrund real estate information gets published about every two months and reflects trends and current developments. It is meant to aid you in taking decisions regarding real estate investments, purchases or sales of freehold flats and houses. It makes no claim to completeness nor do we guarantee the righteousness of the stated estimations and trends. We are always glad to receive your comments!

The customer information published here consists of estimations, opinions or evaluations which have been done by our research departments. Yet these opinions are not to be regarded as impeccable and certainly not as definite forecasts. We leave it up to the individual what he does with the information. We also want to state here that older information letters are not always up-to-date; yet sometimes what we forecasted back then came to be true.

All examples of calculation are without guarantee. All tax-related statements are without guarantee and are subject to change by the lawmaker. Older customer information which are rendered here from archive materiel do not factor in the current taxation laws and neither current market situations.

Every property purchase and every capital investment is to be evaluated absolutely individually and should only be done based on a personal consultation with an expert whom you trust and, if applicable, in accordance with your tax consultant.

 

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