Become a Savvy Investor
Here are helpful articles for your real estate investment.
Investing In Real Estate Is Easier Than You Think
With us, you’ll find all the important information and tips on real estate investments. We show you where and how you can successfully invest in real estate and which factors play a role. Learn why real estate will remain an attractive form of investment in the future and how you can get the most out of your investment. Here’s an overview of the most important content. You’ll find more details in the text below.
By the way, we also have articles on buying, selling, financing and managing, so feel free to check those out, too.
- Why?
- When?
- How?
- Where?
- Which Properties?
- Strategies
- With Urbyo
- Funds
Why You Should Invest in Real Estate
Investing in real estate can be a great way to build wealth, prepare for retirement, and create long-term financial security. Here are some reasons why you should consider investing in real estate:
Long-Term Value Growth
Real estate tends to increase in value over time. This is partly due to inflation, but also to the growing demand for housing.
Regular Income
When you buy a property, you can rent it out and generate regular income from rent. This can provide a steady cash flow and help you finance your investment in the long run.
Tax Advantages
Real estate investments offer various , such as deducting expenses for repairs, maintenance, and other costs related to owning the property.
Portfolio Diversification
Invest in real estate or stocks? Ideally both! Real estate can be an excellent addition to a well-balanced investment portfolio. If you already have money in stocks or ETFs, investing in property helps reduce risk while increasing your potential returns. REITs (digital real estate investments), crowd-investing, or real estate funds are also options. And the latest trend: the metaverse.
Protection Against Inflation
Real estate can serve as an effective hedge against inflation. Since rents typically rise with inflation, property investors can benefit from higher rental income when the prices of goods and services increase.
Leverage
A real estate investment can be made with a relatively small initial investment. Since many buyers use financing to purchase a property, they can take advantage of leverage to increase their equity and achieve higher returns.
Overall, there are many reasons why investing in real estate can be a smart decision. Whether you're looking for a long-term investment or a steady source of income, real estate can be an excellent way to achieve your financial goals.
When: Is It Still Worth Investing in Real Estate Now?
Investing in real estate is basically always a smart decision. More than choosing the “perfect” moment, it comes down to finding the right deal. And every market situation has its advantages. What do we mean by that? In low-interest phases, you may have fewer opportunities to negotiate purchase prices, but you benefit from better interest rates. When interest rates rise, you often gain a bit more negotiating power on the purchase price.
How Do You Actually Find Good Deals?
A good real estate deal starts with a structured approach and the right mindset. The key is understanding the market and actively searching for opportunities with potential. Beginners should first focus on on-market listings—publicly advertised properties—to gain experience and build connections. Access to off-market deals—properties that aren’t publicly listed—develops over time through a strong network and solid reputation.
Tools like meta-search engines make the search easier and help you identify potential bargains more quickly. At the same time, strong relationships with agents, property managers, and other owners are essential for hearing about planned sales early on. Those who clarify their financing in advance and present themselves as reliable, uncomplicated buyers increase their chances of securing attractive properties.
Ultimately, patience, market knowledge, and a clear strategy are the keys to successful real estate investing.
Experts generally agree that the demand for housing—especially in desirable locations—will remain high. Combined with the rising costs of new construction, the demand for existing properties is therefore expected to continue increasing. So if you pay attention to choosing the right location when purchasing a property as an investment, you’re already on the right track.
How Can You Best Invest in Real Estate?
When it comes to investing in real estate, there are several different paths you can take. Which one is best for you depends on your financial situation and your goals. No matter which route you choose, you should always make sure you’re well informed and have a clear strategy that aligns with your objectives and financial circumstances.
Whether you start with small amounts, invest as a private individual without equity, or team up with friends depends entirely on your personal situation.
With Little Money: Small Amounts
You don’t need to invest huge sums to get started in real estate. You can begin with small amounts. One major advantage of real estate—compared to many other asset classes—is the leverage effect, also known as the power of leverage.
When you take out a loan to finance your property, you increase the return on the capital you invest by using borrowed funds. In any case, you should always take out your calculator beforehand and run through all the numbers carefully.
As a Private Individual Without Equity
You can, in principle, invest in real estate even without any equity—or with very little. In this case, it’s referred to as 100% or even 110% financing. Of course, this depends on the current interest-rate environment and the specifics of the deal.
The less equity you use, the harder it becomes to achieve a positive cash flow from the start. But that’s not a problem. With the monthly contributions you make, you’re building wealth. And if you rent out your apartment or house, you’re also building passive wealth through rental income.
What is important, however, is having solid financial planning and enough reserves for potential repairs or maintenance—and being sure you can afford the initially negative cash flow. To figure that out, you should first create a detailed household budget.
Investing Jointly: Co-Investing with Friends
If you can’t raise enough equity on your own—or if you simply want to contribute more of your own funds to a real estate investment—you can, of course, team up with friends or other people and purchase a property together.
This allows you to share both the costs and the risks while still benefiting from the advantages of real estate investing. However, it’s important to establish a clear agreement on how you will work together and how costs and profits will be divided.
No matter which setup appeals to you, our financing experts can tell you exactly which approach is best for your goals and situation. Schedule a non-binding appointment and take the first step toward investing in real estate.
Location Germany: Where Should You Invest in Real Estate?
In general, there’s no one-size-fits-all answer to where you should invest in real estate. It depends on your goals, how much equity you have, your income, and the strategy you’re pursuing.
It can make sense to invest in a region or city you know well. But you can also invest in areas farther from your location, which increases your opportunities. Ultimately, this is a personal decision—you need to choose a location that fits you and makes you feel comfortable with your investment.
More objectively, what’s crucial is taking the time to thoroughly analyze the property’s location. Start by looking at the city or region where the property is located and research the macro location. If that looks good, zoom in to see if the immediate surroundings—the micro location—also fit. And of course, the type of property must also match the location.
There’s also something else you should keep in mind when investing in real estate. You’ve probably heard of A-, B-, C-, or D-cities, right? No? This is a way to categorize cities based on their size and functional importance.
For you as an investor, this doesn’t mean that investing in an A-city is automatically better than investing in a D-city. Each city has its own advantages and disadvantages. Here’s an overview of them all. 👇
Opportunities of A-cities
Examples: Hamburg, Munich, Berlin, Frankfurt am Main, Cologne, Stuttgart, Düsseldorf
Very low vacancy risk due to high demand, a large number of residents, and a high immigration rate
High value development
High rents
High security & predictability
Internationally important business locations
Excellent sales opportunities
Risks of A-cities
High purchase prices
Low return and often negative cash flow despite above-average rents
Opportunities of B-cities
e.g. Leipzig, Dortmund, Hanover, Dresden, Nuremberg, Bonn, Bochum, Duisburg, Essen, Karlsruhe, Münster, Wiesbaden, Bremen, Mannheim
Lower purchase prices than in A-cities
Higher yields and better cash flow than in A-cities
Rising rents
Value development
Low vacancy risk
Nationally important business locations
Good security & predictability
Rising relocation rates
Good sales opportunities
Potentially increasing relevance due to remote work capabilities etc.
Risks of B-cities
High competition due to increasing demand
Opportunities of C-cities
e.g. Magdeburg, Aachen, Erfurt, Bielefeld, Darmstadt, Heidelberg, Kiel, Erlangen, Regensburg, Rostock, Wuppertal, Braunschweig, Augsburg, Lübeck, Constance
Relatively low purchase prices possible compared to A- and B-cities
Regionally significant business locations
High yield and good cash flow possible
Moderate sales opportunities
Increasing relevance due to remote work options and the like
Risks of C-cities
Higher vacancy and general investment risk
Lower performance than in A and B cities
Low move-in rates
Less certainty/plannability than in A or B cities, more research required
Less reliable data & metrics than A-cities
Success depends on individual property
Opportunities of D-cities
e.g. Coburg, Ingolstadt, Bamberg, Schwerin, Schweinfurt, Eisenach, Chemnitz, Lüneburg, Aschaffenburg, Trier, Ulm, Wolfsburg, Zwickau, Bremerhaven, Heilbronn, Jena, Hildesheim
Relatively lower purchase prices possible compared to other categories
Moderate regional significance
High yield and good cash flow possible
Moderate sales opportunities
Increasing relevance due to remote work opportunities and the like
Risks of D-cities
High vacancy and general investment risk
Lower value development
Low move-in rates, smaller (to shrinking) populations
Less certainty/plannability than in A-, B-, and C-cities, more research required
Success strongly dependent on individual property
Which Types of Real Estate You Can Invest In
There are many ways to invest in real estate. Whether you choose residential properties, commercial properties, or rental-pool properties depends on your goals and budget.
If you’re thinking about putting your money into real estate, there are several options to consider. Here are some of the most popular investment types:
Residential Properties: Condos & Houses
One of the most common types of real estate investments is residential properties. You can invest in either a condo or a house, each with its own pros and cons.
A condo is usually easier to manage and maintain since you’re only responsible for your own unit. Additionally, entering the market is often cheaper than buying a house. However, with a condo, you have less freedom, as you must follow the rules of the homeowners’ association.
A house offers more freedom and space, making it an ideal choice for families. You can design the house according to your preferences, which appeals to tenants looking for more privacy than an apartment provides. However, a house is often more expensive to purchase and requires more maintenance and upkeep. Alternatively, you can also invest in a multi-family property.
Commercial Properties: Offices
Another option is investing in commercial real estate, such as office buildings. This type of investment is often more complex than residential properties.
If you invest in an office building, you need to manage leasing to businesses and handle the property’s administration. You also have to ensure the building is well-maintained and that tenants are satisfied. However, the potential income can be higher than with residential properties.
Rental-Pool Properties
Another option is rental-pool investments. These are usually condos in a multi-family building or other jointly managed properties. The special feature of rental-pool properties is that they act like a form of insurance against rental loss during vacancies.
All participants in the rental pool share the risk together: rental income is collected into a pool and then distributed proportionally according to the size of each owner’s property. If a unit is temporarily vacant and generates no income, everyone receives slightly less—but a complete temporary loss is unlikely.
Since you also don’t have to deal with property management, rental-pool properties are ideal if you want to invest in real estate with minimal effort and low risk. However, you should be prepared to accept slightly lower returns.
Your Real Estate Investment Strategy
Do you have some savings and are wondering how to invest them in real estate? But how do you go about getting the most out of your investment? There are various real estate investment strategies to consider. It’s also worth thinking about creating a long-term plan to build an entire property portfolio.
Buy & Hold
This strategy involves buying properties and holding them long-term to rent them out. The advantage is that you benefit from rising property values over time while also generating rental income. However, when choosing a property, make sure it’s in a good location with high demand.
Fix & Flip
With this strategy, you buy properties, renovate them, and then sell them for a profit. This requires a certain level of know-how and craftsmanship, as you either renovate the property yourself or hire professionals. If done well, this strategy can allow you to make money quickly and effectively.
Buy & Develop
This strategy is a mix of the two above. You purchase a property in need of renovation and renovate it within the first three years. The renovation costs can be fully deducted for tax purposes. Additionally, this increases rental income and later allows you to sell at a higher price. The goal is generally to hold the property at least in the medium term.
By the way: You don’t have to stick to just one approach. You can also pursue different strategies—and sometimes a property you initially planned to hold long-term and rent out ends up being a unit you renovate slightly and sell relatively quickly.
Owner-Occupancy & Saving on Rent: What About That?
Strictly speaking, this isn’t necessarily an investment strategy, but it can still make sense. If you’re looking for an apartment or house for yourself, buying a property can help you save money in the long run.
You no longer pay rent and have the freedom to design the property to your liking. Unlike properties purchased purely as an investment and rented out, you cannot deduct interest costs for tax purposes in this case.
Here, you don’t need to focus as objectively on the location, since the property primarily has to appeal to you. However, you should consider the general prospects for resale. After all, your life plans may change, and ideally, you’ll want the property to have maintained or even increased its value.
Invest Successfully in Real Estate: Relaxed & Smart with Urbyo
Now you have a first overview of real estate investments. Ideally, your next step is to plan the process of your investment. The good news is: with Urbyo, you have the perfect partner to invest in real estate easily, quickly, and with professional guidance. Our team supports you at every step of your property purchase, if needed.
On our marketplace, you’ll find thoroughly pre-vetted properties, and for all questions or offers related to your financing, an expert will be by your side to guide you. The best approach? Schedule a non-binding consultation and get started. 🚀
Are Real Estate Funds an Alternative to Direct Investment?
At first glance, real estate funds may seem like a solid and diversified alternative to direct real estate investment. They allow investors to participate in various property projects by purchasing shares in a fund, without having to manage the purchase, administration, or maintenance of the properties themselves.
However, they also come with significant disadvantages. One of the biggest drawbacks is the absence of leverage. With a direct property purchase, an investor can achieve high returns with relatively little equity if the property value increases. This leverage effect is completely missing in real estate funds, as the investor only participates with the capital they contribute.
Additionally, in the current market environment, real estate funds often offer only modest returns—barely above inflation—and can even produce negative returns during crises. This makes long-term wealth accumulation slow.
In summary, real estate funds are generally not a meaningful alternative to direct real estate investment if your goal is high returns and the leverage effect.