Real Estate & Passive Income: Which Property Should You Invest In?
GermanReal.Estate gives investors the chance to invest in real estate and receive passive income. With 1€ real estate investments, this is the easiest way to invest in the German property market.
Key Takeaways
- When investing, you get to pick the right combination of interest rate and profit share! This is depending on your personal strategy.
- Property developers need at least 10% to 20% equity to get financing – that’s where you as an investor come in!
- Our Community Portfolio is an example of how long-term investing in the real estate market in Germany work.
- Leipzig is a location in Germany with one of the highest potential growth rates. We have several investment opportunities here.
- GermanReal.Estate is going international. We will launch our first two international projects in Croatia and Dubai soon.
Real Estate & Passive Income: Which Property Should You Invest In?
If you want to invest in real estate and receive passive income at the same time, there are a lot of different options available to you. Since we’ve been adding several properties to our website over the last weeks, with many more to come, some of you have been asking what you should invest in.
In this article on the GermanReal.Estate FAQ, we’ll be ranking all available properties, and looking at upcoming projects, based on the passive income and the profit share to be paid when the property gets sold.
Fixed Interest Rate & Profit Share Explained
There can be many differences between the different real estate investments you’ll read about here, but what matters from an investment perspective are mainly two things:
First is the fixed interest rate you will receive for your investment. Depending on the investment, you can get interest payments every quarter, half year, or year. To make investment returns easier to compare on our website, we always present the fixed interest rate on an annual basis.
Second is the profit share when the underlying property, or properties, gets sold. To use a simple example, when the profit from the property development is 100€, and the profit share is set at 10%, all investors together would receive their share of 10€.
In case you are confused about how this works and want more information on how we made it possible for you to invest in real estate in Germany for 1€, you can have a look at this article that explains the process of tokenization and how you can invest in all the different properties that are described here.
Our First Property next to Düsseldorf
The first property we launched last year is a beauty located close to one of the top seven cities in Germany, Düsseldorf.
The property is currently under construction, and when you help fund the property development, you will receive a 4% fixed interest rate as well as a 20% profit share when the property is eventually sold.
Why Are Property Developers Paying High Interest Rates?
Since 4% is a pretty good interest rate, and there are a lot higher interest rates to come, many of you will have the question, “Why are you paying such high-interest rates? Is this a scam?”.
First of all, if we wanted to scam you, we would give you a 14.000% interest rate, such as you get promised on some of these crypto websites. And no, we won’t tell you which websites are promising such crazy interest rates because we don’t want you to lose your money!
Second, if you understand the business model of a property developer, it makes sense that they pay us a high-interest rate when helping them to fund their projects. No property developer gets 100% financing from the bank. To get a loan from the bank, property developers have to bring at least 10% to 20% equity to the table to get financing from the bank.
When constructing a 5 million € property, that would be a 1 million € down payment! Property developers pay us a nice interest rate because they can use our investment as a down payment to qualify for bank financing. More so, they can use our investment as rolling equity to start multiple projects at the same time. We’ll get into this topic in more detail in another article.
As An Example – 4% Interest + 100% Profit Share
When the construction in Düsseldorf is done, our plan was to buy the entire property, tokenize it, and then rent it out to earn steady passive rental income for our investors. A project like this in a good location could have a rate of return of 4% each year.
Then, when a good market opportunity presents itself, all investors could come together and vote to sell, with the profit being split among investors. We still don’t have enough investors and might not manage to do this for this project, but this is definitely something we want to do with a future project! What do you think?
The Community Portfolio - 2% Interest + 50% Profit Share In Düsseldorf
This was the idea behind launching our Community Portfolio in February 2023. The first property in our community portfolio is a property in Düsseldorf. Our investors voted that 50% of the returns would be paid out and 50% would be reinvested to grow the portfolio, so the numbers are half of the prior example.
So far, we’ve been very happy with the investments we’ve received, and if this growth continues, we will soon be reaching out to investors to vote on which property to add to the portfolio next. We already have several different options on the table.
In our view, this is the big benefit of Real Estate Security tokens – that we can come together as a community and use our swarm intelligence to vote on what is in the best interests of all of us!
Two New Projects Launched
We just launched two new investments a few days ago. One project is the construction of a property in Leipzig with a 7% fixed interest rate and a 7.5% profit share when the property gets sold. A second project is a portfolio with a 9% fixed interest rate and a lower 5% profit share once any property in the portfolio gets sold.
This is the idea! As an investor, you get todecide what is important to you. If you want regular passive income, you can choose a high fixed interest rate. However, if you want to profit long-term from rising property prices, you can choose projects with a higher profit share.
Our recommendation would be to diversify to spread your risk and invest in multiple different properties.
Let’s move on from the investments currently available on our website and take a sneak peek at what’s to come.
Sneak Peek: 6% Interest + 20% Profit Share In Croatia
We’re going international! Croatia recently joined the Eurozone, and a company in Croatia reached out to us seeking investment in a villa. They wanted us to tokenize it for them for an estimated long-term 6% fixed interest and a 20% profit share. Probably. At the time of publishing this article, we’re still working on the details, and the numbers in the final offer might be slightly different.
Sneak Peek: 10% Interest + 10% Profit Share In Dubai
When investing in German real estate, the B and really good C locations are the absolute sweet spot! Someone with expertise and connections in the Dubai property market reached out to us and told us it is the same there. Properties in B and C locations in Dubai are where the money is being made.
So we decided to get involved! We’re about to launch our first property portfolio in Dubai, giving our investors the chance to invest in this exciting country. The investment will have a 10% interest rate for passive income and a 10% profit share.
GermanReal.Estate has been online for exactly half a year now, and we’re about to have nine different investments in three countries. This is incredible, and we can’t thank you guys enough for your support!
Two More Before We Go!
Two more properties should be going live in April 2023. Again, we’re staying in Leipzig for these two, as it is one of the most attractive real estate locations in Europe at the moment!
First, a Fix and Flip with a 10% fixed interest rate and a 5% profit share, and second, a construction project with 12% passive income and a 5% profit share.
Check out all the details of the projects described in this article on the GermanReal.Estate Marketplace, and educate yourself about the projects before investing.
Thank you, investors! And happy investing!
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