As I promised in the previous article, I will write an article about buying real estate on credit in the light of new interest rates.
However, there are a few basics to this article:
The old wisdom on the stock market is that you need to sell your stock when the housewives are already buying the kitchen money. Now the same situation in the real estate market, he is already buying happy-unhappy real estate for investment purposes. From here, the price drop may not be far away. According to preliminary data, real estate prices have fallen by 1.5% in the last quarter. Budapest prices have long been cheap compared to the prices in the surrounding countries, if we take into account income. (Article here) This does not mean that prices will fall soon. However, this is also thick in the deck.
Everybody wants to buy real estate because the bank does not give interest on investments. Four and a half years ago, you could even get 7% on a simple bank deposit. If there is a visible interest in the bank again, not many will want to bother with renting a home.
Rents have gone up because many people have bought real estate for investment, but they don’t want to rent it, so much less affordable rental housing has become available.
There may also be a fall or long stagnation in rents
I remember vividly that we were happy in 2001 to get a three-bedroom apartment with a window overlooking the M5 motorway for $ 70,000 a month. That apartment could be rented for so much in 2012. Don’t think about rents rising year by year, or at least not falling.
Real estate is not a risk-free business, even by accident. You run not only the risk of market prices but also the risk of tenants or their lack. Many can tell horror stories of how many months or years they were able to get rid of an unpaid tenant and how many hundreds of thousands of unpaid bills they left behind, not to mention the broken up and occupied homes.
Real estate is a job, not just your money at the beginning of the month. I have heard from others that caring for the three real estates is already giving away a half-stance, and that they have been discouraged. Calculate that too.
If you are into real estate renting
you are bound in a clog, you cannot rent real estate remotely from two thousand kilometers. But even 150 kilometers away is not easy.
There is no real property tax in Hungary today, as opposed to almost all European countries. If implemented, the price of all real estate will drop dramatically. This is also a risk.
If you only have to spend two million to renovate your property in ten years, your monthly cost of $ 17,000 will also be charged to you for operating costs (broken, clogged, broken).
It is not enough to buy the property, you have to write it on your name (4% fee plus 0.5-1% lawyer), and it has to be slapped and arranged. Once you sell it, the realtor will take it down by up to 5%. Don’t forget that.
You do not always have a tenant, and if you bring a tenant for real estate, you will also be charged a month’s rent. So don’t count on 12 months of revenue per year.
You should be taxing your income, and don’t forget to deduct it
– Being indebted is a serious risk by all means. Either way, never take out a loan that you wouldn’t be able to pay twice the amount of your repayment each month. (If you were to lose your salary, you would be unemployed in the next economic crisis if, after an accidental third child, your wife’s income falls and she is prepared for the other chances.) Never borrow more than 10 years.
Many people have burned themselves just because they were greedy. Greed is always a bad advisor. If you do not have enough capital and you do not have the financial security, you do not want to get credit right now. (An article on this)
After so many introductions, let’s see how you buy real estate for rent for 10 years on a fixed loan.
Since I have already made a calculator for this, we can use it now. However, the calculator does not expect you to collect interest on that part as an alternative to collecting the money yourself. In other words, it does not calculate the lost interest on the difference between the rent received and the loan installer. Other than that, it’s a versatile calculator, feel free to use it.
Let’s examine three options:
First, let’s start with the fact that time stops, nothing changes for 10 years. There is no rise or fall in rents or real estate prices.
Let’s take a 25 million home loan, which in the end cost 28 million forints after tax, attorney, equipment, etc.
We spend this for $ 140,000 a month, counting 10 and a half months a year. (Average after tax is HUF 104,125 / month) Renovation cost is HUF 2 million over 10 years, which will be deducted from the value of the property at the end.
After tax, we pay HUF 12.5 million from rent, we pay HUF 33.2 million in 28 years for a total of 28 million, and the loan will be repaid by HUF 276.8 thousand per month.