Frankfurt, Düsseldorf And again normal rental apartments became so-called “exclusive residential property”. It was like that in Berlin-Wilmersdorf, in Moabit and now also in Birkenstrasse. The Szymanski have lived there for decades. But now their block has been sold to an investor. The long-established tenants are to be evicted – they can then no longer afford the renovated rooms.
This is what the real estate market in Germany looks like in many places. Housing is becoming more and more expensive. Two authors address this topic in very different ways. Michael Opoczynski, former presenter of the ZDF business magazine Wiso, creates in his novel “Eigenbedarf” the image of courageous tenants who want to oppose the trend. And the financial expert Gerd Kommer analyzes in his guide “Buy or Rent” which option is better.
The steep rise in apartment rents has led many people to consider buying an apartment or a house and grappling with countless questions. Is it worth buying – even now that prices have soared?
Or wouldn’t it be better to keep renting, even if it is getting more and more expensive? What return would a property generate? And what are the costs for property buyers and owners? Financial expert Kommer tries to provide answers to these questions – and comes to a surprising conclusion.
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Because, according to Kommer, the prevailing opinion on real estate is “completely wrong” on the most important points. “The topic of owning a home is so overgrown by round table myths, half-truths, wishful thinking, selective perception and conflicts of interest in the finance and real estate industry that the view of the facts is almost completely obscured,” warns the author, who has previously written several non-fiction books. Among other things, the title “Sovereign Investing with Index Funds and ETFs”, which was awarded the German Financial Book Prize.
Gerd Kommer: Buy or Rent? How to make the right decision for you.
campus
Frankfurt 2021
285 pages
27.95 euros
Of course, Opoczynski also uses the clichés of good (the tenants) and evil (the investors). But his novel is well thought out and sensitively points to an omnipresent problem. Despite the complexity of the subject, the author takes the time to breathe life into his characters and to spin a multi-layered story that arouses curiosity from side to side about what’s to come.
“19 greatest myths” about real estate
Will the Szymanski be able to save their apartment from the investors? Above all, however, “personal needs” is an appeal packaged in the form of a detective novel that the real estate market has got into serious difficulties. Who can still afford to live, let alone buy, today? Should you even go into this area at the current prices?
Kommer ties in with this. At the beginning of his new book, he analyzes the “19 greatest myths” about real estate. He pays particular attention to the two factors risk and return. The latter in particular is dealt with in such detail that the reader can then easily come up with specialist knowledge of indices such as the Herengracht index during discussions. The author explains in detail which costs should be included in the return calculation and which expenses – such as renovation costs – are often underestimated.
With reference to historical series of numbers and with the help of examples and arithmetic examples, financial expert Kommer comes to a clear conclusion: With an investment in a diversified buy-and-hold ETF portfolio (60 percent stocks and 40 percent bonds) you would achieve a better return than with the purchase of a property.
For the average German homebuyer in the past 51 years, renting has been “at least as profitable” as buying – “and, strictly speaking, even more profitable,” warns Kommer. The “only and mundane requirement” that applies to this conclusion is that the tenant is willing to save in the long term and in a disciplined manner, as high as a homeowner who takes out a loan and spend 25 to 30 years erases.
Michael Opoczynski: Personal use. Detective novel.
Benevento
Elsbethen 2021
240 pages
20 Euros
The dusty saying that the smart buy and the stupid rent is exactly that: a dusty old wives’ tale, ”says Kommer. And he is convinced that things will not look any different in the future either. He himself – 58 years old, childless, lives in Munich – has faced the decision several times in his life whether he should buy a property or not – and decided against it. He grew up in his own home in Upper Swabia.
But there were two reasons for him not to do the same with his grandparents, parents, siblings – and millions of property buyers – on the one hand, his frequent job-related moves and, on the other hand, his conviction that a tenant can achieve a better return with an investment in the capital market.
Kommer is well aware that the decision for or against a property is not only made taking into account the return, but can also reflect a lifestyle decision.
That is why he dedicates himself in his book to 28 arguments for or against buying real estate, for example the often heard view that as a property owner one is “forced” to save and thus to happiness by repaying a loan. Here, too, Kommer points out that a person who has invested the same amount in a custody account will have saved at least the same wealth in the end – if not more.
But to expect that many people will show the same discipline when they voluntarily put money aside as when a bank is on their toes when repaying loans is unrealistic – Kommer admits that too.
The topic of home ownership is so overgrown by round table myths that the view of the facts is almost completely obscured by them. Gerd Kommer, financial expert
For him, there are two main arguments in favor of buying a property: that of compulsory savings and the fact that many people are not familiar with investing in the capital market – they would have to seek advice from financial advisors, banks or the media that are guided by interests – and let investment products seduce you. In his book, he gives you advice on building a good investment portfolio as an alternative to owning your own home.
Whether you share Kommer’s opinion or not: The book provides helpful suggestions for making a well-considered decision for or against owning a home. And if you want to do the same thing as Kommer in renting, you can see from the example of the Szymanski that it can definitely be worth standing up for your rights and values - albeit with unconventional measures.
More: Investing in apartments – so much return is still possible.