Preparing for Your Retirement
Homeownership is one of the best ways to prepare for your third stage in life and to protect yourself against old-age poverty. Those who acquire property for owner-occupancy will see their housing costs drop to a negligible amount once they repaid their loans. The same goes for buy-to-let investments: Given the steadily widening pension gap, rental income can act as a stable additional component of your private pension plan.
Residential real estate makes it easy for private households to grow their wealth. Paying off their mortgage loans automatically builds up their real estate assets, year after year. The distribution of wealth within the German population reflects the fact: A survey conducted by the Bundesbank in 2019 found that the median wealth of German homeowners equalled 277,000 euros whereas the median wealth of tenant households was a mere 10,400 euros.
Earning Sound Returns as Buy-to-Let Investor
Compared to financial investments like government bonds, life insurance policies or classic savings accounts, investing in residential real estate will give you a much higher rate of return. Virtually all conservative investment formats have stopped yielding substantial returns – and there is nothing to suggest that this cycle will end any time soon. And it contrasts starkly with the permanently stable appreciation of residential real estate.
Becoming Independent as Owner-Occupier
People living within their own four walls are protected from rent increases. They are not tied to any landlord, and need not worry about the threat of having to move out because their landlord claims intended owner-occupancy. Moreover, they can decorate their home any way they want to. So, there are a number of reasons why the dream of a home of their own has such significance for so many people.