The question of property: real estate funds on credit: Incorrect retirement

Closed-end funds have so far survived every crisis. Banks have understood it skillfully to sell the fund as a supposedly inflation-resistant properties pension. However, the plant has many hooks.

Closed real estate funds have so far survived every crisis. You have the Bauherrenmodell survived as well as the proliferation in the East, and they will not come this year under the wheels. Shares in office buildings, commercial buildings, hotels, and supermarkets are enjoying despite many failures extremely popular and have entered into this market since the banks, the investments in addition to equities, insurance, and securities have become the fourth pillar in the business with wealthy private clients.

Banks have understood it skillfully to sell the fund as a supposedly inflation-resistant properties pension, and the reference to the ailing pension funds did not miss its effect. The business of banking is booming. But whether investors achieve similar profits, is in the stars.

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The concept promises seemingly great benefits. Many small investors are joining together, divide commercial real estate and so are supposed to enjoy high returns that can not be achieved in residential construction. However, the funds are not as easy to maintain as many sellers are claiming. You need to be explained and complex. Opportunities and risks are hidden and can only be recognized with difficulty. This applies primarily to so-called savings funds to retirement. Here the units are not in cash but paid for with the help of loans. The pitfalls are apparent in the following example.

The proportion of a commercial building will cost 100,000 euros. In addition, the premium is 5 percent. For this, the investor will receive 20 years income of 6,000 euros a year. After that, the object is to be sold again. If all goes well, the investor will get back the used 100,000 euros in 20 years. but just as it is also possible that the final payment is higher or lower. Provided that the nominal capital flows back to 100 percent participation with a mortgage is comparable. Today, the investor puts 105,000 euros on the table, gets 19 distributions of each 6,000 Euros and gets the 20th dividend capital back so that flow backs a total of 106,000 euros at the end. The annual return of the payment stream is 5.58 percent before taxes. This is compared to fixed rate bonds offered at the moment, an excellent result. Since it is no wonder that real estate funds enjoy extraordinary popularity. After taxes, the bill looks compared to bonds even better. The interest rates on fixed-income securities are currently fully taxable. The income of real estate funds, however, are taxable in many cases only 75 percent, meaning that investors enjoy other benefits as a result of depreciation.

In connection with the loan, participations are traditional savings plans. There are many forms. They depend on the amount and term of the loans. If the participation funded as 100 percent, the investor receives 105,000 euros. Mortgages with interest rates fixed for ten years currently costs about 5 percent per year. The repayment is based on the objectives of the investor. Young savers are based on a long-running time, older specify when repayment on the gas because they want usually come to enjoy high dividends. Against this background, a repayment period of ten years has, for example, for a saver who is 50 or 55 years old, in. The investor puts in the first half of money, and in the second half, he gets the income and the capital back in full.