Immo-Tips

OUR IMMO-TIPPS ARE PUBLISHED REGULARLY IN OUR WEEKLY NEWSPAPER BASICS

 

Mag. Bernhard Grossruck

M+43 664 20 19 128
F+43 512 582 535
Ebernhard.grossruck@arealita.at

RENTAL FEE AND TENEMENT HOUSE; SMALL CAUSE, LARGE EFFECT

At first glance hardly any real estate values lie as far apart as the monthly rent and the value of a whole tenement house. A rent-determination with too little care and a non professional leasing of properties has major consequences on the whole value of a property.

One has to fight his or her way through a jungle of rent-development regulations. At this point the legislator wanted to do justice to the inconsistent property objects. Because every single property or apartment is different, even if they are in the same house.

Repayment claims of tenants are only one result of incorrect determination of rent. Apart from the legally standardised rent-limits, the rent should not be estimated too high in the area of freely negotiated rents in order to place the property on the market at the right price and to avoid scaring off potential buyers because of rents above the market level and therefore in the long run making the objects uninteresting. The rent as an income has major impacts on the income approach, which on the other hand has a big impact on the leased investment property. This should - according to the legal regulations and as far as possible - be determined according to the market level by an appropriately trained expert. Once rented out too cheap it can have fatal consequences for the whole value of the property. Especially if, in addition to that, a wrong limitation leads to an unlimited tenancy.

Because in a case like this a property valuer primarily evaluates the net rental payments coming up to the landlord and capitalizes them as a cash value at the valuation date. These earnings values by all means lie below the entitled real value of a property. Furthermore the interest rate, which is in accordance with the expected return of the investor, has a major influence on the value of rented properties. At the moment the expected return is, at a time of capital flight regarding properties, is historically low and the equivalent earnings values for these kinds of properties is high. This differs depending on the property category - thus a golden age for sellers of rented properties. But also hidden potentials can be raised by tenement houses. One need only think of the possibilities of raising a rent, the sale of empty units for the real value, etc.

Therefore, this is my Immotip for you: All in all the treatment of matters, that on first sight lie this far apart from each other but are interlocked at the same time, like leasing and investment properties, needs extensive, relevant expertise and experience, to raise potentials or even to avoid great harm.