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REAL ESTATE INVESTMENT COMPARISON - GERMANY
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Modernized Old Property vs New Property
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INVESTMENT PARAMETERS
Modernized OldNew Property
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Total Investment€300,000€500,000
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Structure
€250k property + €50k modernization
€500k new build
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Investment Difference€200,000 MORE
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Initial Monthly Rent€1,400€1,900
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Initial Annual Rent€16,800€22,800
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Rent Difference (Annual)€6,000 MORE
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Mortgage Terms4% interest, 1% repayment4% interest, 1% repayment
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Annual Mortgage Payment€15,000€25,000
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Depreciation Method
Linear 2% (property + modernization)
Degressive 5% (§7(5a) EStG)
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KEY METRICS COMPARISON
Modernized OldNew Property
Difference (New - Modernized)
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AFTER 10 YEARS
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Cumulative Net Cash Flow€28,443€43,166€14,724
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Property Value€365,698€609,497€243,799
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Remaining Debt€263,982€439,969€175,988
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Equity (Value - Debt)€101,717€169,528€67,811
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TOTAL POSITION€130,159€212,694€82,535
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Return on Extra €200k Investment
41.3%
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AFTER 15 YEARS
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Cumulative Net Cash Flow€47,852€61,685€13,833
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Property Value€403,761€672,934€269,174
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Remaining Debt€239,929€399,882€159,953
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Equity (Value - Debt)€163,831€273,052€109,221
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TOTAL POSITION€211,683€334,737€123,054
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Return on Extra €200k Investment
61.5%
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AFTER 20 YEARS
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Cumulative Net Cash Flow€70,446€78,766€8,320
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Property Value€445,784€742,974€297,189
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Remaining Debt€210,666€351,110€140,444
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Equity (Value - Debt)€235,118€391,864€156,746
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TOTAL POSITION€305,564€470,630€165,066
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Return on Extra €200k Investment
82.5%
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TAX BENEFIT ANALYSIS (Year 1)
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Modernized OldNew PropertyDifference
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Annual Depreciation€6,000€25,000€19,000
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Interest Payment€12,000€20,000€8,000
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Total Deductions€18,000€45,000€27,000
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Taxable Rental Income€-1,200€-22,200€-21,000
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Additional Tax€-426€-7,035€-6,609
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Net Cash Flow (Year 1)€2,226€4,835€2,609
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CONCLUSION
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