How can I invest in real estate?

Buying a property is just one way of investing in real estate. This also entails some risks:

• The investment required for purchase and maintenance is high. Properties have to be managed and maintained.
• If you decide to resell the property, the selling price is rarely the same as what you paid for it – with any luck, it may be higher, but there is also the risk that its value may have fallen. This may be due to rising financing costs, for example.
• The sale of apartments and houses can also be a long process.
• If you wish to successfully let an apartment and keep it long-term as an investment property, using a professional management company is recommended, because renting out the property sometimes involves high costs.

This means you do not know in advance how much money you can get back from your investment or how quickly. Then there are taxes that must be paid on the imputed rental value or when selling.

Indirect investment – a smart option

An alternative is indirect investment. In this case you do not purchase a single property directly but instead invest in a whole basket of real estate via shares and funds. Unlike direct investments, here you obtain a well diversified portfolio  In relation to a fund or securities custody account, the portfolio refers to the composition of the types of investment it contains (e.g. shares, bonds etc.). with a lower financial commitment. Indirect investments include:

Real estate shares

When buying real estate shares, you benefit from lower volatility, for instance, compared to the price fluctuations on the SMI. The following principle also applies to real estate shares: supply and related prices are dependent on developments in the equity markets and the real estate markets.

Real estate funds

Real estate funds are another attractive option for investing in property. It is entirely up to you whether you wish to invest your money in apartments, houses, office buildings or shopping centers. A wide range of real estate funds are available. As the funds can be regularly traded, liquidity is higher than with direct investments. This means you have quicker access to your capital. 

Crowdinvesting

Crowdinvesting is an increasingly popular option. The principle is very similar to crowdfunding. But here investors finance real estate instead of projects. Several investors jointly purchase a co-ownership share in a property. The providers undertake to manage and let the property over an investment horizon of six to ten years. However, there are also risks in this respect, such as vacant properties, poor management and generally also losing out on a return, as agency fees are also incurred for the projects. Selling costs also have to be taken into account (possible transfer-of-ownership costs).

Real estate to complement your portfolio

Real estate can be a good addition to the portfolios of private and institutional investors alike. You could, for example, hold a real estate fund and supplement your portfolio with selected real estate shares – but always make sure this does not result in cluster risks. If you have already achieved the dream of owning your own home, for example, additional real estate funds may create an imbalance towards property in your portfolio. Make sure you consider all the options beforehand and select the one that best meets your preferences and objectives.