I started to study away from home, at the moment I live in my own flat and get everyday by car or train to the university. Its very time consuming as i need about 4 hours everyday only to get there and back. I want to move to my university to have more free time.

Now I'm trying to figure out what to do with the flat. I could sell it for 85k, take 15k to help pay rent, take a job and live that way. The rest could be invested in (???) for 5-10 years.

I could keep the flat and rent it to a friend, that would net me around 350-400 each month, but I would have to pay if anything gets broken in the flat, and if he decides to move I would have to search for a new person to rent it to (And no cash flow it is empty for a few months which I rely on to pay my bills). If I have no luck and "bad" renter would move there will be trouble and I want to avoid this, as I want to spend most of my time to study not to manage the flat. After getting my degree I would then sell the flat. (I'm sure I would move again in there).

From a financial standpoint, with one would make more sense? Is it true that a financial crisis is ahead and now is a bad time to invest?

Is it possible to invest all the money and live from the monthly dividends?

The plan is to have the least trouble with managing the and to have a constant stream of income.

The flat is in a relative new building from 1994. Good management, perfect location and around the city is a massive industry so employees like to move here. I'm sure there wont be any drop in value, it's more likely that it would gain value

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    "Is it true that a financial crisis is ahead?" - The thing about predicting financial crisis' is that they are self-fulfilling prophecies. The moment everyone is convinced that a crisis will happen and starts selling assets is the moment where it does happen.
    – Philipp
    Nov 26 '17 at 15:04
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    Have you considered selling your flat and buying a new property near your university? The feasibility would depend on secondary real estate purchase costs, but these vary depending on location, and you don't even mention what continent you are on.
    – Philipp
    Nov 26 '17 at 15:08
  • I'm in Germany, buying a new property is not an option for me, as I want to live in a shared apartment with people from my university.
    – JDizzle
    Nov 26 '17 at 15:33
  • Can you afford to weather a period of no rent, or major repair, or will you be needing all the income from the rental to afford your new accommodations?
    – Hart CO
    Nov 26 '17 at 16:23
  • One period would be manageable, but any more than that would be hard to compensate
    – JDizzle
    Nov 26 '17 at 17:07

Frequently selling and buying properties is generally not advisable in Germany due to the high cost for property purchase tax ("Grunderwerbssteuer") and land registration fees ("Grundbucheintrag"). You can generally assume that ever time you trade homes, you pay about 10% extra. So it is likely a good idea to keep your property and rent it out while you don't need it so you can use the rent to pay for your new room. That's especially true if you expect the property to increase in value.

Also, due to the low interest rate right now, real estate is practically the only good capital investment. A 85k asset which makes you 4.8k each year is a return of investment of 5.6%*. Any financial asset promising you that kind of dividend at the moment is likely equivalent to gambling.

* yes, I ignored maintenance costs, but it's still a really good deal.

If you want to rent out your flat as stress-free as possible, give it to a property management company ("Hausverwalter"). In exchange for a percentage of the monthly rent they will take care of all the small stuff (like hiring handymen to fix broken toilets). You might still have to pay for really expensive investments, though (like replacing a leaking roof). But when something like that happens, you should have no issue to finance it with a loan because you have a real estate as a security.

However, keep in mind that the German tenancy law might make it difficult (but not impossible) to get rid of the tenant in case you want to move back into the apartment. Google "Mietrecht Eigenbedarf" for more details. Should you decide after your study that you don't want to move back, you can always sell the flat with the tenant. But rented properties usually get far lower prices on the real estate market than empty ones.

Regarding covering your cost of living besides rent during your studies: If you are eligible for BAföG (state-sponsored student loan), you should take it, because it's an offer simply too good to refuse. It's literally free money. But unfortunately you are not, because you own too much real estate wealth you are not living in. But you should ask your bank for a loan backed by said property. That way you will likely pay far less interest than with a regular private student loan which isn't backed by anything except the hope for a relevant degree.

  • Yes i thought about the option to take a loan if something happens, but in my situation i need every cent to get by, I wont have anything left over when the month ends. Paying back a loan seems impossible without working more, but then again I want to have as much time to study as possible. Would it make sense to go for a "Studienkredit" where I get every month 200-300 extra to build up something on the side. The loan would run for 3-4 years with 3.6 ppa. After finishing university i could sell the apartment and pay back the whole thing at once.
    – JDizzle
    Nov 26 '17 at 17:19
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    @JDizzle If you are BAföG-eligible, then it's almost always a good option. Half of it is free money and the other half is a zero-percent interest loan you don't need to start paying back until you have a real job. But a private loan with a 3.6% interest is quite exorbitant right now. You have a real estate property as a security, so you should be able to get a much cheaper loan. Ask your bank for details.
    – Philipp
    Nov 26 '17 at 17:34
  • Okay, will talk to my bank, sadly not BAföG-eligible anymore because a switched my topic too late. Thanks for the advise.
    – JDizzle
    Nov 26 '17 at 17:46
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  • There is also the tax benefit of renting the property out. You can get tax back for repairs, which you can't if you live in it yourself.
    – simbabque
    Dec 4 '17 at 11:29

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