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10th August 2018

Location, location, location! How to evaluate a neighbourhood.

Have you ever asked yourself, how did that lucky guy actually do it? He bought that property in a German town you never heard of and after five years he doubled the value of the property.

So is it just luck or is it more..?

What is the only aspect of a property you can’t change? You can change the color of the facade, you can renew the outsides or the ground plan of the apartments. But after you bought a property you never can change the location of it. That aspect makes the research process on the location, the neighborhood and the nearer surroundings to be the most important part of your due diligence process before buying a property. It’s difficult to see the benefits of buying a studio apartment building with 80% vacancy in the vicinity of a small town, located next to a wheat field. But having the information that the town will build a big university on the wheat field within two years, makes it a great investment. The key thing here is: having the right information at the right time and get the right action out of it.

In Germany we are lucky (unlucky if you don’t speak German) to have a lot of sources for all vital information. There are statistics from the government about population, economy, employment rates, tenant to owners rates, development projects and many more. There are sources for rent statistics like „Mietspiegel“ or purchase price trends for properties. But in this case, the blessing is also the curse. Everyone has access to this information, so whenever news are released it’s almost too late because anyone else was faster and your chance is gone.

The real magic in evaluating a neighborhood or a location for an investment is getting real time information beforehand directly from the ground. It is about being very well connected in the business as well as in locations and economic sectors. It’s about building up friendships and partnerships with people having the information you need and having live property performance data, which creates a very powerful prediction of future growth areas. It’s about being the lucky guy yourself and having the knowledge to get the right actions out of information you get and having the experience to identify and use possibilities to make your investment a great success.

Find the right partner to help you evaluate the neighborhood!

Foreign investors don’t have the ability to be directly on the ground in Germany and rely on companies, like Investix, to know where and when to source the right investment opportunities. So the first step of any foreign investor should be to find the right partner rather than searching for the right property.

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Michael Baumgärtner Asset Manager

Helping investors from all over the globe to Source, Structure, & Manage their real estate investment portfolios in Germany.


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