I come from a culture where owning property is encouraged and something everyone strives for. Most of my Canadian friends in my age group (early 30’s) own at least their first properties already.
Real estate doesn’t seem like such a hot topic here in Germany though. At least not amongst the people I know, who tend to be in the middle class.
Although things are changing. Over the past few years, low interest rates have been stimulating the housing market across big German cities.
Mr. German and I are toying with the idea of buying a small apartment in our city. Not because of the housing market, but because we feel we are in a strong position to buy.
Our criteria is pretty standard for a young couple:
- 2 bedroom apartment
- 120K max
- low maintenance fees
- well kept building
- a nice, walkable area
- near amenities (grocery shopping, transit, etc…)
- minor renovations to add value
We have been actively searching for about 5 months, and are now in serious talks with the owner of a 67 sq metre (721 sq ft) flat that fits all of our criteria.
The process is a bit on the slow side, which suits us well since we’re not 100% sure we’re doing the right thing.
If we buy this place, we would be ‘house rich but cash poor’, which is a hard pill to swallow.
I will admit though, that I want to buy this flat. Not because it’s good for us financially, but I want to buy it for emotional reasons. I’m tired of living in temporary flats and want to live in something nicer that’s ours. Basically, I’m falling into the trap of romanticizing home ownership, and I know it too!
We’re trying to figure out whether this fits with our early retirement goals.
It definitely could, because it reduces our monthly expenses which is what we are aiming for. But it could also inhibit us since we wouldn’t be able to create passive income with the capital that’s tied up in the property.
There are other things we can do though, like rent out the other bedroom to help us pay for it. But we probably won’t do that, since we don’t want to live with a roommate.
We’ve said that we would be fine with any outcome, but the outcome that involves owning something is much more involved than continuing to rent.