Object Selection

Property selection refers to the structured process by which buyers or investors filter through a wide range of real estate listings to identify those that meet their financial, tax, and personal requirements. It is a crucial step in any investment or purchase decision and significantly determines long-term returns and satisfaction. A well-informed property selection takes into account location, condition, financial feasibility, and potential for tax optimization.

Criteria for Property Selection from a Tax and Financial Perspective

From a tax and financial perspective, depreciation options (AfA), the ratio of land to building in the purchase price, and the rent-to-price ratio play a decisive role in property selection.

• Depreciation (AfA): The building portion of the purchase price forms the basis for tax depreciation. A high land portion reduces the AfA basis. In Nuremberg, where land accounts for a significant portion of the total purchase price, it is worth examining whether a purchase price allocation via an appraisal can realistically increase the building portion.
• Historic Preservation: Properties under historic preservation allow for increased depreciation under Section 7i of the German Income Tax Act (85% of modernization costs over 10 years) or Section 7h of the German Income Tax Act (renovation/development areas). There are numerous listed properties in Nuremberg’s Old Town and in Erlangen-particularly interesting for investors with high tax rates.
• Rent Multiplier: The ratio of purchase price to annual gross rent (also called the multiplier) indicates how many years it takes to recoup the purchase price through rental income. In Nuremberg, multipliers for condominiums recently ranged from 25 to 35, depending on location. Properties with lower multipliers offer higher initial yields.
• Financing Costs: Fixed-rate periods, equity ratios, and amortization rates significantly impact cash flow. An excessive interest burden can turn an attractive property into a negative cash flow investment.

Investors purchasing property in Nuremberg should factor Bavaria’s real estate transfer tax (3.5%) and notary fees into their overall yield calculations.

Property Selection by Use Type and Investor Type

Private owner-occupiers prioritize different criteria than institutional or private investors. While owner-occupiers focus on location, amenities, and infrastructure, investors look for stable rental yields, appreciation potential, and low vacancy risk.

In Nuremberg, neighborhoods such as Langwasser, Gibitzenhof, or Gostenhof, with high tenant demand, are attractive to investors. Wohlgelegen or Thon are preferred by owner-occupiers seeking quieter residential areas with good infrastructure. In the surrounding areas-Fürth, Erlangen, Schwabach, Ansbach-properties with solid tenant demand are often still available at lower purchase prices. A clear definition of your own investor type is a prerequisite for a targeted property selection.

Investor Types and Their Priorities:

• Owner-occupiers: Location, infrastructure, floor plan, amenities
• Yield investors: Net rental yield, vacancy risk, maintenance costs
• Appreciation investors: Micro-location, development potential, land value appreciation
• Tax-focused investors: Historic preservation status, high depreciation allowance, redevelopment zone

Checklist for property selection

A professional property selection process includes at least the following:

• Review of the energy performance certificate (energy efficiency class, heating system)
• Analysis of the declaration of division and WEG minutes from the last three years (for condominiums)
• Obtaining a current land registry extract (encumbrances, easements)
• Assessment of the structural condition by an expert
• Realistic estimation of the achievable market rent through a comparison of rent indices
• Review of the maintenance fee and operating cost statements (for condominiums)
• Clarification of outstanding special assessments and the amount of the maintenance reserve
• Review of buildability and any building encumbrances

We guide buyers and investors in the Nuremberg metropolitan region through every step of the property selection process and help identify hidden risks early on.

Practical Tip for Property Owners in Nuremberg and Franconia

In a tight market like Nuremberg, speed is crucial-but thoroughness must not suffer as a result. Those who buy under time pressure and rush the property selection process risk costly repairs or an excessive financial burden. We recommend defining a personal requirements profile in advance (budget, location, expected return, time horizon) and evaluating viewings based on a standardized set of criteria. This allows for well-informed decisions even in a fast-moving market.

One often-overlooked aspect is the liquidity reserve after the purchase: Anyone who invests all their savings as equity and does not maintain a reserve for repairs or periods of vacancy exposes themselves to unnecessary risks. As a rule of thumb, keep at least three to six months’ worth of base rent as a reserve.

Frequently Asked Questions

How many properties should I view before buying?

That depends on the market and your experience. First-time buyers should have viewed at least five to ten properties to develop a sense of value for money. Experienced investors often make a decision after two to three viewings, provided the preliminary research was thorough. In a very fast-moving market like Nuremberg, however, even a single top-tier property that meets all criteria can be immediately appealing-this is where the quality of your preliminary preparation counts.

How do I consider tax implications when selecting a property?

Discuss your purchase plans with a tax advisor early on. Key factors include the building’s share of the purchase price (basis for depreciation), potential tax benefits for historic preservation, and the planned holding period (10-year speculation period for rental properties). The question of whether a property should be held as business assets or as a private investment also has significant tax implications.

Can my real estate agent help with property selection?

Yes, a locally knowledgeable agent is familiar with the micro-locations, current rental price trends, and typical pitfalls in the region. We support you in a structured pre-selection process and provide reliable market data for your decision-including insights into potential and risks not visible in the property listing.

At what purchase price does it become worthwhile to obtain an expert appraisal when selecting a property?

As a rule of thumb, we always recommend an assessment by a building expert for purchase prices of 200,000 euros or more. For existing properties over 20 years old, outdated plumbing, moisture damage, and unknown environmental contamination are common risks. The cost of a brief appraisal (300-600 euros) is negligible compared to the potential damage.

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