The
“me too” syndrome affects investors. If Berlin property market appears hot
everyone wants to get on the bandwagon and make a profit while the going is
good without considering short term or long term factors or even other factors
that could change the scenario. A sound investment strategy must be in place if
an investor aims to create wealth.
Consider
property taxation in Berlin. Unlike Munich or Hanover, the city relies on
property taxes for its funding and there always lurks a likelihood that the property
taxes may come in for a hike because most properties in Berlin are undervalued
if one considers the current market prices.
This
is just one of the many different things that can happen when one
considers Berlin real estate
investments.
Builders start frenzied construction activity to meet anticipated demand
created by local and foreign investors and by the influx of people into Berlin.
Investors buy property without weighing all factors, knowing that they can
always lease or rent out property and get handsome returns (several factors
could negatively affect such decision) because demand is pushing up rent.
What
happens next in an overheated market is that there is a correction. Demand for
rentals may not rise as anticipated. There may be a glut of available property
and foreign investors may find some other locations more lucrative. Change in
local or government policy or rise in interest rates could put a damper on
investor sentiment. As a result all the “me too” investors see their funds
locked in with returns far lower than what they expected and no hope of making
short term profits.
Avoiding this trap is easy if one starts
the right way with consultations from a local Berlin Real Estate Agent who not
only keeps tabs on current markets but also has the analytical abilities to
anticipate future developments and advise clients accordingly.
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