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Impact on rents and returns

In the case of value-enhancing investments, some of the costs can be passed on to the tenants. In addition, modernized apartments are usually easier to rent out.

If the focus is exclusively on returns, minor work such as cosmetic improvements or other maintenance work can also make sense, especially if the building is set to be demolished in the long term. It is also important to estimate renovation costs realistically.

A renovation is an investment in the future of your property. With careful planning and use of subsidies, you can increase the long-term value of your investment property.

In some cases, renovation of an investment property no longer makes economic or technical sense, especially if the renovation costs exceed the increase in value or if the building fabric is in such poor condition that even a total renovation doesn’t make sense in the long term.

In these cases, a replacement construction may be a better option. Although the investment costs are initially higher, in the long term owners benefit from lower maintenance costs, higher energy efficiency and better rentability. A replacement building also makes it possible to make optimal use of the space and adapt it to current market requirements. Check the building regulations in advance, especially with regard to utilization rates, living space and floor height.

The legal framework also matters: Depending on the location, building law, zoning regulations and permits can be decisive for whether a replacement building is worthwhile. At the same time, the risks involved with terminating existing tenancies must also be considered. A replacement building usually requires the termination of existing tenancies. However, tenants also have rights and claims for compensation or delays – e.g. due to requests for an extension of the deadline – may incur additional costs.

Financing a total renovation or a replacement building isn’t always worthwhile. In such cases, selling your property can be the more economically sensible solution – especially if the renovation costs exceed the expected benefits or property prices are strong.

Selling allows owners to free up capital and invest it in high-yield properties or alternative investments. Tax-related aspects should also be taken into account, such as property gains tax or possible deductions.

Selling a property can be a strategic decision to achieve your financial goals. Seek expert advice to exploit the full potential of your property.

The decision to renovate, replace or sell depends on multiple factors. The following overview shows how the building fabric, market potential and your personal strategy can impact which option you choose. It serves as an orientation and can help you better classify the advantages and disadvantages.

Whether partial renovation, total renovation, replacement building or sale – the right decision always depends on your individual situation. If your property only has technical defects, a targeted renovation can maintain the value and improve rentability. However, if the building fabric is severely damaged or renovation costs are disproportionately high, a replacement building is often the more sustainable solution, offering advantages such as higher energy efficiency, lower maintenance costs and better rentability.

If, on the other hand, you do not want to invest a large amount and want to benefit from attractive market prices, you should consider selling the property as a strategic option. Ultimately, it comes down to clearly defining your individual goals: Do you want to increase returns, minimize expenditure or consolidate your assets in the long term? The above considerations will help you identify the best solution for your situation.