Markus Beforth bought his first property around 15 years ago. Since then, he has been fascinated by real estate. The Mallorca fan passes on his knowledge as a coach and author.
His credo is simple: owning your own property is still the best way to avoid rising rents and provide for your old age. Markus Beforth, Mallorca part-time resident and full-blooded investor, has been an expert on the real estate market for many years. The family man now owns hundreds of properties in his portfolio. Looking back, Beforth says that the path he took to get there was marked by mistakes due to a lack of knowledge. He wants to spare prospective investors these mistakes. As part of his coaching sessions, he imparts the background knowledge that is crucial for buying real estate in an entertaining and competent manner. In his book "9 x 1 = Mine!" he also shares his experiences, tips and tricks.We spoke to Markus Beforth üabout the current real estate market and the basics that investors should bring with them.
The energy crisis, rising interest rates and various crises are making negative headlines in the real estate market. How do you assess the situation?
First of all, that's basically correct, if you believe the press. The press likes to create a crisis. In my world, every crisis is a gift-wrapped opportunity. You just have to find it and unwrap it. Find the right end of the gift ribbon. And if you look at the statements in a differentiated way, there is actually always talk of new builds, perhaps even single-family homes. The house for the typical owner-occupier. New construction is clearly in crisis, not only in terms of construction prices, but also in terms of sales. We are talking about a high-priced product that is becoming even more expensive for buyers every month due to the sharp rise in interest rates, not least because of all the uncertainties such as political and other risks. They simply make people feel insecure, which is why they do nothing when in doubt. Of course, this puts the construction industry in crisis, but it mainly affects the new-build sector. Even the family that wants to buy their own home is of course now looking twice, because they have been dealing with
having to contend with a doubling of the loan installments. To put it simply: I can only afford half as much house. And that is of course considerable. This is another reason why we are seeing a slowdown or standstill. However, there is by no means a standstill in the investment sector, for capital investors and investors do not have to invest, but can negotiate their prices freely. And that is exactly what is happening at the moment. There is hardly any demand on the market. What is on the market is generally negotiable. More for some, less for others. There are always properties that are particularly good and particularly drastically negotiable. That's exactly what's fun at the moment.
You coach interested parties who want to gain a foothold in real estate investment. Has interest collapsed as a result of the crisis? A very clear no. We have just had another sale of the next six months in the immocation MasterClass, and interest was unbroken. However, it is now the case that we are primarily approached by people who have already dealt with the topic. They watch our YouTube channels for a very long time, they have basic ideas about what they are doing, but above all they have a goal. For example, securing old-age provision. Because if you rely on the German pension, it usually leads to poverty in old age. So there has to be something else, such as making provision for old age through real estate. But there is also a level above that. Those who want to build up a nice second, steady stream of income and who therefore want to invest significantly more in real estate.And finally, there are those who want to invest in real estate full-time with heart and soul and become a full-time investor. There are enough offers, there are more offers than before. You have to negotiate the price. And now there is another very important thing: you need knowledge for this, but not for the negotiation, but above all, of course, for the correct calculation, for the assessment of the objectives, for the assessment of the market situation, for the assessment of financing offers etc.. I always say that knowledge is a currency. And that has never been truer than it is today.
Your slogan – Anyone can make money with real estate investment still applies todayThat's exactly my motto. Anyone can make money with real estate investment. And it's still true today. You just have to make sure that you make investments that really pay off. And that requires precisely this knowledge. Yes, you need someone to teach you what to look out for. How do I proceed? What exactly do I have to do? Who should I contact? What can I expect from the bank – or not? What do I need to bear in mind with real estate in the various asset classes? If a property pays off, then it pays off, and there is no reason not to buy it. Yes, interest rates have risen, but that is included in the calculation. And that's why there are no major challenges in this area for people who are heavily involved in it, who acquire and build up knowledge.
Real estate investing today means buy/sell or buy and rent in 2023 – is there a concept that you would recommend to newcomers?
Today, more than ever, I recommend newcomers to build up knowledge. Of course, buying a property and renting it out is still the be-all and end-all. For beginners this may be a small apartment, for others it may be a small apartment building or something similar. It is completely different. For others, it may be commercial real estate. There are an incredible number of areas in which you can invest. But background knowledge is always important. Real estate investment means buying and selling, or buying and renting. We tend to focus more on buying and letting. Real estate trading has always been a specialized field. In the past, however, many people thought that everything was totally easy because I could buy something and knew that the market would sort it out. The market is rising. So I can't make a big loss on it, so to speak. And that's no longer the case today. You have to know exactly what you are buying. You have to have a clear strategy for it, a clear appreciation strategy. And then you can still earn enough money in real estate trading. But you can no longer buy just anything and think oh, it will work out fine.
What are the most important criteria for buying a property as an investment? Location / rental situation...
The most important criterion for buying a property is that the property suits you: the location, the situation, everything. Many people think of location in terms of the immediate surroundings. For others, it's a long way away because they know the area well, because they come from there or something similar, or because they are there all the time. In terms of the object, for some it is something that they can realize with as little effort as possible because there is not much to do there. For many others, it may also be an object that they can really tinker with and where there is something to do. It just has to fit. This is particularly important when someone who wants nothing to do with a property buys a house in need of renovation. That should not be the case. These are the most important criteria for the investment structure.
It is difficult to find the right bank What preparations should the customer make before the bank interview?
When it comes to bank interviews, it is incredibly important to talk to the bank in advance. I always recommend, and I also write this in my book, to take a sample property in advance and go to the banker, but not to tell them that it is a test. Then go through everything, all the financing, with all the trimmings. Then you know afterwards on what terms and conditions you could buy and manage a property. This is clearly explained in the book, with lots of tips and little hacks for the banks. You should definitely do this beforehand during the interview. You should then compare the information from the bank interview with your personal balance sheet and a personal budget and make all further plans.
Your personal assessment – how will the market develop? In the long term, the real estate market will always develop positively. We have incredibly high inflation at the moment. We always planned for inflation of around two percent. At the moment we are well above that. But in the medium term, I think we will return to that level at some point. Over the next ten years, we will have an average inflation rate of around three percent. And inflation means price increases, nothing else. The hairs on the back of some people's necks start to curl when they think that everything is going to become more expensive. But the investor has a different word for inflation and price increases. He calls it appreciation. And that is exactly what happens to a property that increases in value due to inflation. It increases in value. I can therefore assume that if a property pays off today, it will also pay off in the future and increase in value. So if I sell it at some point in the future, I will most likely achieve a higher price for it than today. In the long term, of course, not always one-to-one with the inflation rate. But there is this increase in value, and that is the important thing with real estate.
Oh yes, an exciting topic, my private life and the necessary balance. I have very good employees for managing the properties, and real estate is simply my hobby. I live and breathe stones, and I don't have 20 other hobbies where I say I have to fit them all into my calendar. If I have another hobby, it also has to do with real estate. Then it's coaching. I love teaching other people about real estate investments and supporting them in the process. That makes me happy all round. And, of course, I am only able to do this because I do real estate investments. At the end of the day, real estate investments always save time and money. After all, money is the equivalent of time. And that's why it's all so possible. My private life is by no means neglected. There's still plenty of free time. And normally I also have the rhythm of flying to my favorite island of Mallorca one week a month and working significantly less there than here in Germany.
The famous fairy comes knocking: What are your three wishes for 2023?
How is it said so beautifully at every pageant? World peace. It has perhaps never been as important as it is today. That would really make me happy: less conflict in the world. Basically, even with such global goals, people still need to get on better with each other, people need to get along with each other. That would also have an impact on the market. There is too little foresight in politics. If there were, many things would develop for the better.
I'm not quite sure whether everything that is currently being decided politically and in Germany will be particularly good for future generations. That's why I'm making the best possible provisions for my successors, for my future generations. Others will have a much harder time. That's why I can only recommend making appropriate provisions, especially with real estate, for example. Otherwise, these are really more wishes for the general public: health for my family, for me, for everyone around me. Apart from these things, I really must and can say that I am almost perfectly happy.
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