| I will give you an example for Italy. The real estate agent wants between 2% and 3% of the actual value of the building from both the seller and the buyer. Taxes (unless it is a "first house" designed and actually used as your "primary residence" AND provided that you are not going to resell it within 5 years, in which case will be around 2% of nominal value) will be around 9% of nominal value (usually much lower than market value).
Then there is the notary fees. So, example, you buy an apartment paying it 200,000 Euro, something that would be rented between 600 and 800 Euro/month (if you are lucky): Estate agent (buying) 6,000 (0.03x200,000) Taxes (buying) 10,800 (0.09x120,000) Notary 2,000 Estate agent (re-selling) 6,000 (0.03x200,000) That is 24,800 Euro to which you add the equivalent of 1 year land tax probably some 800 Euro, and some repairs/refurbishing making it more than 26,000 Euro (and without considering what the 226,000 Euro could have produced if invested). Compare this with 12x800=9600 Maybe it is not exactly 3x, but it is at least 2.5x. If you prefer, unless there is a huge increase in house value in the (short) period of ownership, the breaking even point is past more than three years. |