The 30/30/3 rule should always be followed when purchasing real estate.

If you truly have the opportunity, I recommend that you take it.

But I recommend you really read a bit more before you put your money in. There are countries where property yields are higher. This phenomenon extends beyond individual states and encompasses entire regions. The determining factor is close jobs and excellent communication. Buying property is an option, but it may not be worth it if it doesn't earn money. I have bitter experience with such properties. The low price lures you in. However, this situation ties up your money and prevents it from being easily accessible. Always follow the 30/30/3 rule for buying property as a minimum. This advice applies to both personal and investment purchases. For me, this is the rule for a successful purchase, but I never use credit. The best thing is that if you don't have money for your property investment, you can invest in property management funds.

You have the opportunity to invest a small amount each month. REITs are the best because they are legally required to pay out up to 90 percent of their profits. The little money you have can bring you income. Rather than accumulating it in the bank and letting inflation erode it, you can use it to generate income.

Here is the 30/30/3 rule

Rule 1: Spend no more than 30% of your monthly income on your mortgage payment

The expert recommends spending 30% of your income on paying off the loan you used to buy your home. This means 30% of your income if you're married or single.

In extreme cases, you can pay 40% of your income, but you should consider whether you will be able to live comfortably on the remaining 60%.

Rule 2: You must have saved 30% of the value of the home

Let's say you want to buy a property valued at 100,000 euros. This means that you should have 30%, or 30,000 euros, set aside. A total of 20,000 euros, which is 20% of the property value, will be deductible; however, several banks now also require a 10% contribution from you, and the remaining 10%, or 10,000 euros, will serve as a guarantee for potential uncertain times. These include temporary unemployment and the emergence of urgent needs and urgent purchases.

Rule 3: The price of your property can be a maximum of 3 times your income

Do you know how much you earn per month, together with your partner? Multiply the amount by 12 and you will get your annual income. It should include all your income—rent, dividends, etc.

And now multiply the resulting amount by another three. This amount represents the maximum cost of the property that we can afford.

The expert warns that violating all three rules could make it impossible for you to repay your debt later.

Author Sezgin Ismailov

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