Apartment investment in Berlin.. good long term?

seatleon2000

Anybody any advice on buying in Berlin/Germany?

RainyDay

Research, research, research. Don't believe a single word that any estate agent tells you.

posiedon

I'm not an estate agent, but from reading the papers, I would think property can only go up in the coming years in Berlin. It's widely believed that germany is just about if not already out of recession, so expect some return.

Remember though, that's mainly us Irish which are so obsessed with owning houses! In a lot of other countries they quite happily rent.

RainyDay

Don't believe anyone who tells you property can only go up.

ronbyrne2005

theres apartments for sale in berlin with a garunteed rent of 6% from local council for first few years,they are only 90k and in a good area ,i think they would be a good investment if you could get 6% rental yield as german economy can only get better ,but do research on rental yields, location, tax implications, rent controls etc before buying.

RainyDay

Don't believe anyone who tells you that any economy can only get better.

ronbyrne2005

when i say it can only get better i am not garunteeing anything,i am just indicating a high probabilty given current and past economic performance,there are no garuntees unless you want a very low return in risk free investments such as government bonds,if you want higher returns you have to accept a higher level of risk and i just feel that berlin would be a relatively low risk compared to many other foreign property investments especially as it is government backed.

RuggieBear

i read somewhere that germany have very strict rent control.....so your rental income could be very dependent on local government laws

ronbyrne2005

there are rent controls but you can still get 6+% rental yield plus any capital appreciation. the rent controls arent that low and given the property is cheap relative to here then it can be a good investment

RainyDay

Is the 6% net of German & Irish taxes?

betterthanyou

The germans were doing what the irish are doing now 10-20 years ago ie(buying property abroad) go to any holiday town and you will find german owned property.

If these appartments are such a good buy why aren't the wealthy germans buying them.

For every irish person that can afford to buy an appartment in berlin(in terms of financial ability) there would be 20 germans (based on population size).

So why aren't all these germans buy property in berlin, they would know more about
the tax system
the rental market
the economic outlook
the areas
the government regulations

gamer

Someone on newstalk this week said berlin,budapest or central croatia safest areas to invest in re,property in europe ,city centre apartments are going for reasonable price big companys like ibm are setting up in budapest and its a good tourist location ,but theres no gaurantees in those areas.He said theres too many irish buying apartments in obscure outlying areas ,go for city centre areas,most people think german economy will improve ,labor laws are being reformed to make it easier to employ people ,without to many complex regulations.read recent economist articles on german economy.

irishunion.com

I bought a few appartments in the center of Bucharest. In April 2003 i bought my first 2 beds apartment, level 4 out of 4. I paid a total (Price of apt+furniture+estate agency+all other taxes) of 25200 euro. Now the same apartment is valued EMPTY at 60 000-65 000. Rent is 380 per month, but a nice Italian offered me 4000 per year all money paid in advance for a year i accepted. Romanian tax on almost all income is 16% a lot less than 20 or 21(VAT) or 40% we pay in Ireland. But also because i paid my taxes in advance i got a discount and from 640 (16% of 4000) and i only had to pay 480, 160(25% of 640) was the "discount". When i rent a property the estate agent asks for 50% of the first month's rental income. Eg. : If i rent a flat for 200 a month i must pay the agent 100 euro for finding me a tenant, no more afterwards. The only other outgoing will be on taxes like tax on rental income and for owning property.
I also know people who buy property in Romania or Bulgaria, get rental income and claim unemployment in Ireland, because they can get away with it.
Also if you study a few things about Ireland, the help of EU and it's strong economy. You'll learn that 3 states of EU for a few years "suck/eat" a lot of money. In the last 7 years and so Ireland Spain and probably/i think Greece were the 3 places investment went to.
Why the talk about European Constitution and it's votes?
Poland Hungary and some other state will be the next 3 places where investment will go to for a few good years. But after that it will be Romania Bulgaria and another country (Turkey/Ukraine/Croatia/...).
And i don't know when Germany will be one of the 3 favorites of EU.
Why do you think there was all the talk about Spanish property
And why do you thing there's S00 much talk about Bulgarian propety now?
Spanish real estate market is "Saturated"
Bulgarian and Romanian are fresh on the market.
Land is very cheap in Romania and Bulgaria. One euro per square metre in some places. Apartments in Sofia or Bucharest for only 40 000 euro.

If any of you is interested for more information or offers you can visit my web site at www.irishunion.com

i71jskz5xu42pb

ronbyrne2005 wrote:

there are rent controls but you can still get 6+% rental yield plus any capital appreciation. the rent controls arent that low and given the property is cheap relative to here then it can be a good investment

RainyDay missed this one but ...

Don't believe anybody that says you can get "6+% rental yield plus any capital appreciation"

Apparently there are some less than scrupulous companies offering guaranteed rental yields for the first X years after which you are on your own. The idea here is that the seller guaranteeing rent for the first X years is a comfort to the buyer that the rental market is good. What they actually do however is just pay you out of the profit they make off the deal regardless of what the rental market is like - after X years you are left with a dog. Like I said this is just some less that scrupulous companies

Not to put you off buying property .... just research, research, research as the man says.

RainyDay

irishunion.com wrote:

Romanian tax on almost all income is 16% a lot less than 20 or 21(VAT) or 40% we pay in Ireland.

What on earth are you on about? VAT has nothing to do with income tax, and anyway, Romanian VAT rates are 22% and 11% (depending on the nature of the goods), similar enough to Irish VAT. The Irish upper income tax rate is 42%. The basic income tax rate is 22% and the tax credit system means that there is no tax on a significant part of your income. To make a broad comparison between Irish & Romanian rates is meaningless.

irishunion.com wrote:

But also because i paid my taxes in advance i got a discount and from 640 (16% of 4000) and i only had to pay 480, 160(25% of 640) was the "discount". When i rent a property the estate agent asks for 50% of the first month's rental income. Eg. : If i rent a flat for 200 a month i must pay the agent 100 euro for finding me a tenant, no more afterwards. The only other outgoing will be on taxes like tax on rental income and for owning property.

So please clarify the irish tax liabilities from your rental income for the benefit of other potential investors.

irishunion.com wrote:

I also know people who buy property in Romania or Bulgaria, get rental income and claim unemployment in Ireland, because they can get away with it.

Please explain why tax evasion and social welfare fraud is funny?

irishunion.com wrote:

If any of you is interested for more information or offers you can visit my web site at www.irishunion.com

Some readers might find it a bit hard to take investment advice from someone who has a commercial interest in promoting foreign property as well as a vested interest in pumping up the market.

garred

To the OP the best advice I can give is visit and research. Check what rents you can get, demand on property, charges, etc. Go and see the property and check out the location. Also check various estate agents (not just the one you may be buying the property off) over there. For me the most important thing is to research a good solicitor.
Do your maths and don't go by "guaranteed rental" as said previously you, yes you are paying for your own rent. These people add to the value to cover this so you are paying for this, not just the amount but interest payments (if borrowed) on that amount and also tax on this as an income. I pulled out of a deal that was guaranteeing rent for the reasons outlined.

Also don't go by people who have bought in different countries as Germany is not Spain, Turkey, etc. It has different cultures, laws and tax.

Don't let all this put you off, if you think you can afford it and have done all research, go ahead and do it. If you do good luck with it and also declare it over here. I don't work for the tax office but I'm sure they will be investigating foreign property soon, with it being so popular, just as they did with off-shore accounts and recently the investment policies.

Also take into account the up coming world cup there this summer (as I'm sure the sellers have).

dsab

Renting out in germany is not an easy business.

Rents are pretty low, compared to the UK or Ireland. There are loads of additional costs, some monthly and some annually. Not all of these can be charged onto the tenant.

In germany there is something called the "Mietspiegel". That's a list that gives the average rental price for a certain apartment in a certain area. No landlord is allowed to charge more then around 25% above these rents, no matter how comfortable or luxurious your apartment is.

The normal notice in germany is 3 months for tenant and landlord. Leases are mostly permanent, and not yearly like in Ireland. You can only increase the rent by strict rules, and normally not more then 25% (not 100% sure about the exact percentage) over 3 years.

But if a tenant doesn't pay...that's where the fun starts. No matter how much he ows you, you can't enter his apartment or change his locks or anything else to blackmail him. You have to go to court, and sue the tenant for the return of the apartment. But you can only start this after he didn't pay his rent for approx. 3 months. The legal case might take another 4 or 5 months...during which the tenant is still living very comfortable in your apartment, most likely without paying. Finally you get the judgement, but you still can't get the apartment back. With the judgement you will have to go to a bailiff, who needs to make an appointment with the tenant to empty the apartment. This might take another 4 to 6 weeks. Only the bailiff is allowed to take care of the judgement.

In an extreme case it could well be that you are out of pocket for a years rent plus all the legal fees andf the bailiffs fees (around 1500 Euro, as he also organises vans and movers etc.).

I own two properties in germany, and it is def. not an easy business.

Loads of tenants rights, but very few rights to the owner.

jdivision

seatleon2000 wrote:

Anybody any advice on buying in Berlin/Germany?

The major pull for investors is the fact that older apartments cost less than it would cost to build new ones so there's not a lot of new build. The rental market in Berlin is large, Germans don't have the same tradition of home ownership that we do. On the negative side, as usual Irish investors are paying over the odds in some cases for properties and in addition a lot of what they are buying is stuff that they haven't been able to shift for ages and then along comes an uninformed Irish investor and snaps it up. I've also heard of sewage problems in a number of apartment blocks there and there's also outstanding issues in some properties relating to claims that they were seized from Jewish people and therefore there could be title problems. My advice? Research, research, research and multiple visits to the city.