Property Investment Germany – A Few Things You Need To Know!
Thinking about Property Investment in Germany.If you are you need to prepare yourself for a few radical changes in your property Investing Strategies.In the past I have invested in a number of property Investments in the UK. 3 Years ago I decided to change my strategy and bought some land and properties in Bulgaria at the time the prices seemed like bargain basement prices,even though i bought them all in fantastic locations either way I was keeping them long term!
One of the plots we bought in Bulgaria got re-zoned for commercial development we bought a 200year old house for 5k, then built a laboratory and 2 Shops. One which we rent out to the post office plus 3 terraced apartments on top. We also bought a four bedroom property in Bulgaria by the sea for a bargain. Not to mention land 500metres away with planning permission for 10 apartments. Then last year I went with a friend of mine to an auction in Belfast we saw stunning German Investment Property for sale at very reasonable prices. Eventually I went over and bought Three Investment Properties in Germany. In the spring of 2008 I learned some very valuable lessons which I would like to share with you today. 1. Do not Buy German Investment Property unless you have first checked out the area first. My friend bought a plot of land before we went there and discovered someone had built a house on it illegally when we got there. He ended up having to claim this money back of the seller, and the German Government which is hassle you could do without. It took him a year and then finally he got his money back last week. 2. Check the rents and the locations out with a local estate agent before you buy as there is a lot of vandalism in some parts of the cities. There is also very large areas with a decreasing population and empty properties so you don’t want to be one of the empty property owners. Try to buy a Property with a sitting tenant in a busy up and coming area as German’s tend to rent long term. 3. Beware of Buying German Properties in the UK or off the internet as they are frequently way overpriced check out the local German estate agents to see the real German Investment Property Prices before you agree on the price or pay a deposit. Quite frequently these guys have bought these properties for nothing and are trying to off load them to you at 50% over their real market value. 4. Check the German taxes and apartment maintenance charges which can also eat up a chunk of your cash flow and turn your positive cash flow Investment Property into a negative cash flow. Also consider if you are going to be buying many properties whether you should set up a German G.m.B.h. Company for tax and inheritance tax purposes. 5. Try to buy property that is in good order the cost of renovating in Germany is frequently more than the value of the refurbished property so do not try to be a property ladder expert. If you do it may cost you dearly. 6. If you are from the U.K you will probably find some of the German people can be a bit obnoxious to you but you get used to it after a while. I’m not sure whether it is their general attitude or because of our accent but I just accepted it after a while. Although I met a couple of German people who were actually very nice. 7. If you don’t have complete proof of income forget about getting a German mortgage I think 80% is the maximum Loan To Value, but it is normally more like 70% mortgages hover around 4 or 5% at the moment. The great thing about Germany and the reason I invested there is that one of the properties I bought generates a 25% cash on cash return, you should easily be able to find a property with a 15% return if you know what you are doing. And for this return at the moment the UK market does not compare. As for me cash flow is now king, gone are the days of buying on a whim for capital appreciation the figures must stack up. Because appreciation won’t pay the bills.
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