Berlin Beware

[manicman]

Hi A little advice if anybody can. I recently found a property I liked and payed to the german agency (run by brits in Berlin) the 3000euro securement fee that the agent specified. They said they owned the unit and had bought it at auction and it needed to be a cash purchase. After viewing in Berlin and agreeing to purchase, the balance was payed to agent. this was 3 weeks ago and the German Solicior and Notary are in place. Yesterday I got a e-mail saying that the bank that owned the unit had pulled out as it decidied it wanted to sell as part of a larger group (i.e. part of 15 or 20 units). They have give me the optoin of another unit which is half the size in a slightly more central area at a socalled 7500 euro discount. This property I believe does not have the capital gain potential of the other unit, and to say I'm P***** OFF is an understatement. I have the solicitor viewing the land registry docs tomorrow to find out who actualy owns it as I smell a rat. I'm no mug as everything was done under the guise of research and advice from said Solictor. My costs so far are running at about 1500 euros. I have all e-mails to prove that they said they owned it. WHAT DO YOU HAVE TO DO TO PREVENT BEEN RIPPED OFF BY THESE TYPE OF PEOPLE

 

[JMBroad]

Just out of curiosity, which was the agency? I was in Berlin last week and talked to numerous lawyers, developers and agencies and all of them were complaining about a company in Berlin run by Brits.

The only thing you can do really is to work only with reputable agencies with a proven track record. Unfortunately there are a lot of dodgy agencies out there and unless you are a fan of youtube you won't necessarily always see the negative side of some.

Where in Berlin was the first apartment and where was the second one you were offered? If you want to send me some more details I'll give you my unbiased opinion.

I do work for an agency but am not in sales and decided long ago to only use this forum on a personal basis to gather information, to discuss markets with people who invested in them and possibly provide some help for concerned investors in return so I won't be even telling you which agency I work for let alone trying to convince you to buy through us.

 

[Lewis]

Berlin bandidos

Just out of curiosity, which was the agency? I was in Berlin last week and talked to numerous lawyers, developers and agencies and all of them were complaining about a company in Berlin run by Brits.

The only thing you can do really is to work only with reputable agencies with a proven track record. Unfortunately there are a lot of dodgy agencies out there and unless you are a fan of youtube you won't necessarily always see the negative side of some.

Where in Berlin was the first apartment and where was the second one you were offered? If you want to send me some more details I'll give you my unbiased opinion.

I do work for an agency but am not in sales and decided long ago to only use this forum on a personal basis to gather information, to discuss markets with people who invested in them and possibly provide some help for concerned investors in return so I won't be even telling you which agency I work for let alone trying to convince you to buy through us.

I too would be interested in hearing who they are - pray tell. We deserve to be forewarned.

 

[manicman]

Teepeeseller, In negotiation at the moment. Solicitor say's they check out ok and all what went wrong as far as he says is true and confirms what the agent has said. But he is close to the agent having got lot of work through them, but I don't think its worth his professional integrity to hoodwink a client. If You read JMBROAD say's in the threads he's had confab with many in Berlin and never heard a bad thing yet. If it does not work out I will let the world know about it, but up to now sems like there trying to work things out, so I'll keep all informed as to the situ.
Merry Christmas and a healthy,prosperous new year to you all.

 

[Lewis]

Teepeeseller, In negotiation at the moment. Solicitor say's they check out ok and all what went wrong as far as he says is true and confirms what the agent has said. But he is close to the agent having got lot of work through them, but I don't think its worth his professional integrity to hoodwink a client. If You read JMBROAD say's in the threads he's had confab with many in Berlin and never heard a bad thing yet. If it does not work out I will let the world know about it, but up to now sems like there trying to work things out, so I'll keep all informed as to the situ.
Merry Christmas and a healthy,prosperous new year to you all.[/QUOTEo



Hope it works out fine. Equally if it all works out well let us know who they are.
How did you contact your legal advisor and who supplied the notary?
Take great care.

 

[JMBroad]

That was in the pm actually manic. But after talking to manic in pm's, the company he is working with isn't the one I'd heard all those bad things about.

 

[Lewis]

That was in the pm actually manic. But after talking to manic in pm's, the company he is working with isn't the one I'd heard all those bad things about.

So back to the original question then - What is the name of the company you and the others in Berlin have heard such bad things about?

 

[JMBroad]

Everything I heard bad things about was second hand information from developers, notaries, lawyers and agents which is why I wanted to see if a client would confirm the reports from their side. As it was second hand information and didn't involve me personally I'm not going to broadcast what is potentially misleading information regarding a company and name them. Especially as they are reported to having very capable libel lawyers

It may well be that the Berlin office of the company is trying hard to be independent from the group and behave in a more reputable fashion than their other offices around the world.

Having said that, this particular company which is based in Spain has videos of salespeople on Youtube blatantly lying to clients and is quite infamous among investors worldwide with their name coming up normally related to aftersales problems, as can be seen when you "google" the company name. They are on almost every real estate forum I've seen with reports of dodgy activity.

If you are working with a real estate agency in Berlin which is British owned or operated and you are concerned it might be them, just "google" their name or do a search on Youtube and get some background information about them.

 

[Lewis]

As clear as a bell

Everything I heard bad things about was second hand information from developers, notaries, lawyers and agents which is why I wanted to see if a client would confirm the reports from their side. As it was second hand information and didn't involve me personally I'm not going to broadcast what is potentially misleading information regarding a company and name them. Especially as they are reported to having very capable libel lawyers

It may well be that the Berlin office of the company is trying hard to be independent from the group and behave in a more reputable fashion than their other offices around the world.

Having said that, this particular company which is based in Spain has videos of salespeople on Youtube blatantly lying to clients and is quite infamous among investors worldwide with their name coming up normally related to aftersales problems, as can be seen when you "google" the company name. They are on almost every real estate forum I've seen with reports of dodgy activity.

If you are working with a real estate agency in Berlin which is British owned or operated and you are concerned it might be them, just "google" their name or do a search on Youtube and get some background information about them.

As I suspected. Know the company concerned and you and everyone else coming into contact with them should also be concerned. They have been named many times on this and other property forums - before the spectre of court appearances caused us all to speak of them in cryptic, non specific terms.
Didn't want you to paint yourself into a corner, merely being able to ID them (through my own cognitions of course. Any information you have successfully hidden from us has not been available for me to draw my personal conclusion) is quite sufficient.

My company is Anglo-German and operating throughout Germany - my fear is we are all going to be tarred with the same brush.

 

[manicman]

ok Gents, I'm feeling a little vulnerable here, any chance you pm me and id them.

 

[post-its]

Problems with Berlin real estate

Hi there,

I'm a new member and would appreciate any advice anyone can give. I haven't had a very pleasant experience with German real estate either. The unit we reserved, we found out later after having paid our deposit and notary fees, had been sold to someone else. The agent tried to off load another unit on us which we rejected and did not want in the first place. In a phone call, he promised a refund if we did not wish to go ahead with the purchase because of the mistake they made but I've yet to receive my money, and it's been a while, too. Is there a regulating body that I can approach for help/action on the matter. Since this happened to me, I've done some research and found others with similar problems to mine and I'm sick to death of things like that happening. All I want is my money back.

Any ideas and suggestions would be much appreciated.

 

[JMBroad]

Hi there,

I'm a new member and would appreciate any advice anyone can give. I haven't had a very pleasant experience with German real estate either. The unit we reserved, we found out later after having paid our deposit and notary fees, had been sold to someone else. The agent tried to off load another unit on us which we rejected and did not want in the first place. In a phone call, he promised a refund if we did not wish to go ahead with the purchase because of the mistake they made but I've yet to receive my money, and it's been a while, too. Is there a regulating body that I can approach for help/action on the matter. Since this happened to me, I've done some research and found others with similar problems to mine and I'm sick to death of things like that happening. All I want is my money back.

Any ideas and suggestions would be much appreciated.

The law in Germany is pretty protective of buyers most of the way through, but there are some catches to watch out for.

Which agency had you bought with? Have you signed anything and how long ago did you make the deposit? Which lawyer did you use?

 

[Tim1979]

I'm now in a position to be buying in Berlin (subject to the £/€ rate hopefully getting a little better) and avoiding 'rogue agents' is certainly at the top of my list of things to do. Can those with the experience shed a little light on who is worth avoiding and - just as importantly - who is good to do business with. As this may well be the first of multiple purchases in Berlin, then it would be nice to get an agent to build a good working relationship with.

Cheers,

Tim.

 

[JMBroad]

I'm now in a position to be buying in Berlin (subject to the £/€ rate hopefully getting a little better) and avoiding 'rogue agents' is certainly at the top of my list of things to do. Can those with the experience shed a little light on who is worth avoiding and - just as importantly - who is good to do business with. As this may well be the first of multiple purchases in Berlin, then it would be nice to get an agent to build a good working relationship with.

Cheers,

Tim.

One of the best ways to find if the agent is a "rogue" agent or not is to discuss the rental returns.

If they mention that they can offer you a tenanted property which you can then raise the rent on over the coming years to provide you with a good yield - alarms bells are ringing. Some can but those are few, far between and the rental yields are so low to begin with that agencies probably aren't offering them.

In my opinion, tenanted properties are not the best investment vehicles in Berlin for a number of reasons including the Berliner Mietspiegel, legislation protecting the tenants and the fact that tenants in Berlin are entitled to "free" legal representation.

Also, if the agency is offering product in areas like Neuköln as investment property, it's another indicator to be wary. While Berlin as a whole offers some superb investment opportunities, not all of Berlin is as good an investment as the next.

Neuköln for example was all over the newspapers in 2006 due to violence related issues and they have even had to add metal detectors to some of the school doors to screen the kids for weapons upon arriving and leaving the schools. Today, Neuköln also can't be classed as the best place to invest in Berlin yet some agencies still offer it.

This was just under two years ago in Neuköln:

Letter From Berlin: Germany's School of Hard Knocks - International - SPIEGEL ONLINE - News

No Solution Other Than Police Presence for Unruly Berlin School | Germany | Deutsche Welle | 01.04.2006

I can't tell you which agents to avoid - the same way I won't promote the company I work for out of principal. But those two snippets might give you a headstart on some of the less informed agencies.

 

[Lewis]

JM - Whether tenanted properties are the way to go or not is down to investor priorities.
Firstly rents can be raised - not to the point where they are going to set the investors heart pulsing - but they can. It is a little complicated and must be within the rules laid down.
If this is to be done it must be done with eyes wide open though. The rents in Berlin nowadays are not electrifying - those days are long gone. I have an apartment block yielding 27% (my own) This is absolutely the exception to the rule nowadays.
The tenant is cosseted and protected in a way which disappeared in the UK during the Thatcher era. This should not necessarily be seen as a negative. I own apartments where the sitting tenants have been there for years. Meanwhile my safe and steady small percentage just keeps dripping into my pot. This suits me - It may not suit others with less realistic expectations. I am not continuously having to direct my management company to advertize my properties.
If you are purchasing in the German cities you must also be aware of the glut of rentals available. If you push your luck with the rental raise you may well find your tenant moving on and your yield is down to minus x% because fees for these flats don't go away just because they are empty. Treat your tenants fairly and they will stay for a long time - mistreat them and lose money - a no brainer really.

I operate in Germany and I would struggle to safely make more than 7% net. 4-5% is about the norm. Higher can be made but as you point out have a caveat warning attached to them.
There are areas where if you wish to be something other than a slum landlord you are probably wiser avoiding. Most of Neukoeln would fit that description. Parts of Wedding are also less than salubrious.
I stick to Charlottenburg, Wilmersdorf,Spandau,Prenzlauerberg,Schoneberg(most of) There are also outlying areas worthy of consideration, Blankenfelde, Marienfelde, some areas of Teltow,Potsdam.Dallgow-Doberitz.
Berlin is an exciting place to live. It is not necessarily the most exciting place to invest if your mindset is short term (If it is - stick to BTL in Upper Tearemapartrovia)
Mid to long term is the name of the game throughout Germany.
Where Berlin (and the other large cities of the North - Dresden/Leipzig etc) excels is the potential for long term capital growth and it is about as safe as anything is likely to get in the minefield of real estate investment regardless of what the latest BTL/Creative financing guru may wish to tell you as he/she is boarding the plane to the next, as yet, unheard of "Hot spot" Leaving you and thousands of others with a broken dream and a property you cannot now sell.
Like you I do not display my own company credentials here. Any one can contact us and talk openly about meagre rental returns and the protection of the tenant, I would invite them to consider that this is not the full story of this wonderful country and the canny investor may wish to consider things other than risky, dreamlike yields. Gamblers can stay out of Germany - Many sophisticated investors appreciate Germany for what it is - absolutely safe (unless you come across the rogue snake-oil men JM is so right to warn you about)
Also ask the agent about the capital gains situation in Germany - interesting given the potential for growth!

 

[JMBroad]

Hi Teepee - didn't meant to sound so negative about rental yields - reading your post and re-reading mine I agree I could have explained better.

I don't meant to say or infer that buying tenanted properties in Berlin for the steady rental yield is an unsafe or unwise decision. However, I do feel that there is a better option which gives the buyers more freedom as well as potentially higher yields. The problem is the lack of units in which this latter option can be effectively run. (Sorry for the cryptic message but it's the USP which sets the company I work for out from the crowd so I can't give the game away without breaking my non-disclosure agreement. As far as I know we are the only ones doing it at the moment)

The "challenge" with tenanted properties is when agencies are selling properties with unrealistic yields either because they are going by what the developer told them without questioning it (ignorance) or because they are misleading their clients on purpose. While researching the market I came across many agencies who were offering tenanted properties promising monthly rentals at the top end of what is allowed by the Berliner Mietspiegel and the companies offering them were also saying that the rent could be increased 6% per year. If the monthly rentals are severely lower than what is allowed by the Mietspiegel, yes they can be raised by a maximum of 6% per year but only until they reach the limit outlined by the Mietspiegel.

While I was doing my research although I found a lot of "rogue" agents, I did find a few which had a good grasp on the current market. I can only assume by your post that you are one of them. Totally agree with what you mention in your post. Maybe meet up for an Eisbein one of these days when I'm in Germany next (shudder).

 

[Lewis]

Hi Teepee - didn't meant to sound so negative about rental yields - reading your post and re-reading mine I agree I could have explained better.

I don't meant to say or infer that buying tenanted properties in Berlin for the steady rental yield is an unsafe or unwise decision. However, I do feel that there is a better option which gives the buyers more freedom as well as potentially higher yields. The problem is the lack of units in which this latter option can be effectively run. (Sorry for the cryptic message but it's the USP which sets the company I work for out from the crowd so I can't give the game away without breaking my non-disclosure agreement. As far as I know we are the only ones doing it at the moment)

The "challenge" with tenanted properties is when agencies are selling properties with unrealistic yields either because they are going by what the developer told them without questioning it (ignorance) or because they are misleading their clients on purpose. While researching the market I came across many agencies who were offering tenanted properties promising monthly rentals at the top end of what is allowed by the Berliner Mietspiegel and the companies offering them were also saying that the rent could be increased 6% per year. If the monthly rentals are severely lower than what is allowed by the Mietspiegel, yes they can be raised by a maximum of 6% per year but only until they reach the limit outlined by the Mietspiegel.

While I was doing my research although I found a lot of "rogue" agents, I did find a few which had a good grasp on the current market. I can only assume by your post that you are one of them. Totally agree with what you mention in your post. Maybe meet up for an Eisbein one of these days when I'm in Germany next (shudder).

Sehr geehrtes JM,
Re-read mine also and realized I could have worded mine a little better.
I did not mean it to come across as a lecture to you as an individual (though there are a couple of ripostes worthy of inclusion in future posts/e-mails)
It was designed more as a small infomercial for Germany for the large nr of uninitiated and, as yet, ill informed, people who join these info channels to learn from those of us who have been before and probably already made all the mistakes they are about to make.
I step back from the label "Expert". I do know enough about Germany (lived there for many years including a couple of very happy years in Berlin) as a whole to want to peddle my wares there. Where I do surpass many of my competitors is having the right experts to contact.
I saw a window of opportunity in Germany many other so called experts chose to miss (because they seem to understand one thing only short term profit - which equates to risk)
I was not a wealthy investor when I started - started with a pittance. I was also quite risk averse. So Germany matched my criterion perfectly.
I have amassed certain info (which is basically just good old fashioned caution and common sense - if it required nuclear physics the opportunity would have been lost on me) I marry this all to having the right contacts and have made a nice little living from it.
I favour Dresden nowadays (one of my contacts took me there a couple of years ago - he has since retired there and my plans include settling there once I am too jaundiced and cynical to be pleasant to the sharks who wish to feed off me)
Berlin would be my playground, not where I live. If I were 30 years younger then Berlin would win every time. Priorities change.
If you would care to pm me I may even have contacts which may need your expertise or you theirs. I'll sit in the background and a thank you will suffice.
There is one outfit in particular I am quite fond of and if I feel there is mileage in you talking to each other I would weigh up the negs and pos's of passing a phone nr.
A freezing cold Saturday afternoon game in the Olympic stadion watching Hertha BSC with a smuggled in bottle of Apfelkorn to keep me warm (AND a disaproving glance from my mate who used to accompany me, a mid ranking German police officer! Funny how he never turn down the offer of a swig from my bottle) An enduring memory. (Shudder also)

 

[manicman]

relieved and happy

Hi all,
Some very interesting informed post's on this thread. Just to tie things up, my purchase in Berlin is now complete and I'm recieving funds in my account on a Monthly basis. I eventully accepted there offer of an alternative unit but would not want go through the uncertanty again(agent and solicitor turned out ok). But I'm still positive about Berlin going forward for long term gain and I'm aimimg for the "drip,drip,drip of the rental into my pot" and recycle the funds back in untill I can identify other ways to make gains. any advice JMBROAD & Teepeeseller can provide going forward will be most appreciated. Got another 25 years to go in this game and a lot to learn, but I think I found my long term market.

 

[Lewis]

Hi all,
Some very interesting informed post's on this thread. Just to tie things up, my purchase in Berlin is now complete and I'm recieving funds in my account on a Monthly basis. I eventully accepted there offer of an alternative unit but would not want go through the uncertanty again(agent and solicitor turned out ok). But I'm still positive about Berlin going forward for long term gain and I'm aimimg for the "drip,drip,drip of the rental into my pot" and recycle the funds back in untill I can identify other ways to make gains. any advice JMBROAD & Teepeeseller can provide going forward will be most appreciated. Got another 25 years to go in this game and a lot to learn, but I think I found my long term market.

Hi Manic,
25 years in this game is just about the right time to be spending slowly and cautiously building a self-sufficiency pot mate.
Happy to see my drip, drip, drip philosophy has captured your imagination. Just keep it that way and safe. You'll get there without ulcers, nervous breakdowns, court summons etc trying to ride out the high highs and low lows of the adrenalin BTL brigade.
As much as I fancy the idea of Berlin and Dresden I am not blind to other opportunies. You should keep an eye on the horizon also. I have recently been contacted by a very exciting contact in Leipzig and fully intend to use his expertise by pushing a little of my pot in his direction.
I spent a few days in the Harz mountains (about an hour outside Hannover) recently, I'll be going back this year. There are some interesting little towns within commuting distance of Braunschweig and Hannover where prices astounded me.
Hamburg will be revisited with cheque book this year also. Recently offered a deal from a company called the Berlin real estate centre of seven old Sparkasse banks and a couple of shopping centres. Not in a position to snatch them up personally.
If I had the money available I would have grabbed the shopping centre in Rostock from them.
Maybe one day....... I could go for some sort of creative financing I guess but that sort of stuff frightens the bejaaaasus out of me - Keep it simple has worked well for me so I guess I have to pass this little lot by and wait until I have the cash to do it the easy way - interesting times we live in eh?

 

[manicman]

going forward

Hi Teepeeseller & all,
Don't get me wrong, i'm not risk averse (just want Garuntees LOL),but measured risk with sound fundamentals will be my way forward. I agree, Berlin isn't the only place to be looking, but with limited funds you have to start somewhere and Berlin seem's very attractive. I also believe that BTL has a place within an investment strategy, used in the correct manner and can limit the amount of exsposure within a single market or the European as a whole. I looked at Hamburg when first got interested in Germany, and think I will revisit the subject. Don't have alot of cash (don't Know where it goes) so I'm very interested in leverage and would appreciate yours (and JMBroad) insight to the subject at (small, for now) invester level WRT the current issues within the finance sector and the Liberalisation of the Mortgage market in Germany. Max ltv of 70% and a min lend of 50K euros I'm led to believe. I will for many years to come be a slave to my paymasters ( a labour prostitute as my colleague puts it lol),but the gradual increase of income coming from other areas sounds a lot more attaractive