German Property

[Andrew - Alpha]

Hello,

We are finding that even though there is a great interest level in this magnificent country, the investing public has many unanswered questions about how it all fits together for them and their investments.

We have a strong presence in German and a wealth of experience, so any questions or advice wanted... please fire away!

Kind regards,

Andrew Stanley
Alpha Real Estate Investments
Berlin property, German property, Slovakia Property -
[email protected]

 

[TH4S]

Andrew Stanley,Welcome to the forum,

 

[Andrew - Alpha]

Thanks for the welcome, its good to be here

 

[DC]

I think you should start to blow people away with the returns and growth in Germany, and how it operates in difference to other markets. regards D.c

 

[biker200]

Hi Andrew, I am currently considering @ my first overseas investment in Berlin - due to its relative stability, large economy, and of course low prices.

Can you give me any info on the rental market and elaborate of caps. I've heard a range of confilicting information about rents and would like some clarification.

Can you tell me:
1) What capping there is and how it works? Is capping planned to be stopped?
2) Can the rents be increased during the tenancy period?
3) With new tenants does capping come into play - and even if it does can I expect to get higher rent then from someone who has been in situ for 3 or so years?


Thanks, any advice much appreciated.

 

[Andrew - Alpha]

Rent Controls

Dear Biker200,

Thanks for the post and apologies for the delay getting back to you. I have just returned from Berlin. Please find the answers to your questions below.

1) What capping there is and how it works? Is capping planned to be stopped?

There are no current plans to stop capping. Rents can only be increase up to 20% every three years and are not allowed to exceed the Mietspiegel (rental mirror). The level of the Mietspiegel is set at least every three years. For more information on this and links to the website for the Mietspiegel rates please see the how to buy section of our website.

2) Can the rents be increased during the tenancy period?

Yes once every 15 months

3) With new tenants does capping come into play - and even if it does can I expect to get higher rent then from someone who has been in situ for 3 or so years?

If changing tenant you can increase rents as much as you like (more than the 20% in three years etc) but you must still stay within the Mietspiegel. That being said in reality most apartments will have had rents increase whilst the tenant has been in place and probably already be near the Mietspiegel anyway.

So unless your buying an apartment with a rent well under the market level there should be very little difference.

I hope this has clarified everything for you, if not please feel free to either post on here again or email questions directly to me.

Kind regards,

Andrew Stanley

 

[biker200]

Andrew - thanks for clarifying rents.

Another quick question. Are mortgages readily available for Brits (with appropriate credit etc.) who wish to do German buy-to-lets.

I have enough savings for a deposit of approx 25-30% and would like buy a German property but don't want to remortgage my own house. Will banks/brokers arrange mortgages and, if so, what sort of rate could I expect with 30% down on an 80K euro property.

Also, while we've got an experienced German and Berlin investor on the chat pages it makes sense to ask you where you think the top three Berlin investment locations are?

 

[biker200]

Andrew - thanks for clarifying rents.

Another quick question. Are mortgages readily available for Brits (with appropriate credit etc.) who wish to do German buy-to-lets.

I have enough savings for a deposit of approx 25-30% and would like buy a German property but don't want to remortgage my own house. Will banks/brokers arrange mortgages and, if so, what sort of rate could I expect with 30% down on an 80K euro property.

Also, while we've got an experienced German and Berlin investor on the chat pages it makes sense to ask you where you think the top three Berlin investment locations are?

 

[Andrew - Alpha]

Finance- Germany

Dear Biker200

When it comes to lending the German banking system is a bit old fashioned. That being said is certainly possible to get a mortgage if you are a non-German. We work closely with several mortgage brokers in Berlin to make the process as straight forward as possible.

Unfortunately the banks will not offer the kind of LTV’s you’re used to here in the UK. For single apartments you should work your numbers on 60% LTV. You will probably get more i.e. 65%. Every application is assessed individually. All German mortgages are capital repayment with 5-10 year fixed rates between 5%-5.5% and amortisation (repayment rate) approximately 2%.Do also remember the smallest mortgage the bans will lend is 50K euros therefore making the smallest purchase (taking 60% LTV) 83,333 euros. You will be able to get a mortgage over multiple purchases if made in the same building at the same time.

For single apartments we look for the best immediacy of capital growth whilst maintaining a level of rental income so the investment comfortably washes its own face. The areas we have been focusing on for this are Prenzlauer Berg, Friedrichain and Tiergarten. These three are very central with good access to Mitte (where most people work) and have a high density of classic buildings.

These area have extremely strong rental demand, which means that people want to live in these areas (no break through in logic there ). When we see some of the 87% of the population who currently rent move into ownership these same areas should see the lions share of the buying. Owner-occupiers are always the main drive in growth (in urban areas).

I hope this has been of some help to you.

Any more questions please don’t hesitate to fire away.

Kind regards

Andrew Stanley

 

[DrQ]

Interested in Berlin

Hi Andrew - Could you tell me whether you think Schoeneberg, Charlottenberg & Wilmersdorf have any investment potential?

 

[Andrew - Alpha]

The West End

Dear Dr Q,

Thanks for the post. Yes these areas certainly do have potential and this is where a large section of the growth in Berlin has already been seen. These areas in the central west are the very top end of the market.

The problem with these areas is that yields have been compressed due to recent gains. Remember you can only raise rents once every 15 months, so yields trail behind capital appreciation by approximately a year and a half. So the problem you have is finding a property with sufficient rental income to wash its own face. This is still achievable if buying in bulk e.g. a whole block. But this is quite unlikely when looking for single apartments.

The last thing you want to be doing as a property investor is paying monthly to keep you property running.

We currently have an apartment block on the market in Charlottenburg very near to the palace for 2.45m euros (23 units) this has a yield (net except management costs) of 5.55% and should be an excellent investment for strong capital growth. Not every investor has the flexibility of budget to look at this kind of project. If you can it should certainly be worth while.

Anymore questions please feel free to fire away,

Kind regards,

Andrew

 

[sunmoon]

Hi Andrew,

Can you please let me know what is LTV is because am new in the forum

 

[Andrew - Alpha]

Hi,

Yeh not a problem at all LTV stands for loan to value. So if you were buying a property for 100K and borrowed 60K of it that would be a 60% LTV mortgage.

Regards,

 

[Rambo]

Hi everyone here,

As a acquisition manager with years experience in Germany but on properties of 5 Mio. upwards only, I would like to see how private investors are getting along with the market.

I know what I am saying might not be to the liking of some guys here, but my opinion is that you cannot compare Berlin (P.S. I dont think that besides Aglos and Ammos anyone goes wild about Berlin, there are many problems there which is why many local investors simply avoid it after burning fingers in the past.....) to London and Dublin.

The big Funds (Fortress etc.) are fed up and want to pull out (read FT about it) of the residential in Germany, Goldman Sachs screams aloud : THE GAME IS OVER.....

If a private investor with - say - 250 K wants to invest, I would say just look for a syndicate of Pros or look somewhere else. You dont know the lingo, you dont know the culture, the red tape and you will be a good target to be screwed up by some crooks (the market in Germany is full of scoundrels looking for a quick buck and charging you up to 6% for it...)

Wishing everyone here success....

 

[immernoch]

Rambo I read the FT article and I didn't have much to say to it, except that you really have to play the game and be in the know in order to gain profit in most areas.

the language barier has not been a problem for me (having fluent skills in german) so maybe I'm speaking from a biased source but with great investigation i have managed to play the game in berlin and have been very happyw ith my returns.

 

[mart123]

Hi,
The Deutsche bank produced a report in 2005 that was very pessimistic on the Berlin Property scence. High unemployment, 10% of flats vacant at any one time, outward migration. I can't post the link but you can find it under google
deutsche bank report berlin property market
it's titeled heavily mortgaging the future.

What has changed to make Berlin a good investment?

 

[bialikma]

Hello all !

I'm quite new at this forum and currently checking the offers in Wilmersdorf , Zehlendorf and Charlottenburg . Anybody can advice ?

 

[Lewis]

Hi Andrew - Could you tell me whether you think Schoeneberg, Charlottenberg & Wilmersdorf have any investment potential?

I can perhaps spread a little light on this for you having lived in Charlottenburg and worked in Wilmersdorf.
Ch'burg is seen and has been seen for many years as a des res area. Prices per sqm are higher here than in many other areas of Berlin for good reasons - it's pleasant. You can expect good, solid, safe returns here for a more substantial outlay than in many areas of the city - to a lesser extent the same can be said about Wilmersdorf.
S'berg is one to watch, the new airport looks as though it is happening and this colossus is expected to give many thousands of jobs in both the building and the administration of the development. This will almost certainly have the knock on effect of infrastructure development moving out from the airport.
At our agency we expect to see the tendrils of this through to Teltow, out to the Berliner ring and maybe a less spectacular but nevertheless noticeable effect in some of the outlying villages beyond the Berliner Ring.
Imagine someone saying to you they could find a house with an acre inside the M25, half an hour to Gatwick or Heathrow and you'd get change from £100,000. Would you be tempted to take a look!? Well that's what is about to happen to S Berlin and there are many properties for much less than £100k
Berlin has become the subject of much conjecture, hype, lies and nonsense and has become a magnet for the hangers-on who peddle this to trap the unwary.
Be cautious, due diligence is all.
Berlin - not just as an investment vehicle but as a city to live in is absolutely wonderful. It is not alone in Germany, Dresden offers, arguably an even better investment vehicle and it too is a lovely place to put down roots for a couple of years. I've even had the pioneers of the Brits coming for retirement purposes - a canny choice as their money goes further in Germany.
You don't make any mention of experience of living,visiting,working in Germany or if you speak a little German (always useful even though many speak English and are prepared to practice it on you) If you haven't already visited then I suggest you do so before any decision is made.
Hope this is of some use to you and that Andrew doesn't mind me stealing a little thunder.

 

[bialikma]

Thanks a lot . One more question: what you think about Zehlendorf ?

Mark

 

[Lewis]

Thanks a lot . One more question: what you think about Zehlendorf ?

Mark

Not enough to give you a considered opinion. I've been there many times and it's pleasant enough. I am also aware of the old US Kaserne (been in there when it was a barracks) being renovated and developed into housing. Should be sound enough and I'd be happy enough to live there. All of this my own feelings. There are those here who will know this development and the area far better than I, maybe they'll jump in and offer to help.