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  1. #1

    property investment in Germany

    I am looking at diversifying my portfolio through investment in property in Berlin. I recently read Rob Dix book and came across Mat Smith story and how he got into Berlin properties and then pulled out. I was looking to contact him but couldn't find him on the forum.

    With controlled rent in Berlin it is interesting to see the difference between tenanted and non-tenanted apartment. You can get 30% price increase once the tenant leave (you cant move it out yourself though).

    My knowledge is limited and I was wondering if anyone has some experience with that market?


  2. #2
    So it is a nice diversification. Berlin is a major European capital and cost/ft or 'property price vs. wages ratio' is far less than what we have in London (or even Paris). All the fundamentals are there in central Berlin and prices are on average 3 times lower than London.

  3. #3
    The rental market is controlled with rent being capped. But that is the good thing. Because buying a property that is tenanted is 30% cheaper than the same property free from tenant. So the strategy is really to buy a property tenanted in a location with good fundamentals and wait until the tenants leave to realize capital gain by selling.

  4. #4
    In Germany the mortgages are structured as such that the principal repayment can be delayed indefinitely (essentially providing with 25 years fixed rate interest only mortgage - a dream). You only have to pay 1% of the principal each year.

    So it has a lot going for it but reading the recent book from Rob Dix about Mat Smith story made me think twice...

    Any comments?

  5. #5
    This is good steer Patrick. thanks for the info.

    Indeed cost are high and as an investment it is probably not as liquid as UK. being able to sell easily (i.e. finding buyers) is always a key elements. Some type of investment in the UK are very "illiquid" (student pods and hotel rooms).

    And now reading your note and getting more info on the rental market in Germany one must be careful with the liquidity of the investment. Probably what makes the UK property market so attractive (to foreign investors also) is the liquidity factor. I know conveyance is cumbersome in England and does not simplify the process but when it comes to the volume of buyers and sellers, this is what makes this market attractive. You are pretty sure to get a buyer at the right price and it is a relatively efficient market with know price benchmarks and comparable.

    the trouble probably with other Europeans market is there lack of liquidity. You can easily find yourself owning a property that your are absolutely unable to sell. Even at a discount price. I had experience of owning a legacy property in a place with no fundamentals and that made the local market very inefficient.Very few properties on the market, wide range of prices and few buyers.

    As large as Berlin appears it might be one of the downside (compared to UK market that is).

    Again thanks for the note.

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