Ive been seeking another investment for a while.

Commercial property in the UK or Germany probably. Ive invested in Germany previously and also in UK commercial property.

The problem for me is scale. In order to make a juicy investment scale becomes important.

The advantage of the UK is that gearing is readily available to me.
The advantage of Berlin is much lower prices.

In terms of commercial property Im not thinking offices as there is a greater risk of void periods. Industrial or retail type property would be of interest.

Perhaps £50000 from 3 or 4 of us.

I am considering a couple of established funds but would also like to explore whether some like minded individuals might get something going here.


Let me know if genuinly interested. I propose we all sign an agreement thats ensures that once the £50000 is paid into an escrow account there is no backing out as this would cause the remaining party a lot of grief.

Have you thought of hotel rooms. I recently purchased a double en suite room in a hotel in Scarborough for £20k deposit. The capital cost was £60k and the guaranteed yield of 12% for pa 6 years will pay off the mortgage. The hotel is a favoutie for coach paties and has 83 % annual occupancies signed up one year in advance. I saw a simlar deal in a 4 star busienss hotel in Hull at £80k with a 10% guaranteed yield but backed out

What return would get if you sold the room and didnt wait on the mortgage being paid off. i would be interested in something like that.

Dogbox

I have been reading your posts with great interest you seem to know a lot about investment. I am at the minute looking to invest in property in berlin and would like some advise as to how i would go about it. I was interested in your post about the commercial property but i dont think i could go that high with investment i wanted to invest a small amount as this is the first time iv done this, however i might be intereested in going into the commercial thing if it was a bit lower, my friend is also interested in investing in property and could also be interested in going into this with you. If you could tell me what makes you keen to invest in commercial and not residential.

im sure you can tell by the way im writing here im a real novice but i am seroius i have been looking to do something like this for a while and my friend has been the same for a long time.

im not experianced and would appreciate someone who is and who i could learn from.

Hi Stacey - All 61 rooms have gone so you cannot buy in. This is a relatively new concept and capital prices are low hence the high yield. The theory goes that as the BTL market in the UK gradually becomes less profitable many people will diversify into hotel rooms and the yields will normalise (i.e. capital value rises) The people I dealt with say if you wish to sell later they will pass on details to interested investors. Good prospects but high risk eg how do you put a value on a hotel room. What I liked about this prospect is that I am now a shareholder and if it the hotel goes pear shaped we can elect to convert to luxury apartments. I don't think that will happen, as I say they have an 83% long term occupancy and I get 50% of the room rate and the management company gets 50% so it is in their interest to keep the occupancy high.

I am aware that Guest Invest are doing this in London and their rooms are selling for c £270k with only a 6% guaranteed yield. I felt that coach parties of pensioners to Scarborough was more reliable and I can afford a £20k punt

Mike,

You say you are now a 'shareholder' in this hotel and if it goes pear shaped you could convert the building to apartments ?.

Is it being run as a company that actually owns the freehold ?.

Why commercial property you asked:

1) The work and regulatory burden tends to be less. Tnenats pretty much look after themselves and make improvements out of thier own pocket because this can improve thier bottom line - ie nicer premises looks better to new potential clients.

2) Tenants tend to be longterm

3) Restricted supply. In Germany supply is ok for now, but as sentiment imrpoves it is not unreasonable to assume commercial property in the capital will become as in demand as in UK major towns. In fact even in deepest East Anglia finding property for sale is extremely difficult - everything was bought up a while back.

4) UK property funds tend to favour commercial property and for good reason. Following a recession (as Germany has had) one can pick up commercial property quite easily.

I bought in Germany in 2005/06 and found it is best to have the least hassle possible. I imagine an appropriate target will be a sizeable property with a single tenant and large land footprint.

May set up as a company with a person appointed to manage the property and Tax returns meaning us investors can relax.

15 years from now I suspect Berlin will be completely different and then ownership of prime commercial property will be completely out of reach.

Buying in Germany is not only cheap it is very safe, a pretty unusual combination.

Ive seen repossesions 5 x cheaper than the price shown on official land registry documents from 1997/8. THIS SHOWS THE POTENTIAL IS THERE all it needs is for Germans to recognise the goldmine they are sitting on.

Radio - Sorry slightly misled there. Investors hold all 61 rooms on a 999 year leasehold. The freeholder owns the freehold of the land and common parts. But each room holder has a vote to either (a) repalce the management company if they dont get desired yields or ( to convert to alternative use.

Thanks for that Mike. Sounds interesting.

Incidentally, I've replied to your query about various outfits on the Turkey thread.

I agree with you dogbox that the gold mine is there. I am cautious about Germany for two reasons. Firstly it is a bugger to do business there, high transactions costs, language translation, tenant rigjhts etc but secondly and for me more importantly I haven't yet seen clear evidence of the upturn and won't until I do. We all know Germany will turn around but we don't know when and tihngs could pesrsist for several years yet. Still high unemployment and costs surrounding integratiojn of the East. My strategy for Germany is not a NO just a NOT YET. Hope this helps

Dogbox

have you seen anything, are you talking about buying a property with a business going or buyiny and then waiting on someone renting. my position is that i would need it to be tenanted from the first month ie i can't afford to leave it sitting. What do you think about commercial property with someone already renting and that also has apartments? Have you seen anything i saw a property with a business and apartments attached. It was berlin-capital.com it is a bit out of our price euro1.5 million it has 5 commercial and 19 ressidental tenants with well established business. Also said on brochure good area(off course it'll say that) podom. what would you think of something like that but smaller scale and cheaper.

I have been considering an investment in berlin and would would willing to look at your ideas with you .
£50k plus leverage I presume.
I do have some retail and btl property in the uk allready.

No upturn?

I bought into a German fund about 18 months ago just before Angela Merckel became Chancellor (partly due to reading dogbox's posts on Berlin). It's up 30% to date, despite recent setbacks on the DAX. Property isn't the only game in town, you know.

I looked at UK commercial 2-3 years ago, and bid on a town centre property on the Fylde coast. ( I was outbid, thank goodness, as 2 of the 3 tenants went bust). I would say that the key was to know the area, which would mean I would be wary about Germany. A UK High street can change from prime location to secondary location in just a few doors, so you better know the area.
I also sought some advice from a friend who has a commercial portfolio ( he pulls out a crucifix if you mention residential!) regarding a unit on a busy industrial estate, that I thought was fair value. The estate was on a long road, and units don't come up very often. He advised me against it, as it was the end unit and was next to some residential flats. This could seriously curtail the number of uses for the unit, as the residents could object to the noise levels. I wouldn't have thought of that, so you do have to be careful. The key for commercial property is finding something that would benefit from a structural change eg a large unit that can be split down into smaller units. Otherwise your investing in the economy, which may be due for a downturn. There certainly seem more empty properties about in the NW since I looked in 2004.

I'm more inclined to stick with purely commercial - but nothing fixed at this point so I welcome your input.
My instinct is to avoid multiple tenants as the work involved would be too onerous.

At this point Im sounding out invstor interest, from there we can work out a budget. Its impossible to say at this time whether a tenant would be present from day one. It is likely the best prospects may be repossesions in which case a tenant will need to be found.

Here's a German auction due the end of this month, based in Berlin:


http://immobilien-auktionen.de/en/naechste


Lots 147, 56 are a couple of examples although 56 probably wouldnt be of interest as the upkeep and ongoing management would be too onerous.

Note whole country hotels for 50000 euros.

I am an optimist so would be investing on the premise that German property will once again boom.
Ill just remind folk that in the early nineties in the UK many people could have bought up very cheap investment property but the majority did'nt as the general sentiment was poor - exactly the time they should have bought.

Of the many examples one particularly comes to mind; A chap bought an old warehouse in London in the last recession for I think £140000. Recently he sold it to developers for £6m.
A house of £140k might today be worth say £400 - 700k. The determinant factor was the land footprint. In a recession no one want industrial property, hence why I think commercial property values in Berlin are disproportionally low.. for now.

Hi Mike,

I note from your post on the Streetwise forum that you are now "slightly disillusioned" with your hotel room purchase. What's the problem ?.

Incidentally, I saw on the PA website that they still have rooms available.

hi dogbox
ive been thinking about investing in berlin and agree that commercial property is the way to go, ive got a couple of btl,s in ireland but haven,t really any experience of commercial or foreign investment. i would be interested in teaming up with you and some other investors , let me know if your still interested , id be keen to get this off the ground asap.
cheers
gazz

Hi Dogbox and others,
I am interested in investing in Germany but know very little about it other than what I have read on these boards and similar, therefore would a) need some handholding and need to feel comfortable and secure about the investment (as we all do I would hope!). Dogbox, is this something in addition to the Berlin Property Investment that you mentioned in a separate thread? Whereabouts are we all geographically? You can't beat actually meeting up in person if this is to go further. I am in Surrey.

Sorry about the weird face smiley - have no idea how he got in there!!

BPI is a separte issue.

I think I have found a partner now for my own project. We are visiting properties hopefuly the end of this month.