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I just got back from Berlin Trip. It has been a strange experience. All buyers are international buyers and all sellers are forced by the bank (negative equity) to sell after many years of lower prices. Unemployment is extreemly high and especially in the east some local councils are offering 2 bedroom flats for rent at only 100 euro a month. This will keep rents in control.

However there property out there that can yield 8-9% in reasonable areas. As long as you can get cheap mortgages it makes sence as a long term investment. If rent grows 2% per year and house prices 2% per year just inline with inflation you are doing very well.

The German population as a whole is shrinking I do not thim this will effect Berlin very much.

I made 2 offers on 2 appartment blocks (Kreuzberg (near Bergman Strasse) & Neukoln).

Hi soldintime

Glad you had a good trip. Have they accepted your offers?

May I ask which bank you have managed to get a mortgage through, and how easy was the process?

Many thanks

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Dogbox, thanks for your replies. I think this is one of the most 'exciting' threads I've read. I intend to visit Berlin in the next few months to have a look, but my focus will be commercial property. I agree with all the positives you mention but how to you counter the arguements that

1) The Berlin population is set to shrink not expand

2) The chancellor has not really gone very far with economic reforms

3) Very strong tenants rights means the potential of profit from(residential) property is limited

Cheers Fish,

1) This is nonsense written by an academic. Berlin has all the early signs of reclaiming its pre - communist glory, the people are essentially the same, just communism beat them down. Not only that but I constanlty here Berlin mentioned in the press and on TV, articles about new mega - nighclubs, floating swimming pools, cutting edge architectural projects THE NEW MASSIVE AIRPOT FOR 2010. Essentially this all builds inot a head of steam and more and more 'funk young things' are drawn to the bright lights. THE CAPITAL OF THE WORLDS THIRD LARGEST ECONOMY WILL HAVE A GROWING POPULATION, OF THAT I AM CERTAIN.

2) Give economic reforms time, they are unstopable. Even without any, many worldwide hedge funds are on a buying spree in Berlin - this 'buy mindset' will start to trickle down to the common Man.

3) Tenant stability also offers the owner a lot of benefits they dont enjoy in the UK, so in some respects the rental position is more not less attractive. Also new tenancy arrangments are emmerging where specialised agencies will lend on short - term corporate basis to corporate clients, although I suspect they only take top - end property.

If you can get into commercial I think it an exciting play.

Im looking for an apprtment this time or even just a UK based property fund (but I cant find one, Speymill is too risky - its just a single company rather than a fund I think).

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Hi soldintime

Glad you had a good trip. Have they accepted your offers?

May I ask which bank you have managed to get a mortgage through, and how easy was the process?

Many thanks

Well here is the complicated thing. On one property there are four owners and the bank has told them to sell (severe negative equity). Three owners want to sell the 4th with a 5% stake is not so convinced. So the accepting of the offer is going to take some time. On second property one of the owners (husband) has been in coma for a year. But wife and bank are no negotiating on accepting the offer. So as you can see lots of forced sellers. Should here more this week.

I am talking to an german IFA for mortgages, 75-80% LTV is possible depending on location and condition, too many commercial units and the LTV will go down. Send me a PM if you want more particular details.

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Hi Dogbox, can you help with the following? Is the tax regime similar to the UK? ie can the interest portion of the repayment be written off? What is the level of taxation after that? Whats the level of CGT?

Many thanks

FF

Im afraid I know not.

One thing to keep in mind is most property investors Ive known down the years tend not to declare foreign property sales anyway.

My attitude to investment is not to get bogged down in minuciae or you can end up investing in nothing except the most unimaginative low risk arenas.

Another freind tells me she bought land in Perth Australia 2 years ago at £180000. Just sold at over £400000. She didnt get all scientific and detailed, just bought on gut.

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Before you invest in German property be sure to fully understand the German tenancy laws and all your duties as a landlord (lots.). They are a lot more strict than UK laws, and they are one of the reasons why property isn't booming in Germany.

Good luck tho!

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Before you invest in German property be sure to fully understand the German tenancy laws and all your duties as a landlord (lots.). They are a lot more strict than UK laws, and they are one of the reasons why property isn't booming in Germany.

Good luck tho!

I'm more interested in commercial property, if its like the UK, that would mean tenant is responsible for repair/insurance etc. Makes life easier, especially when you are in a different country. :)

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Buying is painfull. It has now been 2 weeks since i have made offers. Both parties on both properties are facing bankruptcy. The banks and courts have to agree on what a good price for the property is. This will drag on for a few more weeks to come. Yields are dropping quickly in Berlin as sellers ask for more money due to the foreign buying frenzy. 6.5% is now the norm for good property.

I am off again, but this time visiting Leipzig and Dresden as well as Berlin. Yields are still good here and you are not buying dumps that they try to sell in Berlin.

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Buying is painfull. It has now been 2 weeks since i have made offers. Both parties on both properties are facing bankruptcy. The banks and courts have to agree on what a good price for the property is. This will drag on for a few more weeks to come. Yields are dropping quickly in Berlin as sellers ask for more money due to the foreign buying frenzy. 6.5% is now the norm for good property.

I am off again, but this time visiting Leipzig and Dresden as well as Berlin. Yields are still good here and you are not buying dumps that they try to sell in Berlin.

I looked at Dresden and the property seems to be a lot better for the money.

Keep an eye out for a cheap appartment for my portfolio would you ;)

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I looked at Dresden and the property seems to be a lot better for the money.

Keep an eye out for a cheap appartment for my portfolio would you ;)

What is the best way to find good property in Berlin? I am struggling to find any property. I am looking for something upto max Euro 580K and yield 8.5%. Fully tenated in a good area.

Is this possible? What is a good place to find property before taking a trip out to berlin.

Thanks

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  • 3 weeks later...

I have been trying now for 3 months to get a deal closed in Germany. I have made now 5 offers on 5 different porperties. It is just bloody difficult. Nothing is clear cut, lots of undecisive sellers and slow processes with reposesed properties for sale by the banks.

Not very friendly for foreign private investors. You will find out when you try yourselves.

soldintime

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Sceptic, my German extends to asking the way to the beach in a very loud voice, thats about it. I used a German Lawyer with London branch. He acted for me so language didnt come into it.

BTW, Im hearing the bargains in Berlin are gone. Not sure if true or not.

I agreed my Berlin purchase last year. Ive now decided not to invest further there as I couldnt resist another virgin market - Morocco.

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Can I get tax relief for interest payments for buying overseas property (in Germany)? I.e. if I rent out a German property, can I deduct capital expense for buying this property against rental income? And if so, where? In Germany or in the UK? Would this be under Double Taxation Treaties or direct (EU)? We're resident in the UK. Thanks for your help!

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2 people Ive used (both E/As - but unlike UK E/As, the service is far more professional and all encompassing).

Say Richard gave you thier details.

www.jop-immobilien.de (ask for Mr Pfitzner)

www.karras-immobilien.de (Ask for Barbarra, her English not so good, but her son Thomas is usually on hand to translate).

Please treat them with respect, and do not be a 'time vampire'. Try and narrow down what it is you want. I prefer land that has commercial or resi use.

If u want small appartments, Barbarra has new ones in a funky Camden type area (Freiderikshaine) for around 85000 euros right in the busy bar streets.

You can pay as little as 30000 euros further out.

My land is in Kaulsdorf in the old Eastern side. Anywhere near Kopenick seems a good bet as its a busy shopping area with good links not too far out and has lots of parks and lakes etc. Mr Pfitzner had some stuff here.

Bare in ind the legal process is quite legnthy and you will have to consider things such as whether land is contaminated with asbestos buildings etc.

Good luck - its the best investment you will ever make Im sure.

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Phew,

3 Blocks of flats have gone through. I am awaiting the other 3 to go through aswell. All in all the processes seem more cumbersome than in the UK. All I can say to would be investors in Germany is keep hanging in there.

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Can I get tax relief for interest payments for buying overseas property (in Germany)? I.e. if I rent out a German property, can I deduct capital expense for buying this property against rental income? And if so, where? In Germany or in the UK? Would this be under Double Taxation Treaties or direct (EU)? We're resident in the UK. Thanks for your help!

Dear Sceptic

Yes you can set off your interest bill against tax in Germany and the UK. The important thing is that if you borrow the money in the UK (by remortgaging a UK property- which bar the xrate risk could be cheaper than taking out a German mortgage ..... although that's a whole new story) it is VERY important that you get the lender to ringfence the amount you have borrowed with the relevant documenation. This is so that you can prove to the German tax authorities that you have borrowed the money for this purpose.

On the second point there is a double taxation treaty meaning any tax you pay in Germany can be offset against your UK tax bill. Unless you invest in a lot in German property, or don't have interest expenses, you are very unlikely to be paying anything near 40% in Germany in taxation- in fact if you have a couple of small apartments it will be closer to 15% according to our calculations. This is mainly due to your 2% depreciation allowance. So if you are a UK higher rate tax payer it really doesn't make much difference.

If you are looking for opportunities please come and look at our website at www.berlin-capital.com and give me a call any time if you have some questions.

Julian Power

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How do you go about finding deals? best to take a trip out there? I couldn't really find any websites, can you guys give me any links?

www.solidrockconsultancy.com

I have found property through them. They beat the competition on value for money. I have been out with 4 other agents but this company really showed me quality at a good price.

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I am new to the forum, been watching for a few months.

I used to live in Germany (rented), and at the time found this website useful for looking at property prices. Within the website you can also look at rents, so to get a good idea of how much to expect.

http://www.immobilienscout24.de/de/finden/...F94378E.worker1

I am serisously thinking of investing there, if someone could post some links/details to UK based companies that will help me organise the finance/legal side of things that would be most helpful.

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I am serisously thinking of investing there, if someone could post some links/details to UK based companies that will help me organise the finance/legal side of things that would be most helpful.

ex-pat investor, I am the owner of a few high yielding properties in Germany and I placed one of them for sale on the site: www.invest-germany.eu as a test case (it is the house in Gera-Langenberg with the 12% optimized annual net yield). The site is UK based and offers legal and administrative consultancy.

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