Investing in EUROPE !!???

[Junior Jaquet Hernandez]

Hello everyone

I just have a question concerning invest out of the USA, for example in Europe. So according whit the experience of some of you, I would like to know how have been that kind of experience.

Also if you can give me some advise, some idea, or opinion is going to be a pleasure to read it.

Thanks 😁

[Beniamin Bruda]

Hi Junior,

The situation in Germany AFIK  and the things that are different than USA(from what i hear on BiggerPockets) :

1. Interest Rate : The interest rate is very low 1-2 % and you can get financing up to 100% of the purchase price, (so you use your own money only for taxes/RE agent and so on which can be from 6% -16% ) This is not only for owner occupying but also for investing.

2. Rents. As you can imagine that means the prices of RE  skyrocketed, but the rents did NOT grow at the same speed, because of many factors some of them are: Regulations  e.g. you can only increase the rent max 15 % in 3 years if you have same tenant and as long as tenant pays the rent you cannot kick them out only if you need the house for yourself. Sometimes cities like Berlin(since 2 years or so) are able to freeze the rents for couple of years.

3. ROI . Because of low rents and and high price of RE the ROI(return on investment) in most of the big cities(Like Munchen, Stuttgart, Frankfurt, Hamburg, Cologne etc), is around 3-4 % So that means if you pay 1.5 % interest and you pay something for maintenance you are hardly break even or even on minus. You can only hope there will be capital appreciation and hope rents will go slowly up. This is about big cities, not off market deals not BRR, just standard buy to rent.

In cheaper parts of Germany: North East or Saarland, in small towns or villages you can find deals that have a ROI of up to 8 % even 10% sometimes, but you need to count with bigger risk of vacancy and keep in mind that in some of these places there was not too much of appreciation.

What i would do if i were to start again in Germany: get a very cheap rent, a room in shared flat if possible, get a permanent job so i can qualify for a loan. Then try to find right balance between a cheap place with big ROI and and one with potential of growth. Ideally i would buy something with long term renters already there and keep them happy. From what i have seen the purchase price does not variate too much if there are tenants for long term, there are more recent ones or none, but the benefit of it is huge.

For anyone who has more experience in Germany reading this please correct me if I am wrong.