Hello everyone, I need help, I just entered the real estate game, I'm interested in BRRRR strategy, can I use in Europe, for example Germany, does anyone have experience, I read on the forum that wholesale is impossible to work in Germany, interested me BRRRR method?
Investor · Germany · Member since 2020 · 7 posts · 2 votes
5y
@Christoph Heim I would be also interested about BRRR in Germany. were you able to do it or do you know someone how did it ?
And a specific question: how does the refinancing work, what percentage of the appraised value can one get loan for is it 80% is it 100%? (I know when you buy one can get 100% financing an cover only the purchase costs and taxes ).
@Din Kadric If you are interested in how to finance a deal in the first place i can share my experience.
Investor · Germany · Member since 2020 · 7 posts · 2 votes
5y
@Christoph Heim thanks for your answer. Oh wow 130 % it sounds great! I'm assuming that apply when buying a house with a mortgage on it.
How about when you buy a property with your own money and renovate it and then go to the bank to appraise it and get a mortgage against it, how much would they borrow, 100 % of the appraised value?
say one buys a house with 60k, uses another 10K in renovation and a lot of own work and now the house value is 100k, would they give a borrow100k?
Thank you for this information, I appreciate your time, can you send me some of your experiences in Germany with BRRRR, I would have a few questions for you, how can we contact?
Financing: From what I've learn it did not matter much to have a credit score or credit history, but the banks liked to see some regular payments and income from my account. The most important seems to be having a permanent job in Germany (unbefristeter Arbeitsvertrag) the payment was on time and payed via bank(not in hand)
The max monthly payment could be somewhere around 30 % of your take home.
For a classic real estate financing @Christoph Heim explained very well, I was able to get a loan for 105 % of the purchase price and I had to cover some of the closing costs (another 7 % for my case). The interest rates could be at the time of writing under 2 % and repayment period can be for 35 + years( I guess it depends on the age of requester).
If the loan amount is under 100k then some banks would not borrow, other would borrow but max repayment period for like 15 years ( that means bigger monthly payment).
Also cool think is that sometimes one can choose to not start repayment of the principal for first year, so for first year only pay back the interest. Example loan amount 200kEuro , monthly payment 600Euro (400 principal 200 interest) first year only pay 200 Euro/month and from the second year start repaying 600 Euro.
there are at least 2 websites that search for best offer for a mortgage and give advice in English.
For BRRRR: Best way to finance I would say is a personal loan. Private money lender doesn't seem to be a think in Germany, there seems to be more reluctance toward that. German people please correct me if I'm wrong.
From what I searched max amount for a private loan is between 65 -85 k Euro and repayment period up to 8 years. The conditions to get it are similar to the mortgage ones. Because of the shorter repayment the monthly repayment will be big. So what I would do is a deal around 70-80 k and get the appraisal value over 100k so that there is no issue with re-financing.
The big question now is: Given the 2 options is it worth doing BRRRR in Germany ? Is it worth the risk?
Most people do BRRRR so that they don't leave money into deals and they can repeat it many times, but as described above in you could do that with simple mortgage and as Mr Christian said one can even get money for renovation.
If your target is bigger than not leave money in a deal but even get out money from that, then BRRRR would make sense. For example purchase price 50k put like 20k and lot of work, appraise for over 100k and get a mortgage on it for 80 % so over 80k, then you walk from the deal with 10k.
I would be curios if people that are doing BRRRR in US would consider worth doing in Germany.
Disclaimer: I'm not financial adviser, all the information provided in this post are for entertainment purposes only.
Rental Property Investor · Munich, Germany · Member since 2018 · 54 posts · 22 votes
5y
@Christoph Heim do you recommend any lender or mortgage broker with experience in the "backend" of the approval?
Like, how many mortgages can you have, which % of the rental banks consider as income, % of interest estimated after the fixed interest period and etc.