Just bought door # 2 with over 5k back at closing

[Sebastian Koellner]

It's a small step on the slow and steady path to wealth. We are trying to move to MFH, but stumbled upon this Condo at about 60% FMV.

After some negotiation and the usual procedures, we just closed yesterday – bought the condo in a midsized town in Germany for €22,100. We financed it for €30k to cover closing costs for this deal and pocket some money for the MFH deal we are working on.

Cash flow will be only about €60 per month – everything considered, including a 20% vacancy rate, management fee, repairs etc. That appears to be way less then what investors state-side get up for, but we also got the equity upside, so it was worth it to us.

Anyone out there investing in Germany?

[Sebastian Koellner]

Originally posted by @Adrian Chu:

Also, can you share with us how financing works in Germany?

Thanks Adrian. As for your question - overall, money is easy to get right now and rates are low - at least if you qualify ;) 

Customarily, people get ARMs - 5, 10, 15, 20, 25 years. You can however, also set up fully amortized loans with your bank. Currently, the equivalent of a 30 yr fixed interest loan probably runs somewhere like 5.5% (principal and interest). A potential difference over here is that virtually all banks have pre-payment penalties built into the loan contracts - so taking out a 20 year loan and selling after 10 years could cost you quite a bit of money in interest penalty to the bank, depending on how market rates have moved over the course of the 10 years.

The 10 year ARM is of interest to some investors, because if you hold an investment property for at least 10 years, all profits upon sale are tax free...

Other than that, I would see a lot of similarities to the US - lots of paperwork, closer scrutiny in the days right after the financial "collapse" a few years back, now balanced by the dynamic of low interest rates...

Any specific aspects you are interested in?