All Forum Posts by: Account Closed

Originally posted by @Latif A.:

Maximilian. 

You are talking about 200-650 euro per meter square. 
Renting for 60 euroes a year? 
 
This is peanuts. 
 
Sorry. 



Originally posted by @Account Closed:

Hi Latif,

1. No gentrification? Go to places like St. Georg/Hamburg, Neukoelln/Berlin or many others where you have seen complete neighborhoods changing both in investor and tenant perception (with the corresponding hikes in rentals and sales prices). This phenomenon can also be seen in secondary German cities like Bochum, Oldenburg, Muenster - in which I have been investing heavily in the last couple of years and enjoyed the benefits of such development. 
2. 25% Capital gains tax? I admit: German tax code is not a pleasant read. Nevertheless its worth a study. There are several ways to reduce or even avoid CGT. CG from the disposal of land or buildings can be rolled over to other land or buildings bought in the year of the sale, the year before the sale, or in the following four years after the sale (under certain circumstances, six years after the sale) through a tax-exempt reserve. Further, the German Reorganisation Tax Act may allow for a tax book roll-over under certain conditions. For details please either contact your CPA or feel free to ask. 
3. Non-deductibility of interest expenses?  This only applies to owner-occupied property.  However, if you rent your property, any expense incurred for generating your rental income can be offset against your taxable rental income, including mortgage expense, maintenance, repairs and improvements. Please be aware of eventual interest deduction limitations when using a corporation for your ventures. Details upon request. 
4. 45% tax rates? I hold my rental property in a German GmbH (Vermoegensverwaltende GmbH) and enjoy an “extended trade tax exemption” (erweiterte Kuerrzung) laid down in Section 9 No. 1 sentence 2 of the German Trade Tax Act (Gewerbesteuergesetz – GewStG) - in numbers: my tax rate is 15.85 % on taxable income. My properties that I intend to trade I hold in another GmbH, where the max. tax rate is 29.xx percent. 
5. Low rent to price ratio? Wouldn't it have been easier to just say "low returns"? In any case: I disagree. I buy property in secondary cities from as low as 200 €/m2 (average ca. 650-750 €/m2), with net cold rents normally exceeding 60 €/year.  Haven't seen better cap rates in the states so far...(happy to hear your suggestions where to look - I have been looking as far as investing in Ohio (proof of me desperation...)). Also market conditions differ significantly e.g. I find tenant turnover in my properties in the US to be much higher than in Germany, having a big effect on my bottom line. 
6. Appreciation rates of 1-2%? Appreciation is mostly a function of your efforts. I follow a "forced appreciation" strategy anduse multiple levers to create value. I have seem my properties appreciating at rates of not seldom 10-20 % p.a. 

Regards, 
Max

Originally posted by @Latif A.:

Hello @Maximilian,

either you are not aware of the investment world in the USA or your thinking process is flawed. 
  
sorry but Germany absolutely does NOT have the same investor friendly atmosphere as USA. 
  
there is a 25% capital gains tax on any property sold within 10 years of purchase, which is why there are no flips, and gentrification.
  
also in USA mortgage interest is deductable. 
also income tax in Germany is extremely high so you will pay a lot of rental income to tax... what is it like 45%? 

couple that with the EXTREMELY  low rent to price ratio, means that only old people who don't have access to technology are better off buying real estate in Germany.
  
I can take my 450k euros but a property in the worst price to rent area in USA, and still rent a place in Germany worth at least double that.
that means not only is it a bad investment as an investment property, but even for my own residence it makes no sense. 
  
yeah the interest rate are very low 1-2 percent on German mortgages , but that means  the appreciation is also at German speed.
   

  

 
Originally posted by @Account Closed:

Hi Ken,

having done deals in multiple jurisdictions I disagree with your statements on scalability, wealth growth timeline and ROI (which in the end come down to one item: ability of assets to produce net cash flows).

Neither was it the "small thinking" that shaped the socioeconomic/polital landscape in the last century Germany - in fact the megalomania (or its consequences) of a small, inhuman self-called elite. 

Taxation in Germany is as investor-friendly as in the US. 

Also the stability you refer to doesn't exist. Neither in local, national nor pan-european markets. I have bought property for less than 15 percent of its value at peak market - not only in the periphery of Europe, but right in its heart: Germany. 

Regard, 
Max



Originally posted by @Ken Breeze:

Generally speaking, I would have to agree with @Latif A. 

Compared to the US market (assuming you have some knowledge of both markets), Germany is not nearly as interesting in terms of scalability, wealth growth timeline, and ROI. Some of it has to do with last century small thinking and the cultural attitude towards money. Not that other countries or cultures are free of that notion ;-)

Don't get me wrong, my intention is not to sound judgemental or condescending; I am, as most of us, from a low to mid middle-class background, but why do you think Europeans left for a better word and communism and socialism was invented in Europe? This stuff goes very deep and waaaaay back.

I don't know about you guys, but I don't have 30 years to wait for appreciation nor are the local tax laws and regulations (capital gains, property tax, just to name a few) favorable to investors in Germany. 

This is unfortunately also true for many other European countries, in some cases, like Spain or Italy, the game rules are even worse. I know this because I property manage a luxury vacation rental in Tuscany and my family has or had RE in Mallorca/Spain.

This doesn't mean Europe is off limits, it just means you need a very longterm REI strategy, and best to combine it with US and other RE investments if you want to make any returns here.

A whole nother discussion could be about the incredible stability this continent has had for decades compared to the rest of the world including the US.

Starting with you guys, I'd like to set up a European Bigger Pockets Master Mind group. Connect with me to hash out a plan.

Cheers, Ken

P.S. Ich spreche auch fliessend Deutsch ;-)

@Richard Rheker @Jacobus Bor @Flo Schn @Salomon Gamero @Shane Barone @Tevin Howell @Nina Atenburger

1. No gentrification? Go to places like St. Georg/Hamburg, Neukoelln/Berlin or many others where you have seen complete neighborhoods changing both in investor and tenant perception (with the corresponding hikes in rentals and sales prices). This phenomenon can also be seen in secondary German cities like Bochum, Oldenburg, Muenster - in which I have been investing heavily in the last couple of years and enjoyed the benefits of such development. 
2. 25% Capital gains tax? I admit: German tax code is not a pleasant read. Nevertheless its worth a study. There are several ways to reduce or even avoid CGT. CG from the disposal of land or buildings can be rolled over to other land or buildings bought in the year of the sale, the year before the sale, or in the following four years after the sale (under certain circumstances, six years after the sale) through a tax-exempt reserve. Further, the German Reorganisation Tax Act may allow for a tax book roll-over under certain conditions. For details please either contact your CPA or feel free to ask. 
3. Non-deductibility of interest expenses?  This only applies to owner-occupied property.  However, if you rent your property, any expense incurred for generating your rental income can be offset against your taxable rental income, including mortgage expense, maintenance, repairs and improvements. Please be aware of eventual interest deduction limitations when using a corporation for your ventures. Details upon request. 
4. 45% tax rates? I hold my rental property in a German GmbH (Vermoegensverwaltende GmbH) and enjoy an “extended trade tax exemption” (erweiterte Kuerrzung) laid down in Section 9 No. 1 sentence 2 of the German Trade Tax Act (Gewerbesteuergesetz – GewStG) - in numbers: my tax rate is 15.85 % on taxable income. My properties that I intend to trade I hold in another GmbH, where the max. tax rate is 29.xx percent. 
5. Low rent to price ratio? Wouldn't it have been easier to just say "low returns"? In any case: I disagree. I buy property in secondary cities from as low as 200 €/m2 (average ca. 650-750 €/m2), with net cold rents normally exceeding 60 €/year.  Haven't seen better cap rates in the states so far...(happy to hear your suggestions where to look - I have been looking as far as investing in Ohio (proof of me desperation...)). Also market conditions differ significantly e.g. I find tenant turnover in my properties in the US to be much higher than in Germany, having a big effect on my bottom line. 
6. Appreciation rates of 1-2%? Appreciation is mostly a function of your efforts. I follow a "forced appreciation" strategy anduse multiple levers to create value. I have seem my properties appreciating at rates of not seldom 10-20 % p.a. 

Regards, 
Max

Originally posted by @Latif A.:

Hello @Maximilian,

either you are not aware of the investment world in the USA or your thinking process is flawed. 
  
sorry but Germany absolutely does NOT have the same investor friendly atmosphere as USA. 
  
there is a 25% capital gains tax on any property sold within 10 years of purchase, which is why there are no flips, and gentrification.
  
also in USA mortgage interest is deductable. 
also income tax in Germany is extremely high so you will pay a lot of rental income to tax... what is it like 45%? 

couple that with the EXTREMELY  low rent to price ratio, means that only old people who don't have access to technology are better off buying real estate in Germany.
  
I can take my 450k euros but a property in the worst price to rent area in USA, and still rent a place in Germany worth at least double that.
that means not only is it a bad investment as an investment property, but even for my own residence it makes no sense. 
  
yeah the interest rate are very low 1-2 percent on German mortgages , but that means  the appreciation is also at German speed.
   

  

 
Originally posted by @Account Closed:

Hi Ken,

having done deals in multiple jurisdictions I disagree with your statements on scalability, wealth growth timeline and ROI (which in the end come down to one item: ability of assets to produce net cash flows).

Neither was it the "small thinking" that shaped the socioeconomic/polital landscape in the last century Germany - in fact the megalomania (or its consequences) of a small, inhuman self-called elite. 

Taxation in Germany is as investor-friendly as in the US. 

Also the stability you refer to doesn't exist. Neither in local, national nor pan-european markets. I have bought property for less than 15 percent of its value at peak market - not only in the periphery of Europe, but right in its heart: Germany. 

Regard, 
Max



Originally posted by @Ken Breeze:

Generally speaking, I would have to agree with @Latif A. 

Compared to the US market (assuming you have some knowledge of both markets), Germany is not nearly as interesting in terms of scalability, wealth growth timeline, and ROI. Some of it has to do with last century small thinking and the cultural attitude towards money. Not that other countries or cultures are free of that notion ;-)

Don't get me wrong, my intention is not to sound judgemental or condescending; I am, as most of us, from a low to mid middle-class background, but why do you think Europeans left for a better word and communism and socialism was invented in Europe? This stuff goes very deep and waaaaay back.

I don't know about you guys, but I don't have 30 years to wait for appreciation nor are the local tax laws and regulations (capital gains, property tax, just to name a few) favorable to investors in Germany. 

This is unfortunately also true for many other European countries, in some cases, like Spain or Italy, the game rules are even worse. I know this because I property manage a luxury vacation rental in Tuscany and my family has or had RE in Mallorca/Spain.

This doesn't mean Europe is off limits, it just means you need a very longterm REI strategy, and best to combine it with US and other RE investments if you want to make any returns here.

A whole nother discussion could be about the incredible stability this continent has had for decades compared to the rest of the world including the US.

Starting with you guys, I'd like to set up a European Bigger Pockets Master Mind group. Connect with me to hash out a plan.

Cheers, Ken

P.S. Ich spreche auch fliessend Deutsch ;-)

@Richard Rheker @Jacobus Bor @Flo Schn @Salomon Gamero @Shane Barone @Tevin Howell @Nina Atenburger

having done deals in multiple jurisdictions I disagree with your statements on scalability, wealth growth timeline and ROI (which in the end come down to one item: ability of assets to produce net cash flows).

Neither was it the "small thinking" that shaped the socioeconomic/polital landscape in the last century Germany - in fact the megalomania (or its consequences) of a small, inhuman self-called elite. 

Taxation in Germany is as investor-friendly as in the US. 

Also the stability you refer to doesn't exist. Neither in local, national nor pan-european markets. I have bought property for less than 15 percent of its value at peak market - not only in the periphery of Europe, but right in its heart: Germany. 

Regard, 
Max



Originally posted by @Ken Breeze:

Generally speaking, I would have to agree with @Latif A. 

Compared to the US market (assuming you have some knowledge of both markets), Germany is not nearly as interesting in terms of scalability, wealth growth timeline, and ROI. Some of it has to do with last century small thinking and the cultural attitude towards money. Not that other countries or cultures are free of that notion ;-)

Don't get me wrong, my intention is not to sound judgemental or condescending; I am, as most of us, from a low to mid middle-class background, but why do you think Europeans left for a better word and communism and socialism was invented in Europe? This stuff goes very deep and waaaaay back.

I don't know about you guys, but I don't have 30 years to wait for appreciation nor are the local tax laws and regulations (capital gains, property tax, just to name a few) favorable to investors in Germany. 

This is unfortunately also true for many other European countries, in some cases, like Spain or Italy, the game rules are even worse. I know this because I property manage a luxury vacation rental in Tuscany and my family has or had RE in Mallorca/Spain.

This doesn't mean Europe is off limits, it just means you need a very longterm REI strategy, and best to combine it with US and other RE investments if you want to make any returns here.

A whole nother discussion could be about the incredible stability this continent has had for decades compared to the rest of the world including the US.

Starting with you guys, I'd like to set up a European Bigger Pockets Master Mind group. Connect with me to hash out a plan.

Cheers, Ken

P.S. Ich spreche auch fliessend Deutsch ;-)

@Richard Rheker @Jacobus Bor @Flo Schn @Salomon Gamero @Shane Barone @Tevin Howell @Nina Atenburger