Mietkauf - property purchase and rental in Germany

My first post on the forum, hello...

I would appreciate any help available regarding buying property here in Germany. Me and the good lady have just had our first nipper and so we are now searching for a bigger flat. As we are looking to move we're considering buying a flat rather than just renting. Unfortunately we are currently in no position to get the money together for a deposit on a flat and it seems 100% mortgages aren't available here in Germany. One option I have seen a fair few times is this Mietkauf option, I was wondering if anyone had any information on this? Is anyone currently buying property this way? Does anyone know of any information available on the web (in English), I've searched but I've had no luck as yet. Cheers...

Here's a starter: Hire purchase - Wikipedia

Its not really hire-purchase, although the process is similar.

Mietkauf doesn't usually save you money, but it buys you time to save up for the deposit on a house you might really want. It's often, but not always applied to new houses, where there is the added disadvantage of faster depreciation. You simply rent the property for a period of time to give you time to save up money for a deposit. Some of the state saving schemes might assist you with a guaranteed mortgage at a reduced interest following a period (usually 7 or more years) of intense saving, possibly at a state subsidised higher interest rate. The monthly rental on Mietkauf houses is normally higher than on a comparable "normal" house, as the original owner knows he will not have long term income as a result. As the tax advanatages in house purchase are slowly eroded, you may lose these with ultimate purchase. In some areas (Munich!) house prices are actually rising (at last!) so you may end up paying more for the house than you expected when you finally buy (Mietkauf does not necessarilly fix the purchase price).

There are many seemingly good offers on the market, usually on new properties, often from the builders themselves. Be careful when looking into them in detail. Many rely on artificially high income estimates on savings (usually stock market based) to raise the money for ultimate purchase, so include inherent risk. There's no such thing as a free lunch.

Unless you have a dream house in mind now and want to be living in it for the very long term, better to rent a smaller property, save like crazy using state sponsored schemes and buy a different house of your dreams later.

Here in the Stuttgart area there are always offers for Mietkauf homes. Read the papers and K&F.

This leads to Stuttgart listings.

He Guys,

I was looking at the Mietkauf possibilty and had one of the people from a co-operative called Genotec last week at my place to explain. In the end its all hot air. You end up worse that you started, so my advise, hands off Mietkauf, or the Genotec Model. Read carefully.

I give you a Genotec example:

- You still need a down payment of minimum 10k max 42k or so.
- The down payment can be paid monthly or one off.
- You still have to wait at least 1 year before you can take up any property depending on how much down payment you accrue between 1-3years.

- To buy a property of 200000 euros, you need a deposit of 35k + 1 year wait time.
- Say you have the above it goes thus:

- Property price = 200000
- Deposit =35000
- Buy out period = 25 years.
- Genotec buys the poperty for you with the option that you can buy within 25 years.
- You pay Genotec 4.5% of property price as rent a year, ie 9000 euros per year at 750 a month + your normal 'neben kosten' about 200 euors, so your total rent per month is 950.
- for 25 years you pay Genotec 225000. This is money you don't get back.
- You must establish a saving plan with them of at least 1.1% of the value of the property. Take 2%. That makes 50000 in 25 years
- You get interest of 3% per year on the despoit of 35k, that makes 87500 in 25 years.
- At the end of 25 years you have as capital 35k + 50k + 87.5k = 172500

Summary at end of 25 years
- Total rents paid 225000 (money lost) to Genotec
- Extra charge for lawyers fee and Gutachten clicks in say 10000 to be modest.
- Total capital raised 172500.
- Property price 200000 so you have a minus of 35000 and loss of 225000.

In the end you buy the property for 225000 + 200000 + 10000 = 435000.

Perfect con eh!

Cheers

Roland

If you looked at what you're actually paying for a property that you pay off for 25 years, you'd notice you are "wasting" a similar amount of money.. the house could easily cost you twice what you actually paid for it. That's why this argument of "your throwing your money down the drain when renting" just doesn't work for me, cause you are also "throwing your money down the drain" when you get a mortgage as well.. even if you buy a house outright, you're still throwing money down the drain, cause this capital you had would have made you many thousands per year when invested or even put in a savings account..

In reality, none of it is throwing your money down the drain cause you are getting a place to live in.