Relocating nearby to Munich

157 posts in this topic

On 2/27/2021, 12:21:50, MikeMelga said:

Why? Just rent. Makes no sense to buy a house in Munich. It's the biggest realstate bubble in the world and will eventually collapse. Wait till it does, then buy.

 

I have a friend that bought a new small row house for about 600.000€, about 40 minutes away from Munich. But it's a tiny village and definitely not english-friendly. Worst, these small villages are not foreign-friendly. And some not even German-friendly. Either your great granpas were born there or you don't belong.

 

This is terrible advice! 

 

Bought an apartment 5 years ago and now it is worth 50% more. Even if there is a property price decline it certainly won't go down by 50% maybe 10 or 15%. It is absolutely nuts renting if you can afford to buy. 

 

I would prefer to leave my child a freehold apartment when I die than wasting all my money renting until the day I die.

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This is the always the rent vs buy discussion.

 

It's not that clear cut, and has many factors that can make on or the other better.

 

For example, the bubble has been going to burst since the 80 and things are still more expensive.

If however the government suddenly free up loads of land for people to buy, then buying before that happens would have been a bad thing (prices come down).

If you pay way less rent than you would a credit and prices do not go up, renting is good.

 

Those are however very simplified examples and what it comes don to is making your choice (if you can, some people can't afford to buy) and taking your chances.

Sometimes there are no good choices. There are people around who can't afford to buy anywhere, have to take over their parents' house and still can't afford to renovate it.

 

Sometimes choices are not good or bad, just better or worse..

 

 

 

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27 minutes ago, Camm said:

 

This is terrible advice! 

Let's do the math, I think you will understand why it is not.

 

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Bought an apartment 5 years ago and now it is worth 50% more. Even if there is a property price decline it certainly won't go down by 50% maybe 10 or 15%. It is absolutely nuts renting if you can afford to buy. 

Really? If you sell it now, where are you going to live? Also don't forget the moment you sell it you need to pay taxes on gains and the buyer has associated costs. Your math is also wrong. Going up 50% and then going down 50% does not land you in the same spot.

Example (simplified values):

1000€ +50% = 1500€.

1500€ - 50% = 750€

Let's say the market comes down 15%. Your 1500€ are now worth 1275€. That's 27.5% profit before taxes and selling costs. I don't know how much you pay in taxes in Germany, but in Portugal that would reduce it to something around 20%. 20% gain in 5 years is nothing special.

You get inflation adjusted 7% historic average return on S&P ETF. That's 40% compound interest over 5 years. Even removing taxes, it's still around 30%, with the huge advantage that you can move your money at any time. If you don't adjust for inflation (like you are not doing for the house), then it's 60% compound, 45% after taxes.

 

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I would prefer to leave my child a freehold apartment when I die than wasting all my money renting until the day I die.

Because I haven't bought, I can afford international private school for my child. It also allowed me to invest in the stock market with 1300% gains in 4 years. You see, owning a house is not the only way to gain money.

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6 minutes ago, MikeMelga said:

Let's do the math, I think you will understand why it is not.

 

Really? If you sell it now, where are you going to live? Also don't forget the moment you sell it you need to pay taxes on gains and the buyer has associated costs. Your math is also wrong. Going up 50% and then going down 50% does not land you in the same spot.

Example (simplified values):

1000€ +50% = 1500€.

1500€ - 50% = 750€

Let's say the market comes down 15%. Your 1500€ are now worth 1275€. That's 27.5% profit before taxes and selling costs. I don't know how much you pay in taxes in Germany, but in Portugal that would reduce it to something around 20%. 20% gain in 5 years is nothing special.

You get inflation adjusted 7% historic average return on S&P ETF. That's 40% compound interest over 5 years. Even removing taxes, it's still around 30%.Even if there is no 15% market drop, it still pays off more to invest in ETF, with the huge advantage that you can move your money at any time.

 

Because I haven't bought, I can afford international private school for my child. It also allowed me to invest in the stock market with 1300% gains in 4 years. You see, owning a house is not the only way to gain money.

 

 

Blah blah blah.   I bought my house some years ago, the monthly payment was more or less the same amount I would pay for renting it and I just finished paying it.  Now I live rent free.  So to me the real cost of the house was the cost of opportunity of the down payment which was only 22k.   So I doubt 22k would be 500k in nowadays money.  Plus I lived in my own house all that time so I could do to the house whatever I pleased.   Even if the prices tanked I would still come with a very positive balance.

 

In the mean time prices of properties and renting have skyrocketed (but they just introduced here that crappy rent cap that will blow in everyones' faces).

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We bought way to late but saying that, our mortgage is only abut 150 a month more than the the people who took over our old flat are now paying in rent.

Granted, if anything goes wrong here we have to pay for it and we guess we will have to invest in the place as time goes on.

 

My view is that we will end up paying more out buying than we would renting up until the mortgage is paid off. That however doesn't count in the fact that we own something that we could sell. If things keep going the way they are at least.

 

Lots could happen between now and then though, the way it looks now doesn't have to be the way it all ends up. 

 

 

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2 hours ago, Krieg said:

I bought my house some years ago, the monthly payment was more or less the same amount I would pay for renting it and I just finished paying it. 

 

This is the critical point.

 

My mortgage is about half the rent for a similar property in this area - property prices are low, mortages easy to get and rent is average, so the maths is in our favour. Even with having to get a new boiler in the last house it was still cheaper.

 

Not all areas have the same maths. Krieg's maths was a no-brainer, and now he reaps the benefits, mine were a complete no-brainer, I couldn't have afforded to stay if we'd had to rent a property big enough for all of us - buying was my only option. 

 

The maths changes as the property market changes. Not everyone works with all of the same variables. Blanket statements don't work. 

 

 

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1 minute ago, kiplette said:

 

This is the critical point.

 

My mortgage is about half the rent for a similar property in this area - property prices are low, mortages easy to get and rent is average, so the maths is in our favour. Even with having to get a new boiler in the last house it was still cheaper.

 

Not all areas have the same maths. Krieg's maths was a no-brainer, and now he reaps the benefits, mine were a complete no-brainer, I couldn't have afforded to stay if we'd had to rent a property big enough for all of us - buying was my only option. 

 

The maths changes as the property market changes. Not everyone works with all of the same variables. Blanket statements don't work. 

 

 

My math shows 2x more mortgage than rent for my specific case. Not to mention a huge upfront payment.

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42 minutes ago, kiplette said:

 

This is the critical point.

 

My mortgage is about half the rent for a similar property in this area - property prices are low, mortages easy to get and rent is average, so the maths is in our favour. Even with having to get a new boiler in the last house it was still cheaper.

 

Not all areas have the same maths. Krieg's maths was a no-brainer, and now he reaps the benefits, mine were a complete no-brainer, I couldn't have afforded to stay if we'd had to rent a property big enough for all of us - buying was my only option. 

 

The maths changes as the property market changes. Not everyone works with all of the same variables. Blanket statements don't work. 

 

 

 

My situation at the end was even better than I wrote because at the end of the mortgage I was paying something ridiculous compared to the renting market.  The last two years I paid 800 EUR a month, with that you can barely rent a 1 room apartment in Berlin.

 

 

40 minutes ago, MikeMelga said:

My math shows 2x more mortgage than rent for my specific case. Not to mention a huge upfront payment.

 

Well, that might be because you live now in a very expensive house, not everyone has to start with a 2 million EUR house.   I totally understand your decision to PREFER to rent your palace instead of buying a downgrade house.   However, I criticise your blanket statement that buying is bad business.   I have always been surprised by your comments about this, being you someone who allegedly understand finances.

 

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39 minutes ago, Krieg said:

Well, that might be because you live now in a very expensive house, not everyone has to start with a 2 million EUR house.   I totally understand your decision to PREFER to rent your palace instead of buying a downgrade house.   However, I criticise your blanket statement that buying is bad business.   I have always been surprised by your comments about this, being you someone who allegedly understand finances.

Ha, one more argument: renting allows me to live in a house which I can't afford to buy!

Another one is that I already had to move once after 4 years in Munich. If I get a new job across the city, what do I do if I'm stuck paying a house for decades?

 

I don't say buying is bad business. I am saying buying in Munich is bad business.

Personally I will probably buy a piece of land and build a highly customized house. But not in Munich.

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On 27.2.2021, 19:42:20, AlexTr said:

 

It's a shame that people who consider themselves supposedly even-tempered and educated can't behave in a less clearly bigoted way.

 

I'm from the US South and even we consider such open aggression as uncouth and for low-class and uneducated people or those with severe mental defect only.

You don't understand what you're talking about. That's not meant to be aggression.

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I don’t get why this topic had to degenerate again in the buy vs rent (in Munich) discussion, but Mike, without wanting to discuss the topic a small correction: the profits from selling are always 100% tax free in Germany if you’re selling the place where you live, and tax free after 10 years for rented property. In addition, yearly property taxes are low and you can deduct a lot of items from your taxes  (and I don’t imagine this significantly changing with the reform). The biggest upset are really the initial costs.

 

About being a bad or good business, it’s obviously good to buy low(ish) and sell high (or just hold) and to have time on your side, i.e like with sex it’s better to start young. My first properties are paid off, more than doubled in price and more importantly generate enough rent to pay my current home’s mortgage, which allows us to invest half of our earned income in the stock market. If prices drop significantly here or in Portugal I’ll probably buy again. If they increase or stagnate it’s also fine, I’m in for the long haul. I would definitely not want to buy my first property at forty, though.
 

It might have been better to have gone full stock market for the last fifteen years, but then again I made fun of Editor Bob for investing all his savings in Bitcoin when it was at €25. The future is hard to see (for me, not for Editor Bob).

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But Mike knows everything... He is the ToytownTrump! 

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17 minutes ago, SpiderPig said:

But Mike knows everything... He is the ToytownTrump! 

Really! I thought that title was already taken!!

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7 hours ago, MikeMelga said:

Ha, one more argument: renting allows me to live in a house which I can't afford to buy!

Another one is that I already had to move once after 4 years in Munich. If I get a new job across the city, what do I do if I'm stuck paying a house for decades?

 

I don't say buying is bad business. I am saying buying in Munich is bad business.

Personally I will probably buy a piece of land and build a highly customized house. But not in Munich.

You actually sound like someone who is trying to convince himself (and I have noticed you do this a lot). Did you miss out 10 years ago perhaps?

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8 hours ago, Uncle Jamal said:

You actually sound like someone who is trying to convince himself (and I have noticed you do this a lot). Did you miss out 10 years ago perhaps?

I never meant to live forever in Germany, so buying never made sense.

At some point I did the math just to see if it made sense from an investment perspective, in Munich. Basically I would have to scale back to a cheaper house, pay more per month, and have no money available for other investments. Worst, I would be stuck in the same place for decades. Makes no sense.

Now if we were talking about other locations, namely in Portugal, perhaps...

For 500.000€ I can buy a modern 300sqm house with a swimming pool in Portugal.

For 500.000€ I can buy a very small band house 80km away from Munich.

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4 minutes ago, MikeMelga said:

I never meant to live forever in Germany, so buying never made sense.

 

Neither did I, until about 10 years ago when I realised that going back wasn't really an option any more. Luckily, about 8 years ago, I was able to buy the place I'm in and I've watched the prices around me increasing ever since. It was a case of right place, right time, nothing more, but I'm happy now that I managed to do it.

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Buying didn’t tie me to a home or even a country nearly as much as my children do. Leaving and renting out previous homes: all according to plan, also with small children no problem. Leaving my current home with the kids in a good school, engaged in local clubs and with their best friends: it would be a huge headache. Really don’t want to and I’m glad no third party can force us. My wife is German but loves Portugal (who wouldn’t) so we half plan to move there in our fifties after the kids grow up, that’s over a decade from now though.

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18 minutes ago, mtbiking said:

Buying didn’t tie me to a home or even a country nearly as much as my children do.

 Oh this, certainly.

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37 minutes ago, mtbiking said:

Buying didn’t tie me to a home or even a country nearly as much as my children do. Leaving and renting out previous homes: all according to plan, also with small children no problem. Leaving my current home with the kids in a good school, engaged in local clubs and with their best friends: it would be a huge headache. Really don’t want to and I’m glad no third party can force us. My wife is German but loves Portugal (who wouldn’t) so we half plan to move there in our fifties after the kids grow up, that’s over a decade from now though.

Similar situation, my kid has been 90% of his life living in Germany, but as my kid is in international school and most of his friends shift anyway every 3 years, it's not a big issue. He also spends about 3 months per year in Portugal and he actually prefers it there, and has lots of friends there.

Our main issue with returning is that Porto area does not have a proper international school, most follow english curriculum. And they're full of upperclass twits.

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2 hours ago, MikeMelga said:

I never meant to live forever in Germany, so buying never made sense.

 

Neither most of us.

 

2 hours ago, MikeMelga said:

At some point I did the math just to see if it made sense from an investment perspective,

 

Your math is so good that includes knowing the future.  And considering the current prices, I would say your math failed.

 

2 hours ago, MikeMelga said:

in Munich. Basically I would have to scale back to a cheaper house, pay more per month, and have no money available for other investments. Worst, I would be stuck in the same place for decades. Makes no sense.

 

Stuck for decades?   You know you can sell your properties?

 

2 hours ago, MikeMelga said:

Now if we were talking about other locations, namely in Portugal, perhaps...

For 500.000€ I can buy a modern 300sqm house with a swimming pool in Portugal.

 

And people told me if I stopped smoking in X amount of years I could have a Ferrari.   I stopped smoking and still no Ferrari.

 

2 hours ago, MikeMelga said:

For 500.000€ I can buy a very small band house 80km away from Munich.

 

That's the only thing you said that makes sense.   And I already pointed it out.  Your decision to rent a better house than the one you could afford to buy.  But it is a PREFERENCE and no indication of bad or good business decisions.

 

 

10 hours ago, Uncle Jamal said:

You actually sound like someone who is trying to convince himself (and I have noticed you do this a lot). Did you miss out 10 years ago perhaps?

 

It is probably the same reason why he hates Bitcoin with all his heart.   The funny thing is he continues spitting his hate but the Bitcoin train has not yet stopped, he could have boarded it any time in all these years of hate.

 

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