Buying property in Germany

289 posts in this topic

33 minutes ago, mtbiking said:

, it’s been consistently reported that the wealthiest 10% or 5% in Germany own their homes. That may sound obvious, but I think it’s still relevant.

 


 

 

 

Where I used to live, in a village about 45 minutes from Heidelberg, even the middle-class owned their own homes, and nice homes at that.

For instance, my landlord and lady: a very nice, spacious, modern four bedroom, 2 bathroom home with an Einliegerwohnung and beautiful garden. He was a Hauptschule teacher, she was a nursery teacher.

Next door, a policeman and his stay at home mum wife. A really beautiful home with a huge garden and swimming pool. 
On the other side, a very large, modern wooden house with a fantastic garden. Both of them were Diakonie (church) employees, he as a carer for mentally disabled, she as a clerk of some kind. Admittedly, the land was gifted to them by her father.
I could go on and on, but everyone I knew, all the middle-class families, were home-owners, many who had built from scratch and paid off the loan and still lived there after the kids had moved out. It's very common in this area.

 

All of these people built their homes in the 80's and 90's with bank loans and now they are all paid off. They are not wealthy, but smug middle-class, very houseproud, gardening wives, some retirees, and have lived in their homes for decades. 


In Germany, there is not this notion of "moving up the property ladder", buying as an investment to make money when you move up the ladder. They buy or build for themselves, and stay there all their lives, and leave their houses to their children when they pass on. They feel stable, secure, when their mortgage is paid off. That's it. They spend their money putting in a new kitchen from time to time,  renovating the bathrooms, or going on holidays.


My landlady is already wondering what to do when her husband (in his 80s, two heart attacks already) passes on, as the house is much too big for her alone. She is thinking of moving into the downstairs flat. But then, she won't have space for all her grandchildren when they come to visit.


This is typical "buergerliche" territory.

 

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I partially disagree, my wealthy friends have been climbing the property ladder since more than a decade. The middle class, even the upper middle class, in germany has a certain attitude towards property ownership and investing which is definitely not shared by the wealthier ten to five percent of the country. This is my experience.

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8 minutes ago, mtbiking said:

I partially disagree, my wealthy friends have been climbing the property ladder since more than a decade. The middle class, even the upper middle class, in germany has a certain attitude towards property ownership and investing which is definitely not shared by the wealthier ten to five percent of the country. This is my experience.

 

I grant you that -- I don't know any really wealthy Germans, so I have no idea how they feel about property.
(Actually I do know one of the wealthiest men in Germany, according to der Spiegel, or I used to know him. And as the owner of Scholss Elmau in Bavaria, he is certainly not moving up the property ladder! Back in the day I used to visit frequently.)

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2 minutes ago, mtbiking said:

my wealthy friends have been climbing the property ladder since more than a decade

With such pitiful interest rates no one, especially in the professional class, has had anywhere else to park their money except RE.  It's a common theme in this area too.

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1 hour ago, mtbiking said:

 

About market timing: not possible. The only way to make a consistent good return in the stock market is to invest widely, reduce costs, and stay in for the very long term. Everything else is noise, like for example the 6.5% jump in the last 24 hours. Gee, if I only I had bought a couple days ago. How can I live with myself? I think I’ll just let my automated investment plan  buy again on the 15th and afterward on the 1st and go have breakfast.
 

 

I normally try the 4 step approach. Basically I look at the stock market for the last 15 years (say the dax). I then look at 4 trigger points where I would like to buy and what represents a good deal based on the history of the dax. When the dax was in freefall I invested a little at 11500, 10500, 9500 and 8200. I would not try to invest all in one but look at 4 trigger points. I would also keep a little spare in case we reach phase 3 of the bear market which is still a possibility. 

 

However I think the rally is very misguided. The markets assume that this thing will be over in 3 months. The markets still don't know what will happen when countries do exit the lock down. Will we see another spike in corona cases?

 

This is just my opinion and I am in no way a financial expert.

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13 hours ago, BradinBayern said:

I see the Alps from my rental apartment and am 5 mins from the Chiemsee.  To buy this place (at least pre-crisis) would be about 1,300,000€ - 1,500,000€

 

I also prefer to own, but those numbers just do not add up.

Let me try.

 

So let us have an example. Say you rent a 300k house and pay rent of 1200 euros per month. That is 1200 you will never see again. Now say you buy a 300k house with an Apr of 1%. You in effect will only be paying 250 euros per month to the bank and the remainder you can pay on the property. 

 

As long as the era of cheap money is here then property prices will not drop by much. People can now borrow at Apr rates of 0.7%. With all that helicopter cash floating around where do you think the money will go. Remember property prices are not included in the cpi figures so the ecb does not have to care. 

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1 hour ago, RenegadeFurther said:

Now say you buy a 300k house with an Apr of 1%. You in effect will only be paying 250 euros per month to the bank and the remainder you can pay on the property. 

 

That's all well and good but he clearly stated that the house he would need costs 1,300,000 to 1,500,000.

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21 minutes ago, fraufruit said:

 

That's all well and good but he clearly stated that the house he would need costs 1,300,000 to 1,500,000.

 

It is an example.

 

The same principle will apply.

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21 minutes ago, fraufruit said:

 

That's all well and good but he clearly stated that the house he would need costs 1,300,000 to 1,500,000.


Then he’s paying around €3000 in rent unless he’s been there for ages and/or is grossly overestimating the property price. The 2.5-3% brutto Mietrendite is remarkably stable for rental properties in desirable locations in Oberbayern. He could finance and only pay between half and two thirds of that in interest if he wanted. Of course the initial costs are very high, but on the upside the sale is tax free  (as well as the tax synergy effect of owning multiple properties but I digress).

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You are excluding a whole bunch of costs, but I already posted that to Spider Troll, so you can just go back and read that.  Thank you for telling me how much rent I pay.  That was quite...umm, odd.  Good for a laugh, I guess. BTW; 300,000€ would probably get you an empty lot in a less than desireable location in my area.  Good luck renting that out.

 

I thought the topic was "Is this a good time to buy real estate as an investment given the current pandemic and global economic downturn?"  Not "What is BradinBayerns personal situation?" or "How many people bought property in the 1980's and are happy today?"  I guess I was wrong based on these responses.

 

You are correct that property prices might not drop immediately.  Is that a good thing?  Buy high, sell low?  They should be dropping based on the fact that rental income is going to be dropping like a rock.  Heck, you don't even have to pay your rent right now.  You think that artificially high prices based on helicopter money and cheap financing is a good thing?  Were you alive during the last crisis?  

 

Basically, I think all of the assumptions made have to be readdressed.  Remarkably stable?  Is anything "remarkably stable" right now?  I think a bunch of very overconfident people are about to lose their shirts if they haven't already.

 

 

 

 

 

 

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6 minutes ago, BradinBayern said:

Heck, you don't even have to pay your rent right now.

 

We sure do. Where did you get that info?

 

Those that are given a break will have to make it up later. Similar to small businesses getting loans that they will have to repay. There are no free rides.

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17 hours ago, BradinBayern said:

You've done better or you just like to sling shit like the pig?

 

I've lived my entire life below my means.  I've had everything I ever wanted.  I lack nothing.

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9 hours ago, mtbiking said:

I think I’ll just let my automated investment plan  buy again on the 15th and afterward on the 1st and go have breakfast.

 

"automated" is right.  You end up paying the "average" price of a stock and if you're buying an index, you're paying the average for an average.  I might suggest doing something a little less passive:  instead of buying twice a month, take one of those payments and hold it aside and save it for when the market takes its regular downturn.  Once the stock you've been buying goes below the lowest price you've paid in the past, start taking some of your savings and buy as the price goes below the lowest price you've paid and so on until the "saved" money runs out.

This approach allows you to average buy AND discount buy.  Combined, you'll do better than average, average without that much more effort.

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7 hours ago, RenegadeFurther said:

Say you rent a 300k house and pay rent of [...]then property prices will not drop by much. 

A friend of mine bought a house in the South of England in 1995. That's an investment that takes some beating. His comment was, "of course I didn't know, had I known I would have bought ten".

If you know that prices won't drop then why are you wasting your time telling us about it? I know what I'd be doing.

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42 minutes ago, BradinBayern said:

 

I thought the topic was "Is this a good time to buy real estate as an investment given the current pandemic and global economic downturn?"  Not "What is BradinBayerns personal situation?" or "How many people bought property in the 1980's and are happy today?"  I guess I was wrong based on these responses.

 

 

Nope.. Go and look at your first comment... Twas probably you that turned it into a pandemic related problem to fit your bullshittery!

 

Oh... and I lied about my last comment!      :lol:

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1 hour ago, BradinBayern said:

You are excluding a whole bunch of costs, but I already posted that to Spider Troll, so you can just go back and read that.  Thank you for telling me how much rent I pay.  That was quite...umm, odd.  Good for a laugh, I guess. 

 


Perfect, yet another living in a million and a half house paying thousand something per month. Kudos to you. Back in the real world with real numbers no landlord who is not your father in law will rent it for less than €3000 a month. Unless of course the house is much cheaper than your five minute estimate, which is my guess. I couldn’t care less, though, so I won’t further debate the point. If someone has specific questions about property ownership and renting in Munich and surroundings I’ll answer them solely based on my so far quite satisfactory experience in owning and renting out in Munich. 
 

By the way, pay your rent, you actually have to. 
 

 

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1 hour ago, fraufruit said:

 

We sure do. Where did you get that info?

 

Those that are given a break will have to make it up later. Similar to small businesses getting loans that they will have to repay. There are no free rides.

You don't have to pay until June 2022.  What part of "right now" did you not understand?

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1 hour ago, BradinBayern said:

 

Basically, I think all of the assumptions made have to be readdressed.  Remarkably stable?  Is anything "remarkably stable" right now?  I think a bunch of very overconfident people are about to lose their shirts if they haven't already.

 

 

 

 

 

 

Do you watch the news? No one is going to lose their shirts. The Governments now pays their salaries.  Businesses are no longer allowed to fail. We have reached a point where the state will pick up the tab.

 

Whether this is good or bad no longer matters.

 

 

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1 hour ago, catjones said:

 

I've lived my entire life below my means.  I've had everything I ever wanted.  I lack nothing.

Thank you for sharing that enlightened post.

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