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FAQ - Frequently asked Questions
about buying and managing Real Estate in Berlin
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Q: How
much is the cost besides the purchase price to buy a property in
Berlin?
A:
The cost depends on the price of the property and the cost tables for the notary
public and the land register. They are digressive, in other words, the higher
the price, the lower the percentage of the cost.
For a property with a purchase price of € 1 million the
cost would be roughly:
|
Notary Public |
for
the contract |
6,965 |
|
|
For
an escrow account if required (based on $ 500k) |
3,020 |
|
Land
Register |
|
4,280 |
|
Property Sales Tax |
4.5%
in Berlin |
|
|
|
(3.5% rest of Germany) |
45,000 |
|
Agent Commission |
Between 4 and 6 % plus VAT, |
|
|
|
(assume 4%)
|
47,600 |
|
|
Total |
106,865 |
For a property with a purchase price of € 2 million the
cost would be roughly:
|
Notary Public |
for
the contract |
13,660 |
|
|
For
an escrow account if required (based on € 1 mill.) |
5,995 |
|
Land
Register |
|
8,410 |
|
Property Sales Tax |
4.5%
in Berlin |
|
|
|
(3.5% rest of Germany) |
90,000 |
|
Agent Commission |
Between 4 and 6 % plus VAT, |
|
|
|
(assume 4%)
|
95,200 |
|
|
Total |
213,265 |
For the quoted size of investment as a rule of thumb it is safe
to use 10 % purchase cost for an initial calculation, with
higher values reducing the percentage slightly.
These figures also identify the items where savings can be
achieved:
-
If it is a
straight forward purchase an escrow account should be
avoided as the saving can be quite substantial.
-
Traditionally in Berlin the commission for the property
agent is paid by the buyer. For a long time 6% plus VAT was
custom and practise. With the recent influx of international
investors these margins have come under pressure, especially
with the agents not assuming any responsibility for the
information provided by them.
The cost of financing will depend on many factors like
the amount of equity used etc.. There will be cost for Technical
Due Diligence and valuation, "handling fee" between 0.25 and 1 %
of the loan charged by the bank and entry of the loan into the
deeds register. With the right approach and experience there is
also a money saving way of doing this.
Naturally there are many more aspects to be considered before
making a purchase: Review of the rental contracts, maintenance,
ancillary cost to mention only a few of them. Language can be
quite an obstacle because an investor can not expect every
property manager or care taker to speak English.
Businesses like
Berlin Portfolio Ltd.
and their network of Real Estate Professionals from Notaries to
Tax Consultants and Finance Brokers are specialised in assisting
international investors in their investment decisions, providing
a "home base" for their activities in Berlin -- before and after
the purchase.
Q: What is meant by "Faktor" in a German property
exposé or advertisement?
A:
The
"Faktor" is the reverse mathematical
operation of calculating the yield. While
you divide the rent through the purchase price or amount of the total investment
including cost to get a percentage
yield.
The "Faktor" is a multiplicator of the rent which does not take purchase cost
into consideration.
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