A burning question for investors coming to Berlin concerns the cost to be expected when making a property investment.Some typical examples are in this article. There are always different ways to approach a deal and it is the job of the Real Estate Advisor to find the most cost efficient one. Berlin Portfolio Ltd. is specialised in supporting international investors to make the best decisions.
A burning question for investors coming to Berlin concerns the cost to be expected when making a property investment.The cost is directly related to the price of the property to which the
fee tables for the notary public and the land register relate. The
percentage for the fee is decreasing with a higher price.
For a property with a purchase price of € 1 million the cost would be roughly:
Notary Public for the contract: € 6,965
Escrow account if required (based on € 500k): € 3,020
Land Register: € 4,280
Property Sales Tax 4.5% in Berlin: € 45,000
Agent Commission: Between 4 and 6 % plus VAT, (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
Escrow account if required (based on € 1 mill.): € 5,995
Land Register: € 8,410
Property Sales Tax 4.5% in Berlin: € 90,000
Agent Commission: Between 4 and 6 % plus VAT, (4%): € 92,200
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:1. If it is a straight forward purchase an escrow account should be avoided as the saving can be quite substantial.2. 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.For a FREE German English Property Glossary there is an options to sign up on the website below.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.For more detailed information how to avoid unnecessary cost please visit the website of Berlin Portfolio Ltd. or contact the author using the contact form provided there.
The author is a Berliner
and active in the German property market for more than 25 years. Experienced as
project manager, developer and head of the German Business for a UK based
property consultancy he now owns and operates Berlin Portfolio
Ltd. His international background and local expertise is an ideal
combination for an international investor.
He offers "Health Checks" and
problem solving for non or not as good performing properties as promised at the
outset. This includes "forensic" review of the information provided
at the purchase and review of the performance of the property management - all