THE DIFFERENT CHANCES FOR DIFFERENT ITEMS

Rental homes

Rental homes, often with 8-15 apartments or flats are most attractive as investments in Germany.

In Germany much more people live in such rental homes than in Great Britain, France or Italy.
Much sought after are historical buildings, which were constructed between 1880 and 1910 - if the basic structure is good.
Houses from that period are offered often as "Jugendstil-houses".
Meant is in most cases not this specific style (Jugenstil - art nouveau), but that the houses are opulently decorated.
If these houses are modernized, they are very sought for. A modernized old building can be a very good rental property.
Look carefully, whether the renovation was done in a proper way. Many refurbishments are done unprofessionally.
You should examine the contracts, which were made with the architect and the firms involved.

You should consider also that (dependent from the area and the year of construction) there might be some details, you would not have expected:
Some houses from 1880 and later - although looking solidly build - have an inner skeleton wood framing. Some partition walls (between flats) might be only 11 cm wide.
The historical methods of construction differ widely within the different parts of Germany.

Buying prices range from 1.100,- to 2.200,- euro per sqm for unrefurbished and 2.800- 4.000,- euro for refurbished and modernized flats. (Hamburg and Frankfurt)
In some areas they might reach 6.000,- euro and more.

Often rent houses are bought and divided into single owned flats ("Aufteilung");
Development companies buy and divide such houses into condominiums.

The apartments can be sold as single units. Sqm prices range between 1.100,- and 4.000,- euro. 10% to 15% of the net profit have to be calculated as sales costs.
On such houses as rental houses the investment return rate ranges between 5% and 7% p.year. In general, rarely higher.
(If and under which conditions a house can be divided depends on legal conditions.
Sometimes you might find houses, for which ahead an official allowance for dividing exists. Normally such allowance is linked with a "Baugenehmigung", giving exact information, which kind of changes are possible and necessary. F.e. expanding the attics, improving fire prevention etc.. An allowance might be limited for a certain period of time.
If the alterations have not started, the allowance will be canceled)
If you have such allowance, you nevertheless might have problems with tenants, which
will not agree. Such alterations have to be planned very carefully.

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