One of the downsides in Germany is finance and mortgages can be difficult to obtain. General opinion seems to be that holding off to see if more products are going to become available to foreign investors is a waste of time.
If you are investing in a whole block them German mortgages are less restrictive and it is reported on the totallyproperty.com site that it is possible under certain circumstances to get 92% finance but this is the exception rather than the rule and 75% is more normal.
Deutsche Bank does offer a product for non-German investors but there appears to be tightening because of the credit crunch.
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Posters on the propertyshowrooms.com Germany forum have found that getting finance to invest in Germany from UK lenders has proved difficult. And on the propertysecrets.net forum several posters reports difficulties finalising mortgages with Deutsche Bank. The key complaint seems to be the time it takes for the mortgage to come through. It is so slow that they have to either negotiate a payment delay with the developer or find the cash from elsewhere to avoid penalties.
As reported in our news section Germany has been judged the best place to invest based on risk. Certainly forum members are actively debating the issue. Poster Nest Egg points to the macro indicators for Germany compared to the rest of Europe. 'It's undoubtedly going to become the powerhouse of Europe again and will be at the forefront of the EU economies and no doubt driving demand for property with its upcoming property,' he writes.
Price is a key issue. However the forum warns that price hikes by companies in Germany out to make as much as possible from overseas investors are common. Property is marketed to the foreign market at a higher price than to the domestic market.
There isn't anything sensationally new in this discovery. In France, for example, it is well known that you can buy property direct from a Notaire without ever having to use an estate agent and thus avoid agency fees. But it is worth knowing what is happening from people who have an insight into each country.
Regular readers of forum watch may have been following the fortunes of a couple trying to build an eco house in Montenegro on the Channel 4 overseas forum. Not only is this post fascinating for its insight into dealing with bureaucracy in this part of the world but it is also crammed with information from others and helpful in terms of getting a range of opinions.
Montenegro seems to be one of these countries which you love or hate, see as a fantastic opportunity, or dismiss as hopeless. Lack of planning seems to be creating the kind of concrete jungle that many investors, and visitors, want to avoid.
It probably depends on taste and who these properties are marketed to. Certainly some of the descriptions on this forum would put off those from the UK but seem an attractive investment to people from Bulgaria, Russia, Serbia and Bosnia.
Indeed Anke reports that Russians are arriving with suitcases of money to buy land on the coast on which they then build elaborate dachas. There's no need to worry too much about planning as planning laws don't seem to exist.
Those wishing to invest in buy-to-let properties in the UK tend to be split into three groups these days. One is a set of professional buy-to-let investors who, according to the latest research, are still buying. Next is the 'amateur' investors, some of whom have recently got into this kind of investing and are now struggling because of the credit crunch. Thirdly there are those who are renting rather than selling in the current downturn.
But for all of them a major issue it whether to sell or hold on in a loss making situation. One example on the landlordzone.co.uk forum would seem to sum up a situation facing many buy-to-let property investors. In this case the investor bought a new build buy-to-let two years ago. But the rental income is only 4.4% of the current market value and after the letting agent takes his percentage the income is £480 a month but the mortgage is costing £775 a month.
The advice steers clear of selling as any lose made in the next couple of years is likely to be less than the loss made by selling in the current depressed UK market.
But the post has another critical point to it – agents hyping the rental potential of buy-to-let properties. The rental potential quoted is the figure used to obtain a buy-to-let mortgage but when the actual rent does not live up to expectations then the investor is left with a big monthly hole in his finances.
It is also pointed out that many investments make a loss in the early years. Perhaps there has been too much hype before the credit crunch about the make money quick aspect of buy-to-let? But as this forum concludes, for now, it's a hard one mate!
