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FAQ
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Services does with our company
Giannitti & Coopers Investment Group offers the International real estate sector all the necessary elements for a global advising, including our profesional colaboration in Germany to see the properties, legal advise a with specialized cabinet of our own, visit to banks in Germany to obtain financing, contact with administrators of property in Germany. Through our extensive knowledge of the property and building market in Germany, also our services post-inversion, perhaps moore important for the distance and control of them. We are able to provide our customers with the best advice on a case-by-case basis.
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Residential Market in Germany
For example in the city of Berlin less than 13% of people are owners. Apartments are let unfurnished. Residential rental contracts are not limited in their term. The longer a tenant lives in an apartment the longer the period of notice they are required to give before vacating. The average length of lease is 5-8 years. The rent of a property can legally be increased by 20% over a 3 year period if the rent is below the statistical level set by the state for the area. The service charges are paid in advance and at the end of the year the actual costs are calculated – then the tenant will be informed whether he receives a refund or has to pay the excess amount. Most of the running costs of the property (like insurance, property tax, etc.) are paid by the tenants. You as the investor have to pay for the maintenance of the property and the property management.
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Internal Return on Investment (I.R.R.)
Generally you can expect a gross yield of between 9%-12% depending on the size, location and condition of the property. Our task is to optimise the purchase price by taking into account any necessary investments in the property as well as the potential for rental increase and development. The German property market is at a 15 year low so capital gain can also be expected. However our emphasis is on selling secure investments that will improve on their performance over time. From our own experience, we forsee a rise in purchase prices in 2010/2015 of 15-25% depending on location and condition.
The internal rate of return or internal rate of return of an investment (IRR), is defined as the rate at which the net present value or net present value (NPV or NPV) is zero. The NPV or NPV is calculated from the annual cash flow by transferring all future amounts to this. It is an indicator of the profitability of a project, the higher IRR, profitability.
It is used to decide on acceptance or rejection of a proposed investment. To this end, the IRR is compared with a minimum rate or shear rate, the opportunity cost of investment (if investment is riskless, the opportunity cost used to compare the IRR is the rate of return risk-free). If the rate of return of the project - expressed by the IRR exceeds the rate-cutting investment is accepted, otherwise rejected.
In our IRR's investments are normally exceed 20% due to the possibility of financial leverage around 80%, annuities, No less than 30 years and guaranteed gross return of our properties over 10% annually. Currently interest rates exceptionally low Internal Rate of Return is higher.
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Buy location in Germany
Germany has a range of opportunities to suit every budget. The areas are officially graded into best, middle and simple. These grades are usually reflected in the rent paid so that with a good understanding of the market there are returns to be had in all areas. The best areas of Germany are Halle, Dresden, Leipzig, Magdeburg y Postdam.There are always bad properties in good areas and good properties in bad areas but our task is to find the best property suitable for the individual customer.
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Rent Tenants Calculation/Purchase
In Germany, rent is split between the cold rent and the warm rent. The warm rent is the rent service charges. Rent is charged at euro/m2/month. The purchase price of a property is referred to as a multiple of the annual cold rent, so if the rent were 5€/m2/Month and the purchase factor is 10 then the price/m2 is 5x10x12=600/m2.
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Banks Financial
We can help and connect you with banks and agents to facilitate your financing. Generally a financing of 60-80% of the purchase price with a variable interest (with swapp insurance) for 30-32 years can be achieved. Interest on loans are not usual, capital repayments of 1,5% per annum are usually required.
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Legal System - Notary Security
The German legal system guarantees security of title. All properties are registered in the Property Register (Grundbuch) where the ownership, charges and any other agreements are recorded. You can not buy a property if title is not known – there is no search required. The German civil code requires that every property transaction takes place in front of a notary. The notary is publicly appointed and makes sure that the consequences of the purchase contract are fully understood. He is not allowed to take sides of either the buyer or the seller. He handles the completion, makes the entries to the property registry and pays out the money to the seller.
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Rental Income Taxed
The income you generate in Germany is also taxed in Germany. For more information, go to the Fiscality in Berlin section of our website. The corporate tax equivalent is currently at 15%.
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