Berlin Foreclosure Auction Report

Just came back from a public court foreclosure auction in Berlin Weissensee, which I found on the website
foreclosures-germany.com.

Note: This is how the street looks like, but not the property.

The properties public appraisal value was at 678 €/m² and the final bid was at 582 €/m² this is 85,78% of the appraisal price.

The property is rented ~50% and the average rent is 5.10 Euro/m².

In this area and on this trafficed corner 6.50 Euro/m² is achivable.

Nevertheless the new owner has to put money into the unrenovated part.
But even if we calculate with a high 200 Euro/m² he spent 782 Euro/m² in total (plus buyingcosts/landtransfertax, etc.)

Depending on how fast he will achive the 6.50 Euro/m² for all the space his new property is a factor 10 to factor 12 property. This is 7.8% up to 10% yield.

All calculated without any capital appreciation which will add even more to the ROI in a nice location like this,  close to all ready hip Prenzlauer Berg.

Well done ! Congratulations.

New German Property Auction Catalog Available

The biggest German property auction house will hold their 2010 auction March 25th to 27th. We just received the print version of he catalouge. To get a pdf copy mail us at office_at_berlininvestment.com.  Btw. these are no foreclosures!

Rental Contract fine tuning

One of the property manager and owner of a big portfolio of Berlin property I know told me his contract “tricks”:

Do not rent the surface (no matter if its carpet or wood),  if you just give this surface for free, and the renter can use it, will prevent you from beeing forceed to renew the surface later because of the usage by the renter.

German version (for your lawyer of property manager):

Bodenbelag nicht mit vermietet, das verhindert die Verpflichtung zur Erneuerung. Mieter darf nutzen, hat aber kein Anrecht auf Ausbesserung/Erneuerung.

Make sure the renter has signed the rental contract AND has payed the first payment of the security deposit (3 month cold rent, payable in 3 monthly payments) before handing out the keys.

German version (for your lawyer of property manager):

Schlüssel erst nach Unterzeichnung Mietvertrag und Eingang der 1. Mietkautionszahlung.

Make sure the renter has a household contents insurance and a casualty insurance. Some candles cause a fire, fire burns topfloor and the fire water causes a 250.000 Euro damage to the house. If your renter is not insured he will declare bankrupcy and you have to pay the damage youreslf.

German version (for your lawyer or property manager):

Verpflichtung des Mieters zum Abschluß einer Hausratversicherung und Haftpflicht.

Rent increasement by index is a nice thing, a lot of people choose the 3% p.a. index in German, due to very stable situation after the war this was fine. But now we have other times, deflation as well as inflation is highly likely, so it might be a good idea to tie the rental increasment to the consumer index.

It’s a little bit more work to calculate it but fairer for both sides.

German version (for your lawyer of property manager):

Indexierung = Lebenshaltungskosten bzw. Verbraucher index. (2005=100). Umständlicher zu Berechnen aber sichere und fairer als z.B.  3% p.a.

Berliner Property Project House Cumberland back on the market?

While ORCO Germany announced a sale of their fromer project “Haus Cumberland” at Kurfürstendamm 193-194 in Berlin Wilmersdorf to unnamed Swiss investor in Sept 2009, people familiar with the deal now say the property is back on the market or at least the deal broke according to financing problems.

Investors who have checked the property and his potential told the author of this website that most of the property needs to be torn down and that the project under given market conditions with banks tide on project financing is unpossible to realise.