One of the most asked questions by investors new to Berlin is regarding the typical cost involved in making a real estate investment.
The cost depends on the price of the property and the cost tables for the notary public and the land register. They are digressive, in other words, the higher the price, the lower the percentage of the cost.
For a property with a purchase price of 1 million the cost would be roughly:\r
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\r
For a property with a purchase price of 2 million the cost would be roughly:\r
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
5Agent Commission: Between 4 and 6 % plus VAT, (4%): 92,2600
Total: 213,265\r
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:
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.
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.
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.\r For Property Search we recommend Properties in Berlin
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