investing in Europe?
Lender · Sacramento, CA · Member since 2013 · 84 posts · 10 votes
investing in Europe?
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Maastricht, The Netherlands · Member since 2013 · 131 posts · 18 votes
12yAs I invest in Europe (Belgium and the Netherlands), feel free to ask away. I have gotten a basic grip on most markets. They vary immensely though, so watch out.
Germany for example is still booming, although the biggest growth has already happened. A known trap in Germany is that nothing is certain until the final agreement at the notary's office. So no option, lease or whatever is binding until the final signature is officalized. Also, pretty high taxes for investors in my opinion. That drove me away after checking out the Berlin market.
Stay away from France, though. Just read "Immobiliez-Vous" if you want an investor's nightmare scenario. I'm still looking into Paris for my sister (who lives there), but something is "gonna have to give" sooner or later, it's just impossible right now.
If I remember the Münich Real Expo report correctly, the most attractive markets for investors right now are Germany, Denmark and the Netherlands (in that order).
(Sidenote: Erik, I keep bumping in to you here, we must have the same keywords set up ;-) )
50 Replies
- Rental Property Investor · Where we are parked · Member since 2013 · 584 posts · 178 votes12y
Hi Jeremy,
Unfortunately I don't have any input for you but am excited for you. I would love to invest in Europe so it could be a tax write-off when we go to visit! The only thing I know is that in a lot of European countries you don't buy and sell properties like in the US. I know in a lot of European countries you have to pay all cash, you can't get a mortgage like in the US. This makes it difficult, if not impossible, for some investors to purchase in Europe.
Best of luck in your research.
- Lender · Sacramento, CA · Member since 2013 · 84 posts · 10 votes12y
Found globalpropertyguide.com, can't be sure exactly how accurate it is but looks like a good start for research
Unfortunately, I can't give any advice as I'm not investing internationally yet. However, I do plan to do so in order to diversify across political climates and currencies. My vision is to own cash flowing assets in countries who use the world's 3-5 most traded currencies (USD, CAD, EUR, AUD, etc).
I do know that the real estate systems in Europe vary by country. In several parts of Europe (France and Germany come to mind) there is not as much stigma about renting long-term as there is here in the US, which is good for landlords. However, it is generally harder to get a mortgage in Europe and they typically require both a higher down payment (20% - 50%) and shorter repayment term (15 - 20 years).
My source of information is my Master's in international real estate.
Good luck!
- Amsterdam, Noord-Holland · Member since 2013 · 75 posts · 26 votes12y
Check out www.fiabci.org with real estate professionals in 60 countries, database with information and international contacts with brokers, architects, managers, lawyers, notaries, appraisers etc. Secondly, find local real estate professionals through the national associations combined in ICREA. Website is www.worldproperties.com). Thirdly, check CIPS at NAR (http://www.realtor.org/designations-and-certifications/cips-designation/cips-network/cips-search). That should get your started...
- Maastricht, The Netherlands · Member since 2013 · 131 posts · 18 votes12y
As I invest in Europe (Belgium and the Netherlands), feel free to ask away. I have gotten a basic grip on most markets. They vary immensely though, so watch out.
Germany for example is still booming, although the biggest growth has already happened. A known trap in Germany is that nothing is certain until the final agreement at the notary's office. So no option, lease or whatever is binding until the final signature is officalized. Also, pretty high taxes for investors in my opinion. That drove me away after checking out the Berlin market.
Stay away from France, though. Just read "Immobiliez-Vous" if you want an investor's nightmare scenario. I'm still looking into Paris for my sister (who lives there), but something is "gonna have to give" sooner or later, it's just impossible right now.
If I remember the Münich Real Expo report correctly, the most attractive markets for investors right now are Germany, Denmark and the Netherlands (in that order).
(Sidenote: Erik, I keep bumping in to you here, we must have the same keywords set up ;-) )
- Involved In Real Estate · Lynchburg, VA · Member since 2013 · 246 posts · 75 votes12y
Originally posted by @Thierry Van Roy:
Stay away from France, though. Just read "Immobiliez-Vous" if you want an investor's nightmare scenario. I'm still looking into Paris for my sister (who lives there), but something is "gonna have to give" sooner or later, it's just impossible right now.I'd stay away from France and Europe in general because of the extremely high prices (and taxes).
I have several friends who live there and you can buy 5 SFRs in the US where you could buy one 1000 sqft shack in the Paris suburbs. We were looking at listings and they even have lower end boat houses that sell for 150k Euros!
IF you live there and you know the markets intimately, I'm sure you can do well with RE, but I certainly wouldn't roll the dice and manage it from overseas.
- Member since 2008 · 4 posts · 0 votes12y
Hi, I am an english investor, looking to diversify into the US market. England has been through a property crash (as have countries such as Spain and Portugal) Prices are now beginning to rise. As in any country, house prices vary depending on the size of the property and definitely on the area. Unless you are very, very rich you can forget London. Tiny flats (apartments) can be £400000 (yes, four hundred thousand!) The north of England is much more reasonable. What we call a terraced house (basically two rooms downstairs and two bedrooms and bathroom upstairs) can be bought for $95000 upwards.
The rent achievable for a terraced property is around $800 per month
You will, by now realise, that property in England is very expensive compared to the US. Which is why I'm looking in the US! I am also considering Spain or France as there is such an oversupply that prices have crashed.
Virtually all property for sale in the Uk is listed on Rightmove: www.rightmove.co.uk
Cheers
Ann
- Maastricht, The Netherlands · Member since 2013 · 131 posts · 18 votes12y
Yeah, about that. European real estate investors often joke about the kinds of shacks you can get in the US at 40,000 USD. Those things would never get built here, EU countries have very high standards.
I understand these are awesome for flippers and wholesalers, but how long do they last really? These don't last 30 years in a buy-and-hold scenario, but they do in Europe. That's why you don't really have any flippers or wholesalers in Europe, or at least it's a very small and highly professional niche (they get their deals at auctions, and even then it's close).
(Well, you can get them at very low prices in the middle of nowhere in Eastern Europe, Germany or Spain, but who would want that?)
And Paris is a big exception. So big even, France doesn't include Île de France (extended Paris) in their statistics because it would skew the numbers. They have a whole different department responsible, even.
In Paris, appreciation plays a major role. There is some room for growth because people are increasingly expecting a London-scenario there. Just imagine China would start to allow foreign ownership of real estate to its citizens. Paris property prices would go through the roof, as has happened in London with the haute finance and the Arabs for the past twenty years.
Yield-wise, there are enough opportunities. It's the cost in absolute numbers that makes it so that you can't do Europe if you have no money or credit.
- Maastricht, The Netherlands · Member since 2013 · 131 posts · 18 votes12y
@Ann_Raymond:
- UK prices are through the roof, there was even a Panorama documentary on how this is getting out of control. Where do you get the idea prices are only now rising?
- France has not crashed at all since 2008, quite the opposite.
- Spain has crashed, but I wouldn't invest there. The desirable locations aren't that reduced (the coastal lines, Catalonia).
- Real Estate Investor · Member since 2013 · 866 posts · 487 votes12y
In Europe, I am in Denmark and Poland, but the holdings are small. I made the decision early on to stay far away from anything having anything to do with the French government. Far too socialist for my tastes.
I considered Germany but realized it would require me to be more actively involved than I usually am. If you can get dual citizenship there, my understanding is it can be a very attractive long term market play.
The largest %age of my offshore holdings are in New Zealand and Australia. New Zealand is my 'escape' destination if the situation here in the US tanks while I am still alive. Australia is a great market and a wonderful place to visit but I can't see myself living there. As I am still 'youngish' there is a real possibility I will 'shrug' to NZ at some point.
- Member since 2008 · 4 posts · 0 votes12y
Hi Thierry,
Panorama programmes often have political undercurrents. In this case, hyping up possible property price rises due to a new homebuyers scheme called 'Help to Buy'. The market crashed everywhere but London in 2007/8 and is nowhere near recovery. Most property remains below the 2005/6 values. London, like most major cities, is in its own bubble. The spanish economy (and political situation) continues to be dire, so there are many bargains to be had, from fincas in the middle of nowhere to new build apartments and villas on the coast-they just built too many of them. It will all recover, so its just a case of holding on. I have friends in Brittany who have been unable to sell their property for two years now, so France has been affected. The french, of course, think the english are mad for buying properties to renovate:)
- Maastricht, The Netherlands · Member since 2013 · 131 posts · 18 votes12y
There's a difference between not being able to sell individually and house prices tanking, of course. Statistics show the French market only making a slight dip in 2009, which they recovered from the very next year. Going up ever since because of more people moving into real estate instead of other assets as a consequence of the crisis.
But the rent hasn't increased proportionally, while taxes have. Hollande of course won't stay on forever, being even less popular than if Bush and Obama had a baby at their respective lows.
As for Panorama, I know it can be very opinionated. Appearantly, I've been rather fooled by the other side, after reading the latest edition of Property Magic, I was under the impression the statistics showed a general boom there as well. But they've been kind of dabbling since 2010 now that I look at the charts? Hah.
As for Spain, the boom was simply too crazy, I doubt it will "all recover". What to do with the ghost towns? Anyone want to buy the abandoned airport "Madrid-South", just 200 km from Madrid! At 100 million, it's a steal! (I kid.)
There might be a recovery in Catalonia and the coastal towns soon because of this foreign capital, but that won't trinkle down to the entire Spanish market. The party places (Ibiza, Canarian Islands) are still having prices go down as well, it'll take some time before this market rebounds. Maybe as the baby boomers retire? A lot of Belgians are there buying second homes right now (a bit like the English before).
Oops, this post is getting TLDR. It's a pity there aren't more Europeans here, so we could have our own forum section.
biggest question: why?
It's hard enough investing out of area/out of state, but now out of continent?
You live in nor cal. I'd definitely look in your back yard first! It's quite depreciated and now turning around. San Francisco (where I invest) is on fire due to overall recovery and tech, and that will positively impact Sacramento too. Last thing I'd want to do is muck around overseas without tangible experience in specific markets.
I had a friend who "invested" in Baja, Mexico. Almost all the desirable areas, with 75 miles of the ocean, are land grants. ****, you can't even own it outright. With the recession Baja became a lead balloon. Imagine owning property you lost money on, and you don't even legally own it. Ouch.
I'm planning on living part time overseas in the future too. My plan: make my money in RE where I expertly know the markets. Then I can just buy a second home elsewhere.
- Lender · Sacramento, CA · Member since 2013 · 84 posts · 10 votes12y
I'll be starting out in the states, probably not California though. Looking long and hard I can find deals but those quickly get swallowed up by cash buyers. I can do cash but not at California's prices. I'll be starting in Florida, researching there now as I have family there as well.
I appreciate all the info here and do plan to buy something overseas just not sure when. Info here will definitely help though.
- 12yEngelo RumoraBusiness MemberInvestor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
Whatever you do DO NOT BUY IN AUSTRALIA lol
The market their has gone through the roof and its a train wreck waiting to happen in my opinion.
I believe the median house price is over $750,000 lollol
Who ever is buying in Australia now is hoping the property will go up in value more than what they pay.
Hoping is not a strategy.
Thanks and have a great day.
- Lender · Sacramento, CA · Member since 2013 · 84 posts · 10 votes12y
yup, there's a whole wiki page dedicated to the possible housing bubble happening there. If and when it crashes I'd love to own a property there
- Maastricht, The Netherlands · Member since 2013 · 131 posts · 18 votes12y
Going back on the UK:
http://www.theguardian.com/business/2014/jan/04/housing-bubble-fears-price-surge-london-manchester
The increased velocity of appreciation is really worrying me now. 8% Countrywide and 14% in London? 40 GBP a day? That's more than many a Briton's daily wage. This will indeed probably continue into 2015, but blimey! It's turning into a ****-up, my dearest chap! Talk about deja-vu, can't they do something about these epic cycles?
If the bottom ever falls through, the UK market would be nice for an appreciation-play. But I'm going to stay continental for now.
- Member since 2008 · 4 posts · 0 votes12y
Yeah, well - I live in and have properties in Greater Manchester and values are still pretty much flatlining. Maybe 1 or 2% rise. Media City (new home of the BBC) has created a bubble in a very small area. There is a big difference between advertised prices and prices achieved. The estate agents are definitely putting higher values on property but Im not convinced those prices are being achieved and in my area the sold prices don't reflect the bubble that is hyped up in the media. The question about the epic cycles, or boom and bust, is an interesting one. Millions of UK home owners are currently in negative equity so they can't afford to move until the value of their property goes up. So the values rise, people move, the market does well and then it all happens again! Crazy but whatever solution is suggested there will always be winners and losers. Savvy landlords of course always do well - buy at the bottom of the market, rent easily and sell at the top of the market
- Chapel Hill, NC · Member since 2013 · 4 posts · 0 votes12y
Hi Jeremy...
Regarding your question about people investing in Europe, we are getting good results for properties in Greece, largely due to the quality of the properties, seaside or sea view locations, significantly reduced prices, and last year's launch of the Greek residency visa for non-EU buyers spending at least 250,000 Euros. Spain and Portugal have similar visa programs with relatively low investment thresholds. Of course, there's always a risk, but we're seeing many buyers who are looking at the upside.
- Eindhoven, Noord-Brabant · Member since 2014 · 14 posts · 3 votes12y
Originally posted by @Jeremy Williams:
Does anyone invest outside of the US? Specifically Europe? (I've seen some people do Mexico and south america) I can get my dual citizenship in Germany so I've pondered the idea since I may move there one day.
Haven't found much anywhere on investing in Europe though, so anyone who can share anything would be very helpful.
Hi Jeremy,
As far as your dual nationality goes, I wouldn't hesitate with applying. I have dual nationality and believe me, it is a blessing. Even if you never move to Germany, you can travel freely throughout Europe with an EU passport.
I am a real estate student (third year BBA) in the Netherlands. Two of the classes that I take are law for real estate and tax law for real estate. I am pretty good at both subjects and would happily answer any of your questions, should you wish to look at Dutch investments.
What I do know about investing in The Netherlands is that, contrary to what you may have heard, you can get a mortgage relatively easily. The days of 107% mortgages are long gone, but 80% - 90% is still common and rehab can be included. Lenders do have strict requirements, but I imagine that the requirements here are not that different to the US.
What is appealing in The Netherlands at the moment is the extremely low interest rate. Mortgages can be found with interest rates as low as 3,5%.
Something that is worth noting is that in Holland the laws regarding rental (of homes in particular, but also certain commercial properties) are very specific and "protect" tenant.
These laws make eviction a very painful process. If, for example, somebody fails to pay his rent after living in your property for one year, he has four months of legal protection. He can live, rent free, in your property for four months. And the longer that he has lived in your property, the longer he enjoys this "protection" (it is one month per year that he has lived in your property, with a maximum of one year).
But don't let this scare you off. In the lower income segment there is a drastic need for rentals, especially for rentals between €700 and €1000 per month. You have got the privilege of hand-picking the most suitable tenant.
The other great thing about Holland is that most people earn a decent salary and credit screening is easy. If you do your research and/or hire a competent realtor, you will be able to find good tenants easily.
Lastly, if you are looking to invest in cheaper properties and are happy with a lower, yet very stable return, you can look into investing in social housing here in Holland.
Social housing has a maximum rental of close to €700 per month (excluding everything like gas, water, insurance etc). These houses are specifically reserved (by law) for people that earn less than $33.000 per year. The advantage here is that the government subsidizes the rental payments, making sure that you have a very reliable tenant. And of all of the classes of rentals in Holland, this one is the most sought after. In Amsterdam, for instance, you can wait on a waiting list for seven or more years before getting one of these homes.
I hope that this helps you a bit. If you have any further questions please don't hesitate to send me a message.
Cheers
Dunstan
- Investor · Boise, ID · Member since 2011 · 1k+ posts · 736 votes12y
I was in Southern Europe last month. The talk from several French citizens we met was about how many French are moving to other parts of Europe out of frustration with taxation. It would be interesting to really learn the trends on what areas they are moving to, as they undoubtedly need rental housing.
- Amsterdam, Noord-Holland · Member since 2013 · 75 posts · 26 votes12y
I need to correct a few things here, so that there is no misconception about the residential rental market in the Netherlands. Yes, Dutch tenant's laws are pro-tenant. But there's no 'free' renting. After three months' rent arrears a court order can be initiated for eviction. There is no free rent and no longer periods for longer tenancies. Although the rent is not free, collection of rent arrears may be difficult and if you have a verdict (for payment) you can chase your tenant for 20 years in order to pay. Since the verdict remains valid for that period. Our company has had quite some success with this, most people eventually get some new job, pension, or other source of income (or capital).
Investing in social housing (up to $ 700 now) means low direct returns and is not risk free. Social Housing corporations are mostly active in this segment. Private investors in social housing seek for instance condo conversions or other exit strategies. $ 700-1000 is considered mid market and attractive. In both segments tenants can be 'hand-picked'.
Subsidizing has nothing to do with reliable tenants and can certainly not replace a thorough renter's screening.
The Dutch market has a under supply of so-called free market rentals, and an oversupply of social housing (by housing corporations). Politically this is being corrected now, so that market forces will have a more important impact on residential rentals. Especially (institutional) US and German investors have therefore become more active here.
I hope your views on the Dutch residential market are a bit more balanced now. If you do seek residential investments, join a REI association like Vastgoedbelang (or enter into a Buyer's Agent agreement with an investment broker). Good luck with this great business!
- Eindhoven, Noord-Brabant · Member since 2014 · 14 posts · 3 votes12y
@Erik Noordam
Perhaps "FREE" was the wrong word, but if I am renting a out a property and my tenant doesn't pay for four months, I am certainly not going to be happy... even if I can attempt to claim the unpaid monies at a later stage. Should it prove too costly or too much trouble to collect the monies owed, then the tenant has lived in my property (for up to one year) for free. That is what I was getting at. And even if am able to collect the unpaid monies, the tenant has still managed to cause me an enormous hassle.
As far as housing in the social segment is concerned, I never mentioned anything about "risk free" investments. Having the government subsidize the income of a tenant is much safer than hoping that the tenant keeps his job. And as I said, due diligence is still vital. I may be a student and I may be inexperienced, but I know that there is no such thing as a risk free investment...
You are quite correct about the lack of free market rentals (especially between €700 and €1000), but I am interested to know where you have found your statistics about social housing. To the best of my knowledge, every corporation in every major city in The Netherlands has a waiting list for a social home of at least 2 years.
Sorry if I come across blunt, that is not my intention. I just wanted to clear a few things up because it was apparent to me that you didn't understand what I was saying (perhaps I wasn't as clear as I thought I was).
Cheers
Dunstan
- Amsterdam, Noord-Holland · Member since 2013 · 75 posts · 26 votes12y
Hello Dunstan, I would advise you to use a collection agency (PM me if you want some references) or get an eviction order immediately. Vastgoedbelang has a legal department they can help you with. It is a shame that some tenants act this way.
Your comment on due diligence is well understood. Selecting the right tenants means lot less headaches.
The reasons that the Netherlands has too much social housing are complex, but has to do with the power of the social housing corporations who received billions during the 'bruterings' operations in the '90s, and with existing legislation the politicians are trying to curb now. We are not a poor country (right? (;-)) but have a social housing stock of over 95% of the residential renters market of 3+ mln units (the other half+ being owner-occupants). It's a supply issue, the supply of social housing that is an overkill, and because of subsidising the social housing sector there is little supply of the free market rentals (non-regulated rentals). Only 5% of Dutch households live in non-regulated rental dwellings. That's the main reason why there are waiting lists, there is an undersupply of non-regulated rentals (still a very small market here, and expected to grow).
Good reading material: vision paper of IVBN (association of institutional investors): http://www.ivbn.nl/viewer/file.aspx?FileInfoID=679. I just noticed the older vision papers (2011 and earlier) are not on their site anymore.
Take care, Dunstan, all the best from Amsterdam.
- Bedford, NH · Member since 2012 · 2k+ posts · 1k+ votes12y
I don't own an property in Europe, but I tend to rent VRBO properties when we go there. And that experience caused me to literally laugh out loud at Thierry's assertion that the EU has construction standards that make US properties look like shacks. Suffice it to say that a hundred-year-old millworkers house in the Northeastern US compares quite favorably with most places I have stayed in Europe.
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