Lender · Sacramento, CA · Member since 2013 · 84 posts · 10 votes
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.
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 ;-) )
Could you give me an example of where you have had such bad experiences? I know that you do get pretty crappy places in Europe, but you have rough neighborhoods in every country.
I am just interested to know if you have stayed in The Netherlands and had a bad experience with sub-par buildings. Purely for interest's sake.
What I can say about construction standards in the EU is that you have construction standards and construction reality.
In Holland the construction is very well regulated, but even here there are many old buildings that are often not ideal for habitation.
And in poorer countries in Europe there isn't the government manpower to enforce building code, which can result in poor quality (or even downright dangerous) buildings.
But anyway, even this is a gross generalization. To say that the US or the EU is better or worse is impossible. Some countries (or parts thereof) are far better off than others which results in enormously varied construction reality. ;-)
I have never rented in Netherlands. I have in France (twice, in Paris and Toulouse), in Spain in Cordoba province, in Umbria, and in Malta.
I quite agree that we should not generalize. Which is why I found Thierry's comment amusing. The notion that European building are built to a higher standard is, to my experience, unsupportable.
Haha, well certainly in France and in Spain there are some "interesting" places to stay. Also some really awesome places for that matter. It really just depends on the owners financial position and whether he will use any of his money to create/upgrade/restore his rental property.
But as far as sea views and beautiful coastlines are concerned, you have gone to the better parts of Europe. Holland's coastline is just a little less pretty ;-P
Wow, this discussion has gotten a second life? Ok. Might I come to my defense between your laughter by separating older grandfathered properties and construction from the past 30 years? Also, when talking VRBO properties, do you mean vacation shacks or high rises?
My claim is fact and supported by simply comparing building codes. Wooden frames? Not allowed. Aluminum gutters? Nope. Asphalt shingles? Fire hazard, not allowed. Non-concrete basement? Forget it.
Standard rule of thumb for new construction we use in my markets: 1,200 EUR per square meter. That's 360 EUR or 480 USD per square foot. Average construction cost in the US: 94.5 USD. That's 5 times less.
Google if you don't want to believe me. The only other factors I can think of is higher lot prices and labor cost.
Also, I do believe this discussion is a very informative, so perhaps we should try not bringing it down by laughing with personal Eurotrip experiences. Want to throw in some French toilet sanitation jokes for good measure?
***
@Dunstan Midlane , are those investment mortgages you are talking about?
@Erik Noordam , as always, very succinctly put. I wonder about two things though: where should those non-regulated properties come from and is the private investor being crowded out once again?
@Thierry Van Roy. Good comments about the difference in building quality. There are certainly differences between the continents, but also between regions within the two continents. Now back to your question:
It's political decision making. In 1995 the Dutch government's social housing holdings were transferred to the (independent) housing corporations. Now national government wish to split up the social (DAEB) and commercial activities of housing corporations starting in 2015. Government also wishes to include the regulated social housing units that could be liberalized (non-regulated) in the section of commercial activities. Those are the residential units that are rented as social housing (regulated contracts) but actually belong in the non-regulated sector based on the quality and value of these units. Of 2,3 million units it is believed that 800.000 can be liberalized (non-regulated). Commercial activities of housing corporation should operate in a more or less same competitive level playing field with private investors. That is, no favorable financing, guarantees, low land prices, other favorable conditions, etc. The housing corporations will sell at least 12-15.000 units annually to the private sector (owner-occupants or landlords). More units will transfer from regulated to non-regulated with tenants' mutations (new lease).
Market research shows that the non-regulated sector will possibly grow up to 700.000 units until 2030. This growth will be partly at the expense of the regulated sector (minus 10-16%). Also, companies like AM and Van Wijnen are quite successful building for investors in the non-regulated housing sector. The demand for housing is strong and when social housing subsidies are restricted we will get a bigger non-regulated market sector and more stabilized market conditions. Not at first, naturally rents will go up steeply in the beginning to catch up (high demand, low supply due to inelasticity). High growth has to do with smaller households but more households.
Private investors in the Netherlands are ready to invest (40.000 units were proposed earlier), institutional investors (particularly German and US investors) are ready with funding and already starting to participate. Still a bit hesitant due to Dutch tenant laws, but politics and reforms will result in a more market approach of the housing market. The non-regulated (almost non existing) residential sector is ready to go!
@Thierry Van Roy. It's official today. A German residential investment fund acquired 5500 residential units from the housing corporation Vestia in the Netherlands.
I know this is a bit old of a thread but interested to know how markets have changed since the thread has started..
I invest in Canada and live in the US.
Canadian market has been considerably steady the last 20 years...no major melt downs and most people have seen properties double in that time frame. Im enjoying really really low rates where most of my mortgages are at 2.1% rate.
The US dollar in comparison to the CDN is 1.2 so there is an added purchasing power to buy Canadian. And finally if you know where to invest in Canada you can find some solid cashflowing properties.
Contact a reliable international property broker (online auction) to begin with. Good ones will offer both expertise and specific listings to match your criteria. The best ones won't charge anything to the buyer/investor.
www.zillow.com and www.tranio,com are probobly the most efficient platforms in Europe at the moment.
www.zillow.com and www.tranio,com are probobly the most efficient platforms in Europe at the moment.
Never heard of those in European markets. Most brokers in Europe speak English, so I would recommend you to just look on national real estate websites instead. There's no one European site, really, it's all fragmented.
www.zillow.com and www.tranio,com are probobly the most efficient platforms in Europe at the moment.
Never heard of those in European markets. Most brokers in Europe speak English, so I would recommend you to just look on national real estate websites instead. There's no one European site, really, it's all fragmented.
What I meant was that the websites in question are international property auctions based in Europe. Each one of them offers a somewhat unique 'product' in terms of geographic coverage and services; and there are many others, of course, that target country-specific or even city-specific clientele.. I don't quite understand what you mean by them being 'fragmented'?
What I meant was that the websites in question are international property auctions based in Europe. Each one of them offers a somewhat unique 'product' in terms of geographic coverage and services; and there are many others, of course, that target country-specific or even city-specific clientele.. I don't quite understand what you mean by them being 'fragmented'?
Care to tell me where I can find those European listings on Zillow? Never heard of Tranio until now, but their partners are very limited and after browsing I would have to conclude not at all aimed at investors.
What I mean is you can't find any website that covers all of Europe, period. All sites focus on specific countries, hence fragmented.
I never heard of Tranio because I'm not a Russian 'investor' looking for some overpriced prestige property. Let's take Paris for example. The big Haussmann 2 bedroom may look cool but offers a net yield of less than 1%. Brokers add listings to these sites so they can try to get 15,000EUR/m² whereas you should never go higher than 12,000 EUR/m² (and that's in the top neighbourhoods like the 1st or 8th Arrondissement at that).
If you want investment property in Paris, I can tell you from experience it requires you to get intimately acquainted with every single arrondissement and street and then you have to look for half a year to maybe get lucky, lest you be stuck with a 2m high ceiling on the 8th floor of a building with no elevator in a street that is parallel to a good avenue but nevertheless in a bad neighbourhood.
There are less than 2.000 properties in Paris advertised. That's how many get added to the market listings every week if you look on PAP, SeLoger and MeilleursAgents.
So no, Tranio is not where you want to look if you're not swimming in cash. It may be good if you're an international second home buyer, but not an investor who does his due diligence.
Thierry is absolutely right about his analysis of Paris marketS.'so many inside !)
Above all, check the charges of the property and the neighborhoods, and do not expect a wonderful yield, it's all over, except for some "niches" still available.(do not forget Paris is the best world 's place for students since 4 years)
It is however possible to find a 10/13% building around other big towns, but need to get a strong and reliable guy to check everything is ok
As long as the socialist are here, no hope for landlords.....
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!
Erin:
It's actually the U.S.A. which is the anomaly when it comes to residential mortgages and a mortgage term which matches the amortization (i.e. 30yrs).
I have lived in Italy for a few years. I would not invest in Rome for sure. High bureaucracy, impossible to cash flow, and high taxes, and impossible to evict (it can take years.)
One thing to watch in Europe, quite often you have to pay taxes on rents (not just the profit.) Rome is a ridiculous 20% of rents, but I know other countries also charge taxes on the rent. Also, some countries have very strong tenant laws which make evictions difficult even for non-payment. (or only rent to foreigners..). Also depending on the location, property management is very different. While they will charge a fee to find the tenant, it is harder to find someone to take care of the property long term for you.
By the way, amortization of the loan is possible in France within 30 y.
But I would not recommend it, 25 is much better and balanced.
Fixed rate is a must for a rental portfolio, and French loans are so, at 90 %....
Sven:
Amortization and term are not the same thing. In many places, mortgages can be amortized over 30-years, but the loan is not for the entire length of the amortization. ie. you may have 5, or 6, 5-year term mortgages to reach the full/effective length of the amortization.
I made a mistake about the real signification of the words, the system in USA is different...
However, I recommend to borrow at fixed rate, always possible in France up to 30 years.
(I know this is not easy for US residents, but possible anyway)
Sven:
I was under the impression that 30 - 40yr mortgage terms were not as available in France as they once were and most mortgages were in the 6 - 20yr term range.
@Bob Wilkus I plan to move to Portugal once my folks pass. I purchased an improved lot there in Central Portugal this year. I can build for $35-50 a sq ft. All in, I could have a 2044 sq ft home on a 5500 lot for $135,000. That's the plan- it wasn't easy, but if you are resourceful you make the purchase happen. Lot was cash and hopefully get more together to build-