Can we implement BRRRR in Germany?

Question

I stay in Frankfurt and I would love to invest with BRRRR strategy. But,

I've consulted several agents and inquired at banks. Some say it’s possible to implement this strategy in Germany, while others claim you can't, due to regulations preventing the sale of mortgaged property before 10 years.

There's a lot of confusion and misinformation, and no one seems to have solid information.

This strategy is well-documented in the USA, with numerous videos on YouTube. However, I haven't found a single video or article addressing how to apply it in Germany.

Can you help me with this? Do you know if anyone doing it successfully in Germany or Europe?

Thank you.

Christoph Heim · Answer

Hi Nikhil,

BRRRR definitely works in Germany. You would have to get a relatively short term loan (5 years or variable) to buy the property and fix it up. Then you can refinance afterwards like in the US. For the first loan the bank has to take the "Niederstwertprinzip" in account, that means, even if you buy at a huge discount, the bank can not appraise the property higher than your purchase price for that loan. When you refinance after a few years this is no longer necessary and the appraisal can be much higher.

The regulations for selling before 10 years only mean that you will be taxed if its held privately but with the BRRRR strategy you don't sell, you just refinance.