Berlin - expected yield?

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Ret45

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Does anyone know what is minimum rental yield a smart (but realistic) buyer would accept get from an apartment in Berlin. Am looking at an apartment in Weissensee area (near Prenzlauerbeg) which will cost €108 k including stamp, purchase expenses and all management costs for 10 years. Rental yield is 4.4 %. The advantage to the place is that is completely hands free end to end, managed by a reputable buy to let intermediary. Looking to hold for 10 years.

I am happy with decision to buy in berlin, just not sure about yield. notice that prices appear to be increasing across Berlin though so maybe big yields are not so easy to find anymore.
 
Re: Berlin - expected yield???

Forgot to mention that the price per metre of the apartment is €1,400 - is this on the expensive side for berlin?
 
Re: Berlin - expected yield???

Hi Ret45, A 4.4% yield is nothing to write home about. You could do a lot better than that with investments, which are a lot less risky than overseas property.
 
Re: Berlin - expected yield???

just to echo the last post - don't let the desire to invest in property blind you to other investment alternatives. If you have the time take a look at the dividend yields on any of the large UK retail banks or any of the large European telecoms service providers or utilities. I can see some of these companies yielding in excess of 6% and they also offer the possibility of both capital and dividend growth. Not to mention the fact that buying a stock to hold is considerably cheaper than buying an appartement. It is easier to sell too!
 
Re: Berlin - expected yield???

4.4% is not a good return,you can get that type of return in Ireland
 
Re: Berlin - expected yield???

Not in any residential property i have seen in the last couple of years - in some bank accounts though.

I think ret 45 may be looking for capital appreciation on the investment which is also far from guaranteed
 
Re: Berlin - expected yield???

Overseas property is not a low-risk investment. It can also be time-consuming and typically, your expenses will be higher than if you were to choose another form of investment. Your return should reflect this and 4.4% is really too low. Secondly, we Irish have gotten used to very high capital appreciation in the domestic market and for the majority, this has been the primary impetus to invest here recently. However, IMO a property investment should stand on its own and provide a solid return, with capital appreciation potential as a secondary/longer-term benefit.
 
Re: Berlin - expected yield???

Ret45 said:
Does anyone know what is minimum rental yield a smart (but realistic) buyer would accept get from an apartment in Berlin. Am looking at an apartment in Weissensee area (near Prenzlauerbeg) which will cost €108 k including stamp, purchase expenses and all management costs for 10 years. Rental yield is 4.4 %. The advantage to the place is that is completely hands free end to end, managed by a reputable buy to let intermediary. Looking to hold for 10 years.

I am happy with decision to buy in berlin, just not sure about yield. notice that prices appear to be increasing across Berlin though so maybe big yields are not so easy to find anymore.
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Yield looks a bit low and price paid looks a bit high. Normal yields in Berlin are 6 to 7%. However it appears that the better areas tend to give lower yields: apartments overpriced as rents are too competitive. Prenzlaurberg considered to be a real up and coming area. Lesser areas means cheaper property with rents not that much lower than good areas. This is due to the existence of superb public transport systems. If city rent is too high then just move further out.
I agree with posters as regards yields in Ireland. I have not seen a yield of more than 3%.
Buying in areas like Turkey, Bulgaria (some parts), etc. is madness. People are buying purely for capital appreciation. What happens if 'something happens'. Armageddon. There must be some demand locally for the product. Berlin is OK as there is great demand for the property and management companies are excellent. They will collect the rent, handle repairs, handle contracts, lodge money, etc.. Virtually everything. I say get in now.
 
Re: Berlin - expected yield???

Thanks for all the advice. I appreciate that there may be better forms of investment out there than overseas property but, after quite a bit of research and discussions with accountants and various financial advisors, I have decided to buy properties in Germany and prehaps Poland. (By the way, I have discovered that there is no such thing as professional independent financial advice, everyone is trying to sell a product in one way or another).

The advantage of the deal i am looking at in berlin is that it is "hands free", but the downside is that the intermediary will be taking his cut. If I want the best value then I suppose there is no alternative to visiting the local estate agents in Germany and spending a few days looking at properties. Does anyone have experience with estate agents in Germany - is there much room for negoiation or do they look for the asking price for instance. Are they happy to show multiple properties in one day? Anyone have any contacts in Berlin that could offer advice??
 
Re: Berlin - expected yield???

I don't this thread is comparing like for likes.. Surely one need to take into account if OP has €108k available to invest or is borrowing the €108k?
 
Re: Berlin - expected yield???

I am intending to visit Berlin in next few weeks and will also schedule a visit to Frankfurt and maybe Hamburg.
 
Re: Berlin - expected yield???

I am going to Berlin shortly. A friend of mine who is living over there has stated that in an easily rentable location/area, expect to pay 1500-1700 per sq m2. Yield of 4.4% does seem low though.

Having said that, if holding for 10years+, capital appreication over there should more than compensate in the long term...
 
Re: Berlin - expected yield???

that 4.4 yield is net of all running and maintainance costs including property management, tenent management, maintainence and a contribution to the sinking fund. It is also a pooled rent so I won't lose out if my apartment is vacant for any length of time. Plus the rents will increase as tenents move out and are replaced.

the yield might be lower than I could get on a DIY basis but it is a minimum income for 10 years, which is the length of time I intend to hold onto the apartment, and I will have no hassle with the place in that time. Rent will cover the mortgage I intend to take out and hopefully the German economy will do its magic on the capital appreciation side.
 
Re: Berlin - expected yield???

I have a contact in Berlin . A lovely lady called Adelheid. Her company's website is www.adhoc-immo.de

When I visited Berlin Adel took me all over the place viewing apts. I also met with other agents - can't remember precise details now but it was an Irish company & the contact guy is William (think it could be Berlin Invest) It's well worth while to get in touch with a few agents. They will quite happily show you what they have to offer. That way you get a feel for the place & you get to ask all your questions. I didn't feel presurised by any of them.

I bought an apt through her in Wilmersdorf which is a lovely area. You do need to be careful of the Berlin market. Some apt blocks are lovely but the areas are very dodgy with squatters etc round the corner. That's why I found Adel very useful. She really knows her areas & to be fair to her Wilmersdorf is one of the few areas beginning to show appreciation. She's German but her English is excellent. Her husband is Irish.

If you decide to get in touch with her mention my name - it's Brigid.

Good luck to any of you whatever you do. Yes, maybe Frankfurt makes better financial sense as an investment but it's one of the most boring cities I've ever visited.

I think Berlin will come good. It will take time though & you need to bear the old maxim in mind ...location,location, location.

I would say PM me but I'll be away on hols for the next few weeks. I have NO connection whatsoever with the company. I just found Adel by chance & found her very helpful. Berlin is a beautiful city so take time to enjoy your trip.
 
Re: Berlin - expected yield???

Ret45 said:
that 4.4 yield is net of all running and maintainance costs including property management, tenent management, maintainence and a contribution to the sinking fund.
Click to expand...

this is not how yeild is worked out
 
Re: Berlin - expected yield???

yeild of a property is price divided by rent as a percentage,no deductions after that
 
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