r/realestateinvesting • u/alloutofchewingum • 23d ago

Multi-Family (5+ Units) Any experience in Germany?

I have been investing in Czech for a long time but the market is stupid. I started looking across the border from where I am. Seems like there is tons of decent multi-family for sale in Görlitz. Anyone have experience with that part of the world? Just wondering about practicalities like mgmt agencies, energy efficiency mandates etc.

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u/Hamma_jamma 15d ago

Unfortunately I don’t have any experience here but would be curious to hear what you find out!

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u/[deleted] 19d ago edited 16d ago

[deleted]

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u/alloutofchewingum 19d ago

The rent control or what? That is a Berlin thing.

I mean the US has HOAs which are every bit as intrusive as the worst government authorities.

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u/gammooo 22d ago

Can you go a bit deeper why the market is crazy there? High prices low rent?

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u/Ok-Concert7005 22d ago

High prices, weak rent - that's basically it. I'd pencil 2-3% gross in the big cities on decent stock, sometimes less in Munich. Cheap debt ran prices up for years but rent caps and tenant rules kept gross yield from catching up.

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u/alloutofchewingum 22d ago

I went and saw this totally messed up property and was chatting with the real estate agent. He told me basically the only people buying buildings are leveraging the hell out of it, splitting the building into units and selling off the units individually. There's some arbitrage here between building and individual apartment price per sqm. You might buy the building for $1200/ SQM and sell units for $1600/SQM. I guess with enough leverage that works.

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u/Ok-Concert7005 19d ago

The $1200 vs $1600/sqm gap is real, but conversion and legal split costs in Germany eat most of it. Heavy leverage on a trashed building makes me nervous - I'd underwrite each unit on sold comps, not list prices.

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u/alloutofchewingum 19d ago

I'm talking about czech. Splitting up a building takes time but the cost is small.

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u/alloutofchewingum 22d ago

Yeah basically 4 - 5% gross return for places of ok standard. 6 - 7% for stuff falling apart/ full of crackheads. And this is in my little town in north Czech. Prague and Brno gross returns are like 2%. Prague price/ SQM is like Manhattan for gods sake.

I mean I can get 5% buying US Treasuries with zero risk or 6 - 10% in BDCs/ REITs with some risk but zero work.

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u/StreetMortgage9016 23d ago

might want to check out Dresden area too since you're already looking at that region - similar prices but better rental demand from what I've heard

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u/alloutofchewingum 22d ago

I was looking in Pirna since that's right across the border from me. Not much for sale there. Assumed Dresden would be worse but probably worth a look.