Posted at 27.07.2021 | | in Berlin Real Estate Talk
24th Live Event | Meet the Expert
Co-Investments – A smart way to invest your capital?
Expert: Simon Schermuly, Kanzlei Schermuly
When: August 17, 2021 – 7 p.m.
Where: Live via zoom
Real estate is a very popular investment. Currently, there are high increases in the value of condominiums and apartment buildings in medium-sized cities such as Magdeburg, Leipzig, Erfurt, Jena, Chemnitz, etc. and inflation as well as a lack of choice of fixed-interest and secure investments in tangible assets are boosting demand.
Moreover, there is too little construction in almost all cities, so a safe investment of your capital and a positive monthly cash flow are very realistic. But the rented apartment is not the only form of real estate investment.
Summery of the interview:
From what size is a co-investment worthwhile?
It is said that from about 3-4 property a GmbH formation is worthwhile to buy. A GmbH leads to additional costs, which I would not have as an individual. However, this is offset by the tax advantages that a GmbH brings with it. My recommendation is to have us check from 4 apartments onwards whether a GmbH formation might not be advantageous.
What interest rates can German corporations get? Are these better or worse?
In most cases, the interest rates do not differ much from those offered to private individuals.
What happens if I want to sell, who buys my shares in the company? What are the rules?
The important point is that in a co-investment I do not acquire the real estate, i.e. the assets of the limited liability company, but only the shares. This of course creates a completely different legal transaction than a real estate transaction. The advantage for someone who also wants to invest is that if he acquires less than 10% of the shares, the real estate transfer tax does not apply.
Why do I get better properties when I make a co-investment?
I definitely have broader opportunities with a co-investment. When I team up with several people I have a larger volume, so I also have more capital. The important thing is to have clear rules in case there is a falling out or a sale for other reasons.
What are your fees Mr. Schermuly?
As a rule, the fees for a purchase negotiation are between € 3,000 and € 4,000 net. We do not work with percentages of the purchase or sale price.
We are 3 friends and we want to invest in real estate, but we don’t have time to search, build or manage it ourselves. What do they offer here?
First of all, it is best to find a good partner who will look for the right properties for you. We recommend that clients also do their own search. There are many different tools online, such as search agents, that can help with the property search.
The interest rate risks as a homeowner are much lower than you may think. You also have the possibility to have the interest rate fixed for more than 10 years. The advantage of buying as a limited liability company is that you have several debtors and thus several credit ratings that you can have built in.
Schermuly Law Office
Schermuly Law Office is an established law firm in Berlin highly specialised in real estate law. Accompanying the entire real estate life cycle, we advise our international clients on the acquisition, letting and sale of immovable property in Germany. Drawing from a wealth of legal experience and extensive knowledge of the German real estate market, we are committed to help our clients in taking the best decisions.
At Schermuly Law Office, lawyer and owner Simon Schermuly is responsible for the real estate investment division. Simon Schermuly has a broad knowledge in the support and counselling of real estate dealings in Germany, especially if foreign investors are involved. Simon Schermuly is acquainted with the special interests and questions of foreign investors at the purchase of real estate.