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ExPat Newbie mortgage min loan challenge


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Hi all,

 

First post, so go easy on me.

 

I'm UK expat living in Munich with my German wife and seriously interested in starting the property investment journey back in the UK.  I'm in the early stages educating myself through the excellent TPH & TPP resources, making connections, getting advice and already meeting early challenges. 

 

One such challenge is Expat BTL mortgages.  I've had some helpful conversations so far with brokers and mortgage companies direct, but the initial issue seems that most will only offer Expat BTL on a min loan of between £100-150k.  However, I think the numbers will only really work on good value properties in Northern cities, where great opportunities can be less than £100k, plus as our first investment, we don't want to over-stretch ourselves.

 

On this the cogs started whirring and I thought: is it possible to set up a Ltd company with a family member \ friend based in the UK listed as a director\share holder and try to secure a Ltd company BTL mortgage without the Expat rates and a lower or no min loan value?

 

Any ideas if this is even possible or any potential problems or implications?

 

Cheers

Tom

 

PS - I'm flying over to the UK for the August meetups.  Any suggestions on which I should attend (I fly into Manchester)?  I know they'll all be great and helpful, but should I go where I'm interested in starting or any city better for a Newbie?

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  • 4 weeks later...

Have you considered investing in Germany instead? You have a German wife so the language is not an issue. Plus the market, thanks to Briexit  is going crazy, excellent time to get in plus tax free gains, can't beat that. The only advantage I can see to the UK is, with a bit of careful planning you have tax free income. Of course no one knows how this will play out with longterm so that makes planning a bit tough.

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Hi Frankfurt Rob, thanks for your message

 

I have considered investing here and we even have friends, who have invested to rent.  A few things make it difficult:

 

My wife is in a demanding job, plus, we have a young family, so the idea is that this is my project and she is unable to be involved.  Unfortunately, my German language skills are ok, but not good enough to deal with Makler, Mieter or Handwerker if needs be.

 

I have little idea of geography, demographics, let alone the market beyond Munich and I'm pretty sure we've missed the boat where that is concerned, although I know rental demand is sky high.  Munich prices are crazy.  Even though I'm considering investing in the North West, which I also have limited experience of, I at least have a general knowledge about areas, have contacts there or feel comfortable in researching.  I'm also put off by the legal side here.  It seems virtually everything is stacked in the tenants favour, although I could be wrong.

 

Finally, one of the drivers behind this plan, is that we are likely to move back in 3-5 years time, so we see this as generating an income in the UK and providing a foundation, should one of us be unemployed at the point of returning.  Also, we're taking advantage of the weakness of sterling.

 

I'm meeting with an IFA next week both here in Germany and in UK, so I'll get their opinions.

 

 

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I hear you on the German, my wife sometimes complains that I let her do all the talking!  There’s a few things to keep in mind when deciding whether to invest in the UK or Germany.

 

There is no question the UK market is more dynamic with more opportunity for flipping and capital growth but it’s also more hands on. There is more risk due to the nature of the boom bust cycle of UK housing. Buying in Germany is about long term income, I’m sure as you know, places get rented unfurnished. Not only that but tenants have a more homeownership mentality and tend to stay very long term.

 

The other thing is that the bulk of the running costs of the building get passed on to the tenant. That’s the warm rent or nebenkosten (maintaince fees + utilities) that you pay each month. It’s also very hands off. I spend about 2 hours a year managing my places, and that is just settling the accounts at the year. 95% of it can be handled by email. So I either use google translate or pay someone.

 

In making the decision on where to invest there’s several factors to take into account. How hands on do you want to be, how often do you see yourself traveling back and forth and of course our old friend the tax man.  

 

The UK is much more hands on than Germany. I've often thought about buying in the UK as it would be nice to deal in English but I don't feel comfortable managing it from a distance. If you decide to be a landlord in the UK than I highly recommend reading Rob’s books. As mentioned about before about taxation. If you own a property in the UK you need to file a UK tax return but it won’t affect your German tax return and visa versa. The key here that all costs associated with managing the unit can be deducted against the income. Typically that means travel costs to see the unit each year.

 

As always double check with your tax accountant as there’s always loop holes and exceptions.

 

 

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If you decide to buy in Germany the key is to look for a flat in a large well managed building and a rental yield around 4%. Buying a place with a tenant is a positive not a negative.Yes Munich is much more expensive but the rents are also much higher. As long as you get your desired yield there’s no issue with Munich. If I were 20 years younger, I’m retired and my wife will be joining me shortly, I’d be going on a buying binge. I personally feel that Germany is on the beginning of a long bull market. My German friends think I’m nuts but I can see prices, even in Munich doubling in the next 10 years.

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