Real Estate Investment Germany – 3 Ways To Invest

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Have you ever thought about investing in real estate in Germany? Real estate investment can be one of the most attractive and beneficial investments in Germany. Even if you don’t have enough capital to buy a property now, there are different ways to invest in the real estate market in Germany. Read this article for all you need to know about property investment in Germany, including the pros and cons, the 3 different ways to invest, the costs, tax implications, and information about mortgages. I also include 12 must-read tips before investing in the real estate market in Germany. All based on my personal investment experience.

A short summary for the busy people

If you don’t have much time, here is a short summary of the 3 ways to invest in the real estate market in Germany: 

Profitus: A leading real estate crowdfunding platform. English website. Invest starting from 100 Euros. 12.14% average return. Good for investors who do not have large capital or do not want the risks and effort involved in buying their own properties. 

Use an all-inclusive service to buy your property: English service. Everything is taken care of, including property selection, location research, mortgage, tenant management. Risk reduction with rental guarantee and rental pool. Contact my financial adviser and mention my blog “My Life In Germany” to get a free consultation.

Handle everything by yourself: Decide on the location, find your property, get a mortgage, find your tenant and tenant management – all by yourself. Lots of time and effort, especially at the beginning. Possible to hire a local company (Hausverwaltung) to help.

Keep on reading for more details about the 3 options and their pros and cons.

Disclaimer: The statements, comments and other content contained in this article are not to be construed as investment advice and do not constitute, directly or indirectly, a recommendation or solicitation to invest, buy, hold or sell any real estate properties or any advice relating thereto. You are responsible for your own risk if you decide to participate in any form of investment.

Real estate investment – Why invest in Germany?

Real estate investment in Germany can be one of the safest long-term investments. Germany has one of the strongest economies in the world with a stable political environment. Investing in real estate can be secure and profitable in a country like Germany, especially with the excellent current market environment. Below are some reasons why you may want to consider property investment in Germany.

1. Property demand vastly exceeds supply in urban areas

If you have ever tried to find a place to live in Germany, you know what I mean. When I first moved to Germany, I was desperate to find a flat. I never expected that it was so damn difficult to just try to find a place to live. I still remember that I saw a girl crying in a hostel as she couldn’t find any flat and her university was starting. I moved 3 times in a year and finally settled down in a student dormitory. 

When I moved from Berlin to Munich, the situation wasn’t any better. I moved 5 times in a year and finally settled down at my boyfriend’s (now husband) flat.

Flat hunting is almost as difficult as job hunting

In fact, when my friend in Munich wanted to rent out one of his rooms in his shared flat, he got more than 50 emails after he put his advertisement online. He had to remove his advertisement immediately to stop more emails from coming in. 

It is not uncommon that people applying for a flat go through a “group interview” process, where a batch of ten people was invited for a flat viewing together. And batch after batch.

Flat hunting is extremely competitive in big cities. You might be fighting with 70 other people to get one flat. I know also people who bring their formal CVs to their “flat interview”.

The homeownership ratio is a bit less than 50% in Germany

It is one of the lowest among the EU counties. There is a big shortfall for apartments. And the property construction speed is not catching up. The property undersupply issue has been there for years. This makes the real estate market in Germany a good investment for both local and overseas investors.

Read also: 42 Moving Tips – Moving Locally or Internationally

2. Population growth in the big cities

The world population is forecasted to increase by about 23% in the next 30 years. More people mean a higher need for residential property. 

The population growth will be particularly strong in the big cities. One of the reasons is the constant inflow of immigrants. In recent years, there are a lot of refugees immigrating to Germany.

Besides, due to the strong economy and a high living standard, many skilled workers from around the world want to move to Germany. Many of them move to big cities as there are more job opportunities there. 

This all means that property demand will likely grow. Real estate investment in Germany can be attractive as it may be easy to find tenants.

3. Properties have intrinsic value

Comparing to other financial products like stocks, properties are tangible assets with intrinsic value. This may give you more security compared to other investment types. You will very likely get some money out of it when you sell your property.

Read also: Best Online Broker Germany – Top 5 Comparison

4. Protection from inflation

It is possible to increase your rent to offset inflation in the future. There is also something called graduated rent, or “Staffelmiete” in German. With the graduated rent, you can specify in your rental contract that the rent will gradually increase, e.g. a 3% increase every year. 

Read also: The Best Investment to Profit From Inflation in Germany

5. Property prices and rental prices are rising over the years in Germany

The property price in the big cities in Germany is rising crazily over the years

To give you an example: we bought our house close to Munich for around 500,000 Euros in 2016. When I look at a similar house today in the same area, a house like ours is selling for 700,000 Euros! 

In fact, the property price is increasing rapidly over the years in major cities like Munich, Berlin, Frankfurt, Hamburg, etc. Not only the property price but also the rental price is on the rise constantly. Even the financial crisis in 2008 or the Corona pandemic in 2020 did not cause the property price to collapse in Germany.

Even though the property prices in Germany has decreased after 2022, the prices now are still at a high level. If you compare the property prices now to 10 years ago, the prices have increased significantly.

To give you some examples how expensive it is, take a look at the table below for property prices in Munich (data from Dr. Klein).

Real estate typeQuarterMedian price
Flats3Q20237,119 €/m²
Houses3Q20236,027 €/m²
How about rental yield?

Due to the high price of the property, your rental yield may not be that high (around 3% per year). However, real estate investment in Germany can still be very attractive especially in the long term, as the capital gain can be high and you can sell your property easily under the current market situation.

The continuous price increase of residential properties over the year and the increase in rent levels provide a very stable environment for real estate investment in Germany.

Is it a bubble?

Some people argue that the German property price is a bubble and it will fall soon. In my opinion, unless there is a serious problem with the German economy or a sharp rise in the interest rate, it is unlikely that the property price is going to drop in the long term because of the high and steady demand. If you hold your property for the long term, the price will likely go up. 

DisclaimerI am not a financial advisor and I cannot give you any investment advice! What I wrote above is simply my personal opinion. Real estate investment is risky. House price is unpredictable. Historical price is not indicative of future price. This is not an investment recommendation. Read it at your own risk.

6. Positive political environment

The politicians realize the urgent need to build more residential properties in Germany. The government has invested billions to build more residential properties. The big shortfall of properties has become a political concern. This acknowledgment from the politicians provides another good reason to private investors for real estate investment in Germany.  

7. Tax advantage

When you finance your investment property with a mortgage, your mortgage interest is tax-deductible. Besides, you can claim 2% of your property value as depreciation annually for 50 years. The best part is that if you sell your property after 10 years, you do not have to pay capital tax on your gain!

In case your children inherit the property from you, your children will only need to pay inheritance tax if the value of the property exceeds 400,000 Euros (or 500,000 Euros if it is inherited by your spouse). The large inheritance tax-free amount is another advantage for real estate investment in Germany.

Read also: Making a Will in Germany – Why I Did It Already in My 30s

Risks of real estate investment in Germany

1. Long term investment

Property investment is not as liquid as other forms of investment like stocks. If you need cash, you cannot cash out very fast. Instead, you need to go through the process of finding a buyer and all the other administrative procedures of selling a property.

As you can avoid capital tax if you hold your property for 10 years, it makes sense not to sell your property in short term. It can be financially challenging in case you need money in the short term and your money is tied up in your property.

Read also: Invest in Germany to Make Money – English Guide

2. Language barrier

If your German skill is limited, it can be challenging to go through all the property purchase procedures yourself. To buy your property, you will need to deal with the notary, bank, agent, government officials, etc. They may not speak English and all the formal documents will be in German. 

3. The German law is very pro-tenant

There are strict laws regarding the rental price. In general, a landlord cannot increase the rent by more than 15% or 20% within three years, depending on the city. An exception is that if a landlord renovates the property to improve its energy efficiency. In that case, the landlord can increase the rent to a bigger extent.

In certain cities, there is also an upper rent limit (Mietpreisbremse). It means that the rent cannot be 10% more than the official city rental index.

In case you have bad tenants, it is very hard to evict them. The eviction process takes a long time, and during which you may not have rental income if your tenants stop paying.

Besides, you really need a legitimate reason to evict your tenant. Even then, the tenants can still try to appeal the eviction, if they can prove that the eviction is causing them hardship.

For more details, check this out: Renting in Germany – Ultimate English Guide to Finding Your Apartment in Germany

4. Maintenance cost of your property

If you buy a second-hand property, it may not be very easy to see the condition of the property at the time of purchase. You may end up paying a lot of repair and maintenance costs in the future, which may come as a surprise. 

Therefore, you should plan some money for maintenance costs if you are buying an old property. Or even better, buy a new property to minimize the risk. 

Besides, you should always hire a surveyor (Gutachter) to check if there is any hidden issue with your property before buying it.

Real estate investment Germany – 3 Ways to do it

There are many different ways to invest in the real estate market in Germany. We will talk about 3 ways below.

1. Profitus

Real estate can be a very attractive investment in Germany. However, the purchase of a property requires quite some capital investment at the beginning.

What if you want to take advantage of the real estate market in Germany, but do not have enough capital to start?

The initial payment for property investment in Germany can be quite high, when you consider the additional costs that come with the purchase, e.g. the notary expenses. After the purchase, you will also have to deal with your tenant. This also requires your time and effort.

Luckily, there is also a way to invest in the real estate market in Germany even if you don’t have much capital yet.

What is Profitus?

Profitus is like a big pot where lots of people, including you, can put in a little bit of money to help with real estate projects. The money collected from everyone goes to things like building new houses, fixing up old ones, buying property, or renting out real estate. And as the property makes money, you get a piece of the profits too!

With Profitus, you can invest quickly, directly, and digitally in real estate projects. You don’t have to be a large investor to participate in property investments. In fact, you can start with as low as 100 EUR.

Profitus has managed over 159 million Euros in investments over the years. It has real estate projects in the Baltic region, with 12.14% average return for investors.


Profitus stands out as one of the most ambitious and rapidly expanding crowdfunding platforms in the Baltic region. Acting as a crowdlending service, Profitus serves as the middleman between individuals seeking to invest and those in need of funding.

Here’s what Profitus does:

Risk assessments

Profitus evaluates the risk associated with both the borrower and the real estate projects. This helps ensure the safety and reliability of investments.

Financing process administration

Profitus manages the entire financing process, from facilitating transactions to providing guidance on market trends.

Regulatory compliance

Profitus operates under the highest regulatory standards, overseen by the Bank of Lithuania. This ensures that all activities adhere to strict legal requirements.

Secured investments

Every investment opportunity on the Profitus platform is backed by a mortgage, providing an added layer of security for investors.

The investment process is simple. First, you create an account on the Profitus platform. Then, you verify your identity. Afterwards, you can select your desired project and invest. You will receive interest once a quarter. At the end of the investment period (as short as a few months), you will get back your entire investment.

How safe is my investments?

Your investment at Profitus is secured by mortgages and other collateral, reducing the likelihood of total loss. Each project has its own risk mitigation measures outlined for transparency.

Profitus primarily raises funds for real estate development projects and other business loans, ensuring borrowers pledge real estate as collateral, offering assurance to investors.

Additionally, the Bank of Lithuania closely monitors and supervises Profitus operations, further enhancing trust and reliability in the platform. Funds not yet invested are held in segregated accounts with Lemonway, a licensed provider, offering additional protection.

But remember, all investments carry risks, even if they’re small. Profitus follows rules to make sure everything is fair and clear.


I think Profitus can be very interesting for people who are still in the process of saving up their money to buy a property. In that case, Profitus can be a good alternative until they have enough money to buy their own properties.

I can also understand that some people may not want to have all the risks and effort involved to buy their own properties, get their mortgages, and deal with their tenants. In that case, Profitus can be a good alternative for them.

Check out real estate investment opportunities at Profitus now!

Profitus_invest in real estate crowdfunding platform

Disclaimer: Subscription to the investments and securities offered entails a high risk of loss for your capital up to the total loss. The investments via Profitus are not suitable for all investors. Only invest an amount that you can afford to lose. Make sure you have fully understood the risks associated with the investments before you invest.

2. Use an all-inclusive service

Our journey to become landlords in Germany

This is how I started with my first investment property in Germany. My financial adviser has a focus on real estate investment in Germany. Growing up in Hong Kong, it has always been my dream to be a landlord. I know too many people who get rich this way in Hong Kong. When I told my finance adviser that I wanted to invest in real estate in Germany, I was surprised to learn that he was so specialized in this area.

His company is providing an all-inclusive service, from finding an investment property for us to handling the tenants after the purchase. EVERYTHING was handled and it really saved us a lot of time and effort when we handed over these tasks to the professionals.

Our investment property does not have to be close to where we live

After telling our financial adviser that we were interested in buying an investment property, he informed us whenever a suitable property was available for sale. The location of the property was not limited to where we lived. It could be anywhere in Germany. Honestly, it didn’t really matter because everything could be handled remotely. The important thing was that the best location was chosen to get the best return for our investment.

Buying a good investment property is competitive

As you probably know already, the property market in Germany is quite crazy. Even if you want and have the money, it can be quite competitive to buy a flat. It took us more than a year until we were finally lucky enough to buy our investment property.

Our financial adviser even had some kind of listing where all the potential investors are lining up on this list. It was like waiting in a virtual line and only those on the top of that list had a higher chance of getting a flat. Crazy!

We bought our investment property via our financial adviser. It is a newly built flat and has been rented out already. The great thing about buying via our financial adviser is that we do not need to pay a real estate agent fee because his commission is included in the property price. We are happy to find this low-effort way to become landlords in Germany 🙂

Why I used an all-inclusive service?
Only high-quality property is selected

The company of our financial adviser has an intensive control process and they select only properties with top quality. For example, our investment property has premium features like parquet flooring and an underfloor heating system. 

We do want to invest in a high-quality new flat because we can rent it out at a good price and the capital gain potential is high in the future. Not to mention that we don’t have to worry about the maintenance cost at the beginning. 

So far, all the properties he presented us were newly built. Once all the flats in the building were bought by the investors, the building company would start building and the flats would be finished in 1-2 years. 

The best location is researched

I don’t have to think about where I should buy my investment property. The company has done intensive research on the location already and the result was presented to us in a detailed brochure.

For example, the population growth rate of the city, the unemployment rate, the proximity to the city center or public transportation, the number of big companies or universities nearby, the age structure of the population, etc. 

We saved all our time on the research and can be sure that this was a good location for an investment property.

Our mortgage was taken care of

As it was an all-inclusive service, there was also an independent mortgage broker from the team who helped to find us a mortgage. This broker did not work for a specific bank. So, we could be sure that he compared and found us the best deal.

They will take care also after our purchase

Our investment property is about 4 hours drive from where we live. But it doesn’t matter at all. We almost don’t have to do any work. The management company will be responsible for finding our tenants and take care of them.

They calculate the best rent possible based on the region. So, we also don’t have to worry about what rent we should charge and if we can increase our rent legally in the future. 

If the tenants need anything, they will deal with the management company but not us. If they move out, the management company will help to look for a new tenant. That frees us from all the relating stress and work.

Rental guarantee

For some of the investment properties, the company even provides a rental guarantee. For example, we bought our second investment property near Berlin. For that property, we have  a rental guarantee for the first 5 years.

It means that we can be sure that we get 10.5 Euros per square meter in the first 5 years, regardless of if the flat is rented out or not. We have basically no risks during this period. This is something that we cannot get if we would have found and bought an investment property all on our own.

Rental pool

This is another concept I like. With the rental pool system, the rental income from all the flats in a building is collected into a “pool” and is then redistributed to the landlords based on the size (square meter) of each flat. 

The advantage of using a rental pool is the reduction of risk when an individual flat is vacant. In case our tenant moves out, we don’t have to worry that we may not get rental income for a month or two.

Instead, we will still get some rental income since it is paid out from the rental pool when other flats in the same building are still being rented out.

All in all, we are happy with our investment properties

That is the reason why we bought two investment properties from our financial adviser. Such an all-inclusive service is designed for people who want to invest but also want to save their private time while doing things right. We trust to hand over these tasks to the professionals (who will surely do a better job than if we would do it ourselves).

If you are interested, I can highly recommend talking to my financial adviser. He speaks perfect English and can explain all the details to you thoroughly. You can write or call him and mention my blog “My Life In Germany” to get a free consultation.

Tips: Currently, there are real estate offers in Leipzig, Wedel, Bestensee, Kassel, Magdeburg, Gernsbach, Erfurt, and Lippstadt. These are active offers that are open for investors to buy (So, be fast!). The size of the flats ranges from 32 to 149 square meters, with a starting price of 2,500 €/m². You can check this page for more details about the offers.

iFunded_real estate investment in germany_how I became a landlord_investment property_hkwomanabroad_ my life in germany
Photo by Tierra Mallorca on Unsplash

3. Handle everything by yourself

Even though I highly recommend using an all-inclusive service when buying an investment property, I do understand that some people may want to handle everything by themselves. If that sounds like you, read on to learn how to do it.

What do you need to do?
Decide on the location

This means you do your research to find the best location to buy your investment property. You will have to do your market analysis, and take your budget into account. 

Finding your property

You will also have to go through the property hunting process by yourself. As mentioned before, sometimes it can be extremely competitive to find a place to buy. You have to be fast. Be prepared and have every document ready when a good offer comes by.

Getting a mortgage

Unless you have enough cash to buy your property, you will have to look for a bank to get a mortgage. The easiest way is to use a free online mortgage calculator. Just enter the house price, your down payment amount, and some other basic info. You can then see the different mortgage options in minutes and consult with a financial adviser there about each option.

Deciding on the rent and looking for your tenant

After buying your investment property, you also have to do research and decide on an appropriate rent level. Then, go through the tenant’s interview process. This is sometimes very time-consuming.

As mentioned before, there can be A LOT of people applying for your property, especially in a good area. The process of searching for your best tenant can be very overwhelming. You have to check everything you possibly can to minimize your risk.

Taking care of your tenant afterward

Your job does not end here. After renting out your property, you still have to take care of your tenant. You need to organize a handyman in case something is broken inside your property. You need to communicate with your tenant in case he needs something. You need to make sure your tenant is paying rent on time. In case your tenant moves out, you will have to check the condition of your property when he leaves and start over the tenant searching process.

Read also: Buying a House in Germany – As a Foreigner

Should you do everything by yourself?
It is a lot of work at the beginning

Doing everything by yourself involves a lot of work, especially at the beginning. As you can see, all the above-mentioned tasks involve a lot of research, work, and organization. You need to know what you are doing.

If you have a good tenant who lives in your property in the long term and does not bother you as much, you may not have that much work anymore after you have found your tenant as everything is already running.

Of course, it is easier if you live close to your investment property so that you can be there if needed. But if you don’t, it is still possible to organize your rental property remotely. 

Managing your investment property in Germany remotely

I have a friend who lives in Munich and has an investment property in Berlin. It was a lot of work for her at the beginning as she had to renovate the flat before looking for a tenant. But once the rental is running, she was there only once a year to join the yearly meeting from the management company and to check if everything is ok with the tenant.

Hire a local company to help

Alternatively, you can hire a management company to help with your rental property. You can look for a local company near your property (“Hausverwaltung/ Mietverwaltung” in German).

Some of them offer services like searching for tenants and taking care of your tenants so that you don’t have to travel to your property to deal with such things. You should compare different management companies as their prices and services can vary a lot.

Read these 12 tips before starting with your real estate investment in Germany

1. Plan your finance

Before your real estate investment in Germany, the first important thing is to plan your finance. You need to have good financials to afford to buy an investment property. You need money not just to cover the purchase price of your investment property, but also all the additional costs relating to the purchase. For example, notary costs, estate agent fees, property tax, etc. 

Also, don’t forget the running cost after you buy your investment property. You will need enough money to cover your mortgage payment and any other potential maintenance costs for your property in the future. 

I find it helpful to draw a finance plan. We have a big spreadsheet putting down our estimated household income and expenses in the next 30 years. Sure, it is impossible to predict everything so far out in the future and it is just the best estimate. But this really helps to see how much we can afford and plan for different scenarios.

For example, what if the interest rate rises after 10 years, and how much increase we will be able to afford. We can then pick the best mortgage plan that suits our personal situation the best, e.g. fixing the interest rate for a longer period.   

Read also: Occupational Disability Insurance in Germany – 4 Best Offers          

2. Who are your target tenants?

Do you have a specific group of tenants that you are targeting? The type of tenants you want will affect what kind of apartment you should buy. 

For example, if you want to rent out your apartment to students, you will need to buy a small single apartment that can be afforded by students. 

If you are going for family, then you will need a bigger apartment or a house, with enough sleeping rooms for both parents and the kids. 

If you want to rent out a furnished apartment to corporate clients, you will need a nice apartment in big cities like Munich or Frankfurt, where many big companies are at. 

3. What type of property do you want to buy?

Do you want to buy a newly built property? So far, I have only bought newly built properties. The good thing about newly built property is that you will get a 5-year warranty from the seller. Besides, it is more modern and normally comes with an elevator and other barrier-free features. These all make it much more attractive to renters.

Moreover, buying a newly built property means that no existing tenants are living there at your purchase. It means that you can choose your tenants and set your own rental price.

The disadvantage of buying a newly built property is that it may take some time until the property is finished building. In our case, it took more than a year until the property was built. During this time, we had to pay commitment interest (Bereitstellungszinsen) to our bank to secure our mortgage. 

Another thing is that a newly built property is likely more expensive than an old one. However, don’t forget all the repair and maintenance costs you will have to plan for if you are buying an old property.

4. Where should you buy your investment property in Germany? 

The location of your investment property in Germany is extremely important. You will want to choose a place with good public transportation, infrastructure, shops, schools, and universities. This is because people want to live in such places. It means higher demand and higher rent for your investment property.

When we bought our house, it was very important for us that a big supermarket is within walking distance. We don’t want to drive every time for grocery shopping. Similarly, since we have kids, we care about if there is a school nearby and if our kids will be able to get to school by foot, bike, or by bus. Walking distance to the downtown area is also a big plus.

Besides, the city where your investment property locates is also very important. You should look for a city with an increasing population but limited room for more residential buildings. Cities with big international companies or universities, and cities that are closed to the airports provide good demand for your rental property.

You should spend time doing your research before buying your investment property in Germany. This is extremely important to be successful with your investment.

5. Check your property thoroughly

As mentioned before, it is important to hire a surveyor to check if everything is fine with your property before the purchase. You can avoid expensive repair costs by doing so.

6. Understand the tax implication

Even if you are not a German tax resident, you will still have to pay capital gain tax if you sell your investment property within 10 years. For most properties, you can claim 2% depreciation per year on the initial purchase price. But some properties also have specific depreciation rules. 

For example, the investment property we bought is classified as a monument (Denkmalimmobilie) and we can claim a very high depreciation percentage in the first 12 years (9% in the first 8 years and then 7% in the following 4 years). This has a great positive impact on our finance plan. 

Besides, don’t forget that the rental income you receive may not cover your monthly mortgage expenses in full and you have to also pay tax on your rental income. Besides, any potential tax savings will only come in the following year after you file your tax return. So, you need to make sure that you have sufficient cash flow during the year to cover all the potential costs relating to your rental property.

If you are not sure, always check with your tax adviser before your purchase so that you can plan your finance correctly.

Read also: Tax Return in Germany – English Guide

7. How much rent should you charge?

You should research the rental condition in your area. Check what the average rent is for other similar properties like yours. The rent you charge should be in line with other similar properties to ensure that your apartment is always occupied. Also, inform yourself in case there are any rules regarding the rent level in your area. For example, in certain cities, there is an upper rent limit (Mietpreisbremse).

You should also increase your rent every time if you can do so legally. Firstly, this is to cover the inflation rate. Secondly, you can negatively impact the resale price of your property if you charge a rent that is too low. This is because when you resell your investment property in the future, your existing tenants may not move out necessarily. It means that the buyer of your investment property will have a limited ability to increase the rent significantly.

8. Choose your renter carefully

As mentioned before, German law is very pro-tenant. Once your tenant moves in, it is difficult to evict him. Therefore, it is extremely important to choose your renter carefully to minimize your risk. 

It is common in Germany to ask your potential tenant to provide his proof of income and employment contract. You want to choose someone who has a stable income and job.

Besides, choose someone who has liability insurance. In case your tenant causes any damage to your flat and has no money to compensate you, at least his liability insurance can pay you back. For more details about liability insurance in Germany, check this out: Liability Insurance Germany – English Guide

On top of the above, you should also check the credit history of your potential tenant. You can ask him to give you a document filled out by his previous landlord to verify that he has paid his rent properly in the past. This document can also include the reason for his move and the contact details of his previous landlord.

You should also charge a deposit of up to 3 months of cold rent. This serves as security for you in case your tenant stops paying rent or causes any damage to your property.

9. Consider getting legal insurance for your rental property

Be aware that your personal legal insurance in Germany normally does not cover legal costs involving conflicts with your tenant. It is highly recommended to get legal insurance covering your rental property specifically.

If you do not yet have private legal insurance in Germany, you definitely should get one. Why? Check out this post: Legal Insurance Germany – English Guide (+ 3 Best Offers) 

If you already have private legal insurance, you can check if you can add the option to include legal costs for rental property. 

You can also use Tarifcheck to search and compare different legal insurance for rental properties.

10. Consider carefully if real estate investment in Germany is right for you

Even though you can potentially earn a very good return with a real estate investment in Germany, it is a very serious long-term investment with a significant sum. You should really think carefully if this is something right for you.

Is it the right timing?

Is it the right timing for you now, considering your personal financial circumstances? Investing in property means that it will tie up your money for the long term. You need to make sure that your household income is stable enough to afford to pay off your mortgage in the long run. 

Are you prepared to deal with any potential conflicts with your tenants?

If you have a bad tenant, it can be very painful to deal with them. In this case, legal insurance for rental property can be very helpful. If you are not using a management company, you should also make yourself familiar with the law regarding property rental. This is so that you are not doing something illegal accidentally, e.g. by charging too much rent.

Leave some buffer

When planning your finance, you should also leave some buffer for any unexpected expenses. For example, in our case, we only realized some additional expenses after buying our houses. One of these is to install a descaling plant at the central water supply. Each of these unexpected expenses can easily cost more than a thousand Euros. So, your financials need to be very solid if you decide to invest in the real estate market in Germany. 

Besides, you should have some buffer because you never know how long the current good market conditions will remain, e.g. the low interest rate and high demand. Also, think about if you can afford it in case the price of your property falls in the future.

11. Learn the property purchase procedure in Germany

In our case, we first bought a house for ourselves to move in so that we don’t have to pay rent anymore. Because of that, we are very familiar with the property purchase process when we bought our second property in Germany for an investment purpose.

If you don’t have that experience yet, I would highly recommend you to do your homework and learn the basics first. Check this out: Buying a House in Germany – As a Foreigner

This is a comprehensive guide about buying a property in Germany. You will learn all the costs relating to property purchase, the role of the notary, tips about finding a house to buy, and the procedure of buying a house, etc.

12. The best way to transfer money

Buying an investment property in Germany involves a lot sum of money. If you need to transfer money internationally to buy your investment property in Germany, the worst you can do will be to do a bank transfer.

I used to do bank transfers in the first few years after I moved to Germany until I heard about the services from CurrencyFair. I would have saved so much money if I knew it before!

With CurrencyFair, the fee is only 3 EUR no matter how much I exchange. The exchange rate it uses is also much cheaper than the one used by the bank. Besides, I can also set a higher exchange rate and the transfer will only take place once this rate is reached.

By the way, Currencyfair is also offering 10 free transfers to our readers at the moment if you want to try it out for free.
currencyfair get 10 free transfers

What cost should you expect?

On top of the property purchase price and your mortgage cost, you should plan for the below costs when investing in properties in Germany:

  • Notary’s and registration fees: 2-3%. If you need an interpreter, the cost will be on top.
  • Estate agent’s fee: 1.5-7%, plus 19% VAT. The cost depends on the area, and how the buyer and seller split this cost.
  • Property transfer tax (Grunderwerbssteuer): 3.5-6.5%, depending on the region
  • Property assessment: This is to evaluate the value of the property before making your purchase. The cost ranges from a few hundred to more than a thousand Euros.
  • Renovation and maintenance cost: This is especially important if you are buying an old property. 

For more details on each of these costs, check out here: Buying a house in Germany – Cost of buying a house

Mortgage in Germany – how to get the best deal?

If you live in Germany, you can sometimes get a 100% plus mortgage. This is very attractive, considering how low the current interest rate is. You can use this leverage to earn a profit from your real estate investment in Germany.

If you want more information about the common types of mortgages in Germany; tips when getting a mortgage; the mortgage process when building your new property from scratch, etc., check this out: Mortgage in Germany – English Guide (Plus 6 Best Tips!)

You need to be fast

The property market in Germany is very hot. It means that even if you want to buy a property, you may need to compete with many other people and fight for one. 

In our case, we got our house because we called and reserved it immediately after the advertisement was put online. We haven’t even visited the area before our reservation. If you want to get a property, you have to move fast. We told an agent once that we needed a few days to consider. And when we called back after a few days, the house was already sold.

Therefore, it is recommended that you first check your finance to see how much you can afford. This is so that once you find your property, you can move quickly.

In some cases, you may need to have a life insurance policy to get a mortgage. Anyway, it is highly recommended to have life insurance if your family is financially dependent on you (so that they will not be forced to move out of their own home in case you die). For more details, check here: Best Life insurance Germany – Top 4 Comparison

Another tip: Do you know that your SCHUFA score has an impact on your mortgage interest rate? Check this out for more details: What is SCHUFA – How to get SCHUFA in Germany?

How to get the best mortgage deal?

The easiest way to find the best mortgage deal is to use a free online mortgage calculator. Just enter the house price, your down payment amount, and some other basic information. You will see the different mortgage options in minutes.

How about German tax?

When you buy an investment property, all the expenses incurred can be claimed against your rental income. For example, your mortgage interest, notary cost, estate agent fee, management company fees, etc. In most cases, you can claim a 2% depreciation on your initial property purchase value every year. 

As mentioned earlier, if you hold your property for more than 10 years, the profit of your property sale will be tax-free.

For your rental income, it will be taxed at a progressive rate and up to 45%. The tax system is the same regardless if you are a German resident or not.

Please note that we are not qualified to give you tax advice according to German law. Make sure to seek qualified and appropriate tax advice before your real estate investment in Germany.

If you live in Germany

You can use Yourxpert to get a free online initial assessment from a tax adviser. Simply write your question in the below question box. The initial assessment or recommendation is free of charge. If further actions are needed, you will get a non-binding offer with the price and you can decide if you want to take the offer.


If you do not live in Germany

You still need to file your tax return to the German tax office when you own an investment property! It can be challenging for non-residents to do tax filing by themselves, especially when all the formal documents are only in German.

For those who don’t live in Germany, the best is to use the tax filing service from Property Tax International. They can help to file your property tax in Germany so that you don’t have to deal with the German bureaucracy. Besides, they speak English and can give you tax advice regarding your property in Germany.

Property Tax International Banner_filing property tax for non resident in Germany_Mylifeingermany_hkwomanabroad


Real estate investment in Germany can be very attractive if you do it right. Of course, every investment comes with risks. You should assess your financial situation and make the right investment decision.

In our case, we are running three investment properties in Germany. What I can say is that I really like investing in properties in Germany and I am very confident and positive about the German housing market in the future. 

If you are interested in doing the same, I can highly recommend you to talk with my financial adviser. He was the one who helped us to achieve our goal of becoming landlords in Germany. You can write or call him and mention my blog “My Life In Germany” to get a free consultation.

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Photo by Towfiqu barbhuiya on Unsplash

Please be aware that this article is intended to provide you some guidelines about real estate investment in Germany and it is not to be considered as expert, legal or professional advice.

The statements, comments and other content contained in this article are not to be construed as investment advice and do not constitute, directly or indirectly, a recommendation or solicitation to invest, buy, hold or sell any real estate properties or any advice relating thereto. You are responsible for your own risk if you decide to participate in any form of investment.

Our blog accepts no liability in any case. Every investment has risks and it can lead to a total loss of your capital. Only invest an amount that you can afford to lose. If you need more details and specific advice on your personal situation, we would highly recommend you to consult a tax adviser, a financial adviser, or an estate agent.

Do you also have an investment property in Germany? Or are you interested in buying one? Leave a comment below and share your experience!

About the author

Originally from Hong Kong, Sindy spent 13 years in Germany before moving to the US. Her blog is your ultimate resource for navigating Germany, offering pro tips on bureaucracy, job hunting, education, culture, family life, and more.

With a "been there, done that" attitude, Sindy, a certified public accountant, draws on her extensive finance and accounting background to provide professional insights with a friendly touch.

Having navigated German life with her German husband and raising two kids there, Sindy brings a personal touch to her advice. Let this blog help fellow expats like you navigate the ins and outs of life in Germany!

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2 Replies to “Real Estate Investment Germany – 3 Ways To Invest”

  1. Sindy, thanks for your interesting article.
    I assume the main words are “For those who can afford it”!
    Additionally, you are lucky to be married to the proper man, right?:) By the way, did you buy your german property alone?
    Just working full-time alone in Germany at an ordinary position?
    Sorry, I don’t think that nowadays a single foreign student without any savings and after 35 age like me, who is working part-time ( monthly salary around 900 EUR net) could afford buy at lease 2 bedroom apartment in good location of Germany( yes, it’s pricy). Another thing, to get a mortgage in a German bank, the foreign students should earn enough salary per month, that means medium level work positions and permanent job contract if I do understand correctly.
    Hopefully, you will understand my concerns.

    1. Thanks for your comment! Yes, if you don’t have much cash, you will need to get a mortgage from a bank. To get this, you need to have a good salary. How good the salary is depends on how big is your loan, the interest rate, and your first installment. Surely, buying a property is not for everyone. It is better to save up the first installment portion before you proceed to buying (because you can get a much better interest rate). It would be difficult if you only have a part time job. That is why I also pointed out another possibility to invest in real estate fund instead, if one needs time to save up money. If you have any more questions, feel free to ask me again 🙂

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