Invest in Real Estate in Germany

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  • Buying a property as an investment is also a good option for your income

Buying Real Estate in Germany in 5 Steps

Investing in real estate (house or apartment) is a big and important decision, especially if you are a foreigner in Germany. As a foreigner or expat, you can buy a property in Germany. However, the procedure and documentation may be slightly different.

When buying a property, it is important to know what you can afford.


Total Price

The first step is to understand that the total price of the property does not consist only of the price of the property itself. Additional costs, such as taxes, agency fees, notary fees, and legal consulting fees, often add an additional 10% to 15% to the total price of the property. Therefore, it is recommended to have at least 10% of your own capital to cover these costs for investment property, and 20% for property for personal use.

It is advisable to apply at bank for preliminary approval before viewing the property. Having preliminary approval means that the lending institution temporarily agrees to finance you with the purchase of property. Having pre-approval convinces the seller of the house or apartment of your ability to execute the purchase, which can help you stand out when viewing properties. It is important to note that the bank from which you received preliminary approval does not have to be the one where you will eventually get a loan to buy the property.

To choose the optimal credit institution, you can contact different banks directly by yourself or with the help of an independent financial advisor, get and compare up to 300 different bank offers. Please note that if several direct credit applications are submitted to different banks shortly, this may negatively affect your creditworthiness, as they are recorded in your credit report (Schufa in Germany). In contrast, an independent financial adviser makes so-called condition requests (German Konditionenanfrage), which are not recorded in the credit report and thus do not affect your creditworthiness.

Choosing the Property

The second step is to choose a property. The Internet is a good source of information, and local newspapers can also have interesting offers. After choosing, you should schedule a property inspection and consult with an expert who will check the condition of the property.


If you do not finance the property 100% (investing in real estate in Germany by yourself), the third step is financing. It is possible for foreigners to get a mortgage loan from a bank in Germany, but they require a regular income, and a permanent residence permit if you are not a EU-citizen. It is also possible to get a loan with a limited residence permit, but in that case, not every bank wants to finance and often gives a higher interest rate due to higher risk. Your ability to meet these conditions, as well as your creditworthiness (German “Bonität”) determine how much capital you can borrow from bank.

To determine how much you can borrow, the bank has the right to inspect the property and determine the mortgage value of the property, i.e., the value it will definitely get at any time in the event of a forced property auction. Therefore, when financing a property, not only personal capital and creditworthiness are important, but the property itself and its value are also of key importance.

The higher the risk that the debtor will not be able to pay, the higher the interest rate and property financing becomes more expensive. As it usually involves high amounts, lenders adequately secure themselves by pledging the property and the accompanying plot. A maximum of 35 to 40 per cent of the monthly net income of the household should go for the repayment of the mortgage. This ensures that despite this financial burden, you can continue to settle your life costs worry-free.


The fourth step in the process of buying a property is a contract. In Germany, every property purchase must be confirmed by a notary. The notary will check all documents related to the purchase. In case the party participating in the sales contract does not speak German well enough, the notary will require an official translator to be engaged. It is usually up to you to take care of finding and hiring translator.

Property Registration

The fifth step is a property registration. Once the contract is signed, the notary will send a request for property registration in the land register.

Buying a property in Germany is a complex process.

Property as an Investment

It is necessary to know if you are buying a property as an investment, it is recommended to keep the property in ownership for at least ten years. This way, no capital gains tax is paid when selling the property. But, you can sell a property you used for personal use after two years without paying capital gains tax. So, investing in real estate in Germany for rent and yourself isn’t the same when you are selling it.

Buying property in Germany can be a complex process, but with the right information and preparations, it can also be very profitable. If you decide to take this step, be sure to consult with a lawyer and financial advisor in collaboration with a real estate expert who will guide you through the entire process.

Must-Read Info

When buying an apartment or house, please think carefully about insurance.

Financial advisors can help you when you decide to buy a property.

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Marija Šimić Avatar
Invest in Real Estate in Germany
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