SlideShare a Scribd company logo
1 of 3
Download to read offline
Berlin Real Estate
International real estate investors as well as German real estate investors are permanently facing the issue
of getting value for money from their real estate management.
Which is the right fee level that does not absorb high proportions of the rental income but enables the real
estate manager to provide the right service level required? How should the fee be calculated? What is the
going market rate? What is included and what is extra? This article will give an overview of the rates an
investor has to be prepared for and some existing fee models.
Every real estate investment needs a real estate management that is right for the real estate, right for the
investor and right for the budget available. The requirements regarding qualification and quality are not
discussed in this article and will be addressed in an upcoming publication. I will provide some examples
fee payment models and then provide a fee span for the going rate for each model and an evaluation from
the investor's viewpoint.
Fixed rate model
In the fixed rate model the real estate management fee is based on the number of units no matter whether
rented or not. There is no relation to performance of the real estate manager or even the performance of
the real estate. In other words you still pay the full fee, even if half the tenants move out. A variation on
the theme is a slightly reduced fee for vacant units. Quite often this model does not differentiate between
residential real estate units and commercial real estate like retail or office. It is only used when the
commercial real estate has a relatively small share of the total investment.
The going rate in Berlin is somewhere between 14.00 EUR and 20.00 EUR per unit per month plus VAT
(!) which is currently at 19%. The reduction for vacant units would be somewhere between 2.00 EUR and
4.00 EUR if it is offered.
The service provided by the real estate managers with this type of fee model seems to correlate with a
quite basic service level. It is a preferred model used by small one man band or so called kitchen table
managements working in a semi-professional manner.
Percentage model
At the first glance this seems straight forward and fair but it depends very much on the parameter the
percentage is applied to. Let me show you some variations on the fee model:
gross contract rent including heating and ancillary cost -- Soll-Bruttowarmmiete;
gross contract rent cold (excluding heating) -- Soll-Bruttokaltmiete;
gross actual rent including heating and ancillary cost -- Ist-Bruttowarmmeiete;
gross actual rent cold (excluding heating) -- Ist-Bruttokaltmiete;
net contract rent -- Soll-Nettomiete;
net actual rent -- Ist-Nettomiete.
There are many more iterations possible but these are the most common ones. Again there will be VAT at
the current rate of 19% added to the fee.
So if you are discussing real estate management fees and someone boasts that he is only paying 3.5%
management fee what does that tell you? Right! It tells you almost nothing, only that they are using a
percentage model.
Only the last option mentioned above really ties the fee a real estate manager receives to the rental income
he helps to raise as a performance measurement. It is also the only model providing an incentive to not
only sign nice rental contracts but to make sure the money is coming in every month. There are
constellations like a renovation period when this fee-model would not be fair and another approach could
be required that should be limited to the time of the exception.
Taking the just said into account it is a complex task to provide a guideline on going rates. There are
guideline tables available but most are influenced by real estate managers associations. Also the size of a
real estate or the fact that there is a portfolio with a single owner and one type of reporting will influence
the fee calculation.
For a single apartment building with 20 to 40 apartments you should be able to get a decent management
with simple reporting and bookkeeping for a rate of 4.5 to 5.5 % of the net actual rent. It will be some
negotiation but is achievable. If you need balance sheet bookkeeping because you have a legal entity like
a GmbH as owner it will be more to the upper end of the fee span.
A mix of fixed rate model for the residential units of a real estate and percentage model for the
commercial part are quite widely spread in Berlin real estate germany since many of the inner city
apartment blocks will have some retail units on the ground floor and some other commercial units on the
first floor while especially side wings and rear buildings will be predominantly residential.
Author: Cascadal Malik
Website : http://www.guthmann-estate.com/en/home.html
Ambition: Love to write articles and serve people

More Related Content

Viewers also liked (8)

E deanshandbook2013
E deanshandbook2013E deanshandbook2013
E deanshandbook2013
 
Needs Analysis for 2014.
Needs Analysis for 2014.Needs Analysis for 2014.
Needs Analysis for 2014.
 
2013 2014 timelinefor farnet and harbournet
2013   2014 timelinefor farnet and harbournet2013   2014 timelinefor farnet and harbournet
2013 2014 timelinefor farnet and harbournet
 
Eddie riesch interview
Eddie riesch interviewEddie riesch interview
Eddie riesch interview
 
Eddie riesch interview
Eddie riesch interviewEddie riesch interview
Eddie riesch interview
 
List of subjects being offered online in harbour net in 2014
List of subjects being offered online in harbour net in 2014List of subjects being offered online in harbour net in 2014
List of subjects being offered online in harbour net in 2014
 
Personality 2
Personality 2Personality 2
Personality 2
 
Personality 1
Personality 1Personality 1
Personality 1
 

Recently uploaded

Unique Spaces Envogue1 Mundhwa Pune E- Brochure .pdf
Unique Spaces Envogue1 Mundhwa Pune  E- Brochure .pdfUnique Spaces Envogue1 Mundhwa Pune  E- Brochure .pdf
Unique Spaces Envogue1 Mundhwa Pune E- Brochure .pdfManishSaxena95
 
K Raheja Amaltis Sion Mumbai | A Return To Better Living
K Raheja Amaltis Sion Mumbai | A Return To Better LivingK Raheja Amaltis Sion Mumbai | A Return To Better Living
K Raheja Amaltis Sion Mumbai | A Return To Better Livingaidasheikh47
 
Evolving Work Trends Require New-age Businesses to Design Thoughtful Workspac...
Evolving Work Trends Require New-age Businesses to Design Thoughtful Workspac...Evolving Work Trends Require New-age Businesses to Design Thoughtful Workspac...
Evolving Work Trends Require New-age Businesses to Design Thoughtful Workspac...GMRAerocityHyderabad
 
Commercial Lots for Sale - Pederson Crossing Blvd., DeForest,WI
Commercial Lots for Sale - Pederson Crossing Blvd., DeForest,WICommercial Lots for Sale - Pederson Crossing Blvd., DeForest,WI
Commercial Lots for Sale - Pederson Crossing Blvd., DeForest,WILee & Associates of Madison, WI
 
AIPL Joy District Sector 88, In Gurgaon.pdf
AIPL Joy District  Sector 88,  In Gurgaon.pdfAIPL Joy District  Sector 88,  In Gurgaon.pdf
AIPL Joy District Sector 88, In Gurgaon.pdfbhattrishabh270
 
Birla-Alokya Whitefield, Banglore-e-Brochure.pdf
Birla-Alokya Whitefield, Banglore-e-Brochure.pdfBirla-Alokya Whitefield, Banglore-e-Brochure.pdf
Birla-Alokya Whitefield, Banglore-e-Brochure.pdffaheemali990101
 
LCAR Unit 15 - Agency in Real Estate - 14th Edition Revised
LCAR Unit 15 - Agency in Real Estate - 14th Edition RevisedLCAR Unit 15 - Agency in Real Estate - 14th Edition Revised
LCAR Unit 15 - Agency in Real Estate - 14th Edition RevisedTom Blefko
 
2023 NAR Profile of Home Buyers and Sellers
2023 NAR Profile of Home Buyers and Sellers2023 NAR Profile of Home Buyers and Sellers
2023 NAR Profile of Home Buyers and SellersTom Blefko
 
2023 NAR Technology Survey - LCAR RE Practice
2023 NAR Technology Survey - LCAR RE Practice2023 NAR Technology Survey - LCAR RE Practice
2023 NAR Technology Survey - LCAR RE PracticeTom Blefko
 
Godrej Shettigere - Where Dreams Take Root in Luxurious Villa Plots of North ...
Godrej Shettigere - Where Dreams Take Root in Luxurious Villa Plots of North ...Godrej Shettigere - Where Dreams Take Root in Luxurious Villa Plots of North ...
Godrej Shettigere - Where Dreams Take Root in Luxurious Villa Plots of North ...JagadishKR1
 
Common House Flipping Mistakes and How to Avoid Them
Common House Flipping Mistakes and How to Avoid ThemCommon House Flipping Mistakes and How to Avoid Them
Common House Flipping Mistakes and How to Avoid ThemHampton Luzak
 
Anshul Uruli Kanchan Pune E-Brochure.pdf
Anshul Uruli Kanchan Pune  E-Brochure.pdfAnshul Uruli Kanchan Pune  E-Brochure.pdf
Anshul Uruli Kanchan Pune E-Brochure.pdfManishSaxena95
 
Kalpataru Jade Skyline Baner Pune | A New Way Of Living At An Affordable Price
Kalpataru Jade Skyline Baner Pune | A New Way Of Living At An Affordable PriceKalpataru Jade Skyline Baner Pune | A New Way Of Living At An Affordable Price
Kalpataru Jade Skyline Baner Pune | A New Way Of Living At An Affordable Priceaidasheikh47
 
SVN Live 3.25.24 Weekly Property Broadcast
SVN Live 3.25.24 Weekly Property BroadcastSVN Live 3.25.24 Weekly Property Broadcast
SVN Live 3.25.24 Weekly Property BroadcastSVN International Corp.
 
4S Sector 59 In Gurugram | Invest, Nest, Rest
4S Sector 59  In Gurugram | Invest, Nest, Rest4S Sector 59  In Gurugram | Invest, Nest, Rest
4S Sector 59 In Gurugram | Invest, Nest, Restbhattrishabh270
 
ALSTINE -300 (Aluminium Coating Chemical)
ALSTINE -300 (Aluminium Coating Chemical)ALSTINE -300 (Aluminium Coating Chemical)
ALSTINE -300 (Aluminium Coating Chemical)JAIBAN ORGANICS
 
Experience Tranquility: Serenity in Springfield, Idaho's Architectural Animat...
Experience Tranquility: Serenity in Springfield, Idaho's Architectural Animat...Experience Tranquility: Serenity in Springfield, Idaho's Architectural Animat...
Experience Tranquility: Serenity in Springfield, Idaho's Architectural Animat...Yantram Animation Studio Corporation
 
4 & 5 BHK Spacious Apartments for sale in Anamika High Point, Off SG Highway ...
4 & 5 BHK Spacious Apartments for sale in Anamika High Point, Off SG Highway ...4 & 5 BHK Spacious Apartments for sale in Anamika High Point, Off SG Highway ...
4 & 5 BHK Spacious Apartments for sale in Anamika High Point, Off SG Highway ...RE/MAX Realty Solutions
 
Anshul Kanvas Wagholi Pune Apartments Brochure.pdf
Anshul Kanvas Wagholi Pune Apartments Brochure.pdfAnshul Kanvas Wagholi Pune Apartments Brochure.pdf
Anshul Kanvas Wagholi Pune Apartments Brochure.pdfsabhyara24
 
REALTORS Land Institute 2023 Land Market Survey
REALTORS Land Institute 2023 Land Market SurveyREALTORS Land Institute 2023 Land Market Survey
REALTORS Land Institute 2023 Land Market SurveyREALTORS® Land Institute
 

Recently uploaded (20)

Unique Spaces Envogue1 Mundhwa Pune E- Brochure .pdf
Unique Spaces Envogue1 Mundhwa Pune  E- Brochure .pdfUnique Spaces Envogue1 Mundhwa Pune  E- Brochure .pdf
Unique Spaces Envogue1 Mundhwa Pune E- Brochure .pdf
 
K Raheja Amaltis Sion Mumbai | A Return To Better Living
K Raheja Amaltis Sion Mumbai | A Return To Better LivingK Raheja Amaltis Sion Mumbai | A Return To Better Living
K Raheja Amaltis Sion Mumbai | A Return To Better Living
 
Evolving Work Trends Require New-age Businesses to Design Thoughtful Workspac...
Evolving Work Trends Require New-age Businesses to Design Thoughtful Workspac...Evolving Work Trends Require New-age Businesses to Design Thoughtful Workspac...
Evolving Work Trends Require New-age Businesses to Design Thoughtful Workspac...
 
Commercial Lots for Sale - Pederson Crossing Blvd., DeForest,WI
Commercial Lots for Sale - Pederson Crossing Blvd., DeForest,WICommercial Lots for Sale - Pederson Crossing Blvd., DeForest,WI
Commercial Lots for Sale - Pederson Crossing Blvd., DeForest,WI
 
AIPL Joy District Sector 88, In Gurgaon.pdf
AIPL Joy District  Sector 88,  In Gurgaon.pdfAIPL Joy District  Sector 88,  In Gurgaon.pdf
AIPL Joy District Sector 88, In Gurgaon.pdf
 
Birla-Alokya Whitefield, Banglore-e-Brochure.pdf
Birla-Alokya Whitefield, Banglore-e-Brochure.pdfBirla-Alokya Whitefield, Banglore-e-Brochure.pdf
Birla-Alokya Whitefield, Banglore-e-Brochure.pdf
 
LCAR Unit 15 - Agency in Real Estate - 14th Edition Revised
LCAR Unit 15 - Agency in Real Estate - 14th Edition RevisedLCAR Unit 15 - Agency in Real Estate - 14th Edition Revised
LCAR Unit 15 - Agency in Real Estate - 14th Edition Revised
 
2023 NAR Profile of Home Buyers and Sellers
2023 NAR Profile of Home Buyers and Sellers2023 NAR Profile of Home Buyers and Sellers
2023 NAR Profile of Home Buyers and Sellers
 
2023 NAR Technology Survey - LCAR RE Practice
2023 NAR Technology Survey - LCAR RE Practice2023 NAR Technology Survey - LCAR RE Practice
2023 NAR Technology Survey - LCAR RE Practice
 
Godrej Shettigere - Where Dreams Take Root in Luxurious Villa Plots of North ...
Godrej Shettigere - Where Dreams Take Root in Luxurious Villa Plots of North ...Godrej Shettigere - Where Dreams Take Root in Luxurious Villa Plots of North ...
Godrej Shettigere - Where Dreams Take Root in Luxurious Villa Plots of North ...
 
Common House Flipping Mistakes and How to Avoid Them
Common House Flipping Mistakes and How to Avoid ThemCommon House Flipping Mistakes and How to Avoid Them
Common House Flipping Mistakes and How to Avoid Them
 
Anshul Uruli Kanchan Pune E-Brochure.pdf
Anshul Uruli Kanchan Pune  E-Brochure.pdfAnshul Uruli Kanchan Pune  E-Brochure.pdf
Anshul Uruli Kanchan Pune E-Brochure.pdf
 
Kalpataru Jade Skyline Baner Pune | A New Way Of Living At An Affordable Price
Kalpataru Jade Skyline Baner Pune | A New Way Of Living At An Affordable PriceKalpataru Jade Skyline Baner Pune | A New Way Of Living At An Affordable Price
Kalpataru Jade Skyline Baner Pune | A New Way Of Living At An Affordable Price
 
SVN Live 3.25.24 Weekly Property Broadcast
SVN Live 3.25.24 Weekly Property BroadcastSVN Live 3.25.24 Weekly Property Broadcast
SVN Live 3.25.24 Weekly Property Broadcast
 
4S Sector 59 In Gurugram | Invest, Nest, Rest
4S Sector 59  In Gurugram | Invest, Nest, Rest4S Sector 59  In Gurugram | Invest, Nest, Rest
4S Sector 59 In Gurugram | Invest, Nest, Rest
 
ALSTINE -300 (Aluminium Coating Chemical)
ALSTINE -300 (Aluminium Coating Chemical)ALSTINE -300 (Aluminium Coating Chemical)
ALSTINE -300 (Aluminium Coating Chemical)
 
Experience Tranquility: Serenity in Springfield, Idaho's Architectural Animat...
Experience Tranquility: Serenity in Springfield, Idaho's Architectural Animat...Experience Tranquility: Serenity in Springfield, Idaho's Architectural Animat...
Experience Tranquility: Serenity in Springfield, Idaho's Architectural Animat...
 
4 & 5 BHK Spacious Apartments for sale in Anamika High Point, Off SG Highway ...
4 & 5 BHK Spacious Apartments for sale in Anamika High Point, Off SG Highway ...4 & 5 BHK Spacious Apartments for sale in Anamika High Point, Off SG Highway ...
4 & 5 BHK Spacious Apartments for sale in Anamika High Point, Off SG Highway ...
 
Anshul Kanvas Wagholi Pune Apartments Brochure.pdf
Anshul Kanvas Wagholi Pune Apartments Brochure.pdfAnshul Kanvas Wagholi Pune Apartments Brochure.pdf
Anshul Kanvas Wagholi Pune Apartments Brochure.pdf
 
REALTORS Land Institute 2023 Land Market Survey
REALTORS Land Institute 2023 Land Market SurveyREALTORS Land Institute 2023 Land Market Survey
REALTORS Land Institute 2023 Land Market Survey
 

real estate germany

  • 1. Berlin Real Estate International real estate investors as well as German real estate investors are permanently facing the issue of getting value for money from their real estate management. Which is the right fee level that does not absorb high proportions of the rental income but enables the real estate manager to provide the right service level required? How should the fee be calculated? What is the going market rate? What is included and what is extra? This article will give an overview of the rates an investor has to be prepared for and some existing fee models. Every real estate investment needs a real estate management that is right for the real estate, right for the investor and right for the budget available. The requirements regarding qualification and quality are not discussed in this article and will be addressed in an upcoming publication. I will provide some examples fee payment models and then provide a fee span for the going rate for each model and an evaluation from the investor's viewpoint. Fixed rate model In the fixed rate model the real estate management fee is based on the number of units no matter whether rented or not. There is no relation to performance of the real estate manager or even the performance of the real estate. In other words you still pay the full fee, even if half the tenants move out. A variation on the theme is a slightly reduced fee for vacant units. Quite often this model does not differentiate between residential real estate units and commercial real estate like retail or office. It is only used when the commercial real estate has a relatively small share of the total investment. The going rate in Berlin is somewhere between 14.00 EUR and 20.00 EUR per unit per month plus VAT (!) which is currently at 19%. The reduction for vacant units would be somewhere between 2.00 EUR and 4.00 EUR if it is offered. The service provided by the real estate managers with this type of fee model seems to correlate with a quite basic service level. It is a preferred model used by small one man band or so called kitchen table managements working in a semi-professional manner. Percentage model
  • 2. At the first glance this seems straight forward and fair but it depends very much on the parameter the percentage is applied to. Let me show you some variations on the fee model: gross contract rent including heating and ancillary cost -- Soll-Bruttowarmmiete; gross contract rent cold (excluding heating) -- Soll-Bruttokaltmiete; gross actual rent including heating and ancillary cost -- Ist-Bruttowarmmeiete; gross actual rent cold (excluding heating) -- Ist-Bruttokaltmiete; net contract rent -- Soll-Nettomiete; net actual rent -- Ist-Nettomiete. There are many more iterations possible but these are the most common ones. Again there will be VAT at the current rate of 19% added to the fee. So if you are discussing real estate management fees and someone boasts that he is only paying 3.5% management fee what does that tell you? Right! It tells you almost nothing, only that they are using a percentage model. Only the last option mentioned above really ties the fee a real estate manager receives to the rental income he helps to raise as a performance measurement. It is also the only model providing an incentive to not only sign nice rental contracts but to make sure the money is coming in every month. There are constellations like a renovation period when this fee-model would not be fair and another approach could be required that should be limited to the time of the exception. Taking the just said into account it is a complex task to provide a guideline on going rates. There are guideline tables available but most are influenced by real estate managers associations. Also the size of a real estate or the fact that there is a portfolio with a single owner and one type of reporting will influence the fee calculation. For a single apartment building with 20 to 40 apartments you should be able to get a decent management with simple reporting and bookkeeping for a rate of 4.5 to 5.5 % of the net actual rent. It will be some negotiation but is achievable. If you need balance sheet bookkeeping because you have a legal entity like a GmbH as owner it will be more to the upper end of the fee span.
  • 3. A mix of fixed rate model for the residential units of a real estate and percentage model for the commercial part are quite widely spread in Berlin real estate germany since many of the inner city apartment blocks will have some retail units on the ground floor and some other commercial units on the first floor while especially side wings and rear buildings will be predominantly residential. Author: Cascadal Malik Website : http://www.guthmann-estate.com/en/home.html Ambition: Love to write articles and serve people