Alex Düsseldorf Fischer, a German real estate multimillionaire, on the requirements for buying your first property:
"The first thing you need is stable income, more than 2000 € (2200 $) to be precise. Having this income, you still can't buy big multi-family apartment buildings but you can buy your first condo. These 2000 € apply only to single people, while married people should calculate on 2500 € (2700 $), additionally 300 € (330 $) for every child you have.
For your bank it is very important that your income is sustainable. In other words, if you are working overtime and you are receiving additional payments for night working, your bank will subtract this from your income. In this case it would be wise for you or your wife to have a side job. The second most important factor is a positive balance sheet with your assets exceeding your liabilities. For most banks, a negative balance sheet is a complete showstopper. Balance sheets also include leased cars, financed cars and credit agreements with retail stores. As a consequence, make sure that you have a positive balance sheet.
Thirdly, you should ideally have 10 % to 12 % equity of the purchase price of the property requested. Banks always mention 20 % to 30 %, which is true if you do not have good connections. If you are well connected, you are able to manage the purchase with 10 % to 12 % equity on condition that you have a good income and a positive balance sheet. The fourth crucial point is knowing someone who is well connected to banks. You consequently need an excellent financial intermediary or a good friend with strong ties to banks.
These are the four main criteria in order to start off small as a real estate investor. In terms of your balance sheet, there are also measures to build up your creditworthiness. First of all, you should have two bank accounts at two different banks, one bank account for your income and a second bank account for your expenses. Banks rate your creditworthiness on the basis of your transactions. As a consequence, if you transfer money from your first bank account to your second bank account, two banks see your transactions and as a result, you can raise credits with two banks.
As far as good connections are concerned, bankers are accustomed to people only contacting them in problematic situations. Be different by informing bankers about positive news like, for example, rises in salary. Always provide bankers with good news."
"The first thing you need is stable income, more than 2000 € (2200 $) to be precise. Having this income, you still can't buy big multi-family apartment buildings but you can buy your first condo. These 2000 € apply only to single people, while married people should calculate on 2500 € (2700 $), additionally 300 € (330 $) for every child you have.
For your bank it is very important that your income is sustainable. In other words, if you are working overtime and you are receiving additional payments for night working, your bank will subtract this from your income. In this case it would be wise for you or your wife to have a side job. The second most important factor is a positive balance sheet with your assets exceeding your liabilities. For most banks, a negative balance sheet is a complete showstopper. Balance sheets also include leased cars, financed cars and credit agreements with retail stores. As a consequence, make sure that you have a positive balance sheet.
Thirdly, you should ideally have 10 % to 12 % equity of the purchase price of the property requested. Banks always mention 20 % to 30 %, which is true if you do not have good connections. If you are well connected, you are able to manage the purchase with 10 % to 12 % equity on condition that you have a good income and a positive balance sheet. The fourth crucial point is knowing someone who is well connected to banks. You consequently need an excellent financial intermediary or a good friend with strong ties to banks.
These are the four main criteria in order to start off small as a real estate investor. In terms of your balance sheet, there are also measures to build up your creditworthiness. First of all, you should have two bank accounts at two different banks, one bank account for your income and a second bank account for your expenses. Banks rate your creditworthiness on the basis of your transactions. As a consequence, if you transfer money from your first bank account to your second bank account, two banks see your transactions and as a result, you can raise credits with two banks.
As far as good connections are concerned, bankers are accustomed to people only contacting them in problematic situations. Be different by informing bankers about positive news like, for example, rises in salary. Always provide bankers with good news."
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