GmbH: foundation, advantages and disadvantages

In the following, you will find out everything you need to know about setting up a GmbH. How do you become a shareholder of a GmbH? What are the differences between incomplete and complete companies? What are the advantages? What are the disadvantages? How do I set up a company? What is a company? You will get an answer to all these questions and more – explained simply and quickly. Plus everything you need to know about taxes in Germany and real estate trading.

Learn everything important about it here! In addition, you will find all German types of companies and legal forms, as well as tips on how to start a company, including the special case of real estate GmbH, family foundation & Co.

If you’re considering setting up a limited company, the first thing you need to know about is the incorporation process: Who can form what exactly, when and to how many… what are the differences and similarities between the various forms of company law? It is equally important to know the advantages and disadvantages of a GmbH: From profit distribution to saving taxes – an overview of the seven most important founding criteria for you.

What are the founding criteria?

1. Number of shareholders
2. Management
3. Foundation
4. Company name
5. Funding
6. Liability
7. Profit distribution

Corporation GmbH: Management according to HGB

In the entrepreneurial world, there are many different forms of business you can choose from. They are roughly divided into two categories, namely sole proprietorship and companies, which in turn are divided into incomplete companies – these include dormant companies and BGB companies – and complete companies – partnerships, corporations and some more.

The limited liability company – in short: GmbH – is one of the so-called complete companies and, in contrast to incomplete companies, is not subject to the German Civil Code (BGB) but to the German Commercial Code (HGB). As a corporation, the GmbH has a more complex structure than other forms of corporate law, as it cannot be formed informally like a general partnership (OHG), but requires notarisation of the shareholders’ agreement.

Other typical corporations:

• Entrepreneurial company / UG (limited liability)
• Stock corporation (AG)
• European Company (Societas Europaea, abbreviated to SE)
• Partnership limited by shares (KGaA)

Legal form variant GmbH & Co KGaA – KGaA with general partner GmbH

Sometimes the GmbH also appears in combination with a partnership limited by shares (KGaA). For example, family businesses occasionally organise themselves as a Gesellschaft mit beschränkter Haftung & Compagnie Kommanditgesellschaft auf Aktien – in short: GmbH & Co KGaA. In this case, they form a stock corporation in the legal sense – however, the general partner as personally liable shareholder is not just any natural person, but specifically a limited liability company (GmbH). If the general partner is instead embodied by an AG, it is referred to as an AG & Co KGaA, and in the case of a Societas Europaea, as an SE & Co KGaA.

More about the individual hybrid forms:

• AG & Co KGaA – see stock corporation (AG)
• SE & Co KGaA – see Societas Europaea (SE)

Companies operating under the legal form variant of the GmbH & Co KGaA have only existed since the end of the 1990s, after open legal questions were clearly explained by a court ruling of the Federal Supreme Court (BGF). The licensing departments of some well-known football clubs have opted to set up a GmbH & Co KGaA, as have many other companies from a wide range of industries: Food, pharmaceuticals, clothing, publishing and digital media, to name but a few.

Examples of GmbH & Co KGaA companies:

• Asklepios Clinics GmbH & Co. KGaA
• Borussia Dortmund GmbH & Co. KGaA
• CoinIX GmbH & Co. KGaA
• Funke Media Group GmbH & Co. KGaA
• H&R GmbH & Co. KGaA
• Jack Wolfskin Ausrüstung für Draußen GmbH & Co. KGaA
• Merz Pharma GmbH & Co. KGaA
• Mineralbrunnen Überkingen-Teinach GmbH & Co. KGaA
• NorCom Information Technology GmbH & Co. KGaA
• Paragon GmbH & Co. KGaA
• Schwartauer Werke GmbH & Co. KGaA
• Wiley-VCH GmbH & Co. KGaA

CEWE Stiftung & Co. KGaA is a special case: In this company, the general partner is embodied by a foundation. In principle, the partnership limited by shares is possible in all conceivable combinations, as GUB Investment Trust KGaA points out as an example.

Continue reading here on the topic of setting up a family foundation:

• Establish a family foundation

Foundation & management: alone, as a partner or in a team

You want to found a GmbH and live your dream of independence in reality? No problem! Because for the foundation of a GmbH one natural – or legal – person is completely sufficient. If you want, you can be the sole founder of the company and thus automatically take over the management alone. Founder duos, on the other hand, usually share the management, whereas in a multi-person GmbH all shareholders can exercise their co-management rights. Optionally, the position of managing director can also be outsourced and filled externally. In this case, one speaks of a commissioned external managing director.

Whoever ultimately holds the power of management… There is an obligation towards the other shareholders to provide information on the affairs of the GmbH and to submit the books and documents to them for inspection upon request.

Tip: A limited liability company is an excellent way to set up a family business. Due to the flexible possibilities to adapt the share capital and the business shares to the financial framework of all family members and to manage the business across generations, parents, children and grandchildren can jointly participate in the corporation.

Entry in the commercial register: The most important applications for GmbH founders

The internal relationship determines the beginning of the company as the date contractually agreed between the partners. In the external relationship, however, the formation of the GmbH is dated on the first action on behalf of the company, i.e. at the latest with the binding entry in the commercial register. Registration costs you on average around 200 to 300 euros and is usually carried out by a notary.

Since you are registered in the commercial register as a GmbH shareholder, you can – just like a OHG shareholder – officially trade under a company name. This means that your company has a company name, i.e. an official name, which you can freely design together with the other shareholders. It doesn’t matter whether it is a personal company, a real company, a fancy company or a mixed company… As long as the name is in the sense of the prohibition of misleading and the name is “Gesellschaft…. mbH” or carries the suffix “GmbH”, almost anything is allowed.

Tax ID, Trade Licensing Office, Articles of Association & Notary Public

You will first receive a tax identification number – tax ID for short – from your local tax office, which serves as a basic requirement for all other formalities and applications. The registration of the GmbH as a company or commercial enterprise is carried out by the Trade Licensing Office for a processing fee of approximately 10 to 65 euros.

Moreover, a so-called obligation to make additional contributions can also be agreed in the shareholders’ agreement. This is an optional limited or unlimited obligation of the partners to make further limited or unlimited additional contributions on top of the existing contributions. Such a requirement is usually linked to certain conditions or the occurrence of certain situations, such as the pending redevelopment of a property. According to the Law on Limited Liability Companies (GmbHG), such agreed additional contributions must be in proportion to the GmbH shares of the individual shareholders. However, by means of an abandonment – i.e. the relinquishment of one’s own shares in the company – it is possible to free oneself from an existing obligation to make additional contributions.

Excerpt from the law – § 26 GmbHG:

(1) The memorandum and articles of association may stipulate that the shareholders may decide to demand additional payments (additional contributions) over and above the nominal amounts of the shares.

(2) The payment of additional contributions shall be made in proportion to the shares held.

(3) The obligation to make additional contributions may be limited in the memorandum and articles of association to a certain amount to be determined in proportion to the shares held.

25,000 Euro share capital, half for cash foundation

A prerequisite for registration in the commercial register is the payment of the required share capital of at least EUR 25,000 into the business account. At least half of the specified amount must be paid into the business account when the GmbH is founded in cash. For the residual value it is irrelevant whether it is a cash contribution or a contribution in kind such as real estate, machinery, real estate liens, etc., the main thing is that the capital contribution is recognisably noted in the shareholders’ agreement according to its type.

Possible contributions in kind:

• Real Estate
• Machines
• Car
• Office & business equipment
• Copyright
• Real estate liens
• Trademark rights
• Patents
• Receivables recoverable

In general, share capital is defined as the sum of all capital contributions and is given the term “subscribed capital” in the balance sheet. The exact value is determined by the shareholders in the shareholders’ agreement and can vary for the individual shareholders. The prescribed minimum amount is set above 100 euros, whereby all higher-value contributions must be a multiple of 50. In addition, a quarter must be paid in as a minimum on each capital contribution until summa sumarum 12,500 euros is reached.

Profits, Losses & Liability

In contrast to partnerships such as the general partnership (OHG) and the limited partnership (KG), a profit made by a limited liability company is not necessarily paid out directly. Rather, the partners decide jointly how to proceed with the profit: In the case of a profit distribution, the calculation of the profit shares is carried out in proportion to the shares of the individual partners. In the case of a reserve formation, on the other hand, the profit is retained and contributes to the increase of the equity capital.

The limitation of liability is a decisive factor for the name of a GmbH and often a criterion for choosing this and no other legal form of a company. As a corporation, the GmbH is a legal entity under private law. This has the consequence that the individual partners are limited in their liability to the corporate assets and do not have to participate in the losses with their private assets in the case of corporate debts. Before registration in the commercial register, however, it is still a pre-GmbH and thus all shareholders involved in the pre-foundation are liable without limitation, directly and jointly and severally.

However, a separate liability applies to the managing director: In case of doubt, he is the only one who must also be liable with his private assets.

GmbH Bodies: Managing Director, Supervisory Board & General Meeting of Shareholders

A limited liability company consists of several organs. These bodies are divided into:

1. The directors,
2. The Supervisory Board and
3. The shareholders’ meeting.

The managing directors deal with the day-to-day business and other matters of the company and represent their company externally in accordance with the GmbHG. The supervisory board is required by law above a certain number of employees and acts as the company’s supervisory body by appointing and advising the management, but also by monitoring and, in case of doubt, dismissing it. Alternatively, its establishment can also be determined within the framework of the articles of association. The shareholders’ meeting acts as the decision-making body of the GmbH.

If you want to know more about the individual bodies of a limited company, read on here:

• Corporate bodies of a limited liability company

Advantages: Reputation, credit rating, security, flexibility & Co.

After presenting the typical characteristics of a limited liability company, you have certainly already recognised the advantages that this legal form offers you: The high start-up capital also makes the GmbH a reputable legal form, which can be an advantage especially in matters of company financing. Financial institutions are therefore often willing to issue good loans and business partners and customers gain more security due to the good credit rating.

Furthermore, contributions in kind are also accepted, so that it is not solely a matter of the cash assets of a shareholder. The financial risk, on the other hand, remains low, since the partners are not held liable with their private assets. Taxation with corporation tax is also more favourable in many cases than having to handle everything – as is the case with partnerships – via income tax.

Flexible GmbH models further allow to establish a GmbH both alone and among partners as well as in a team – the management can be arranged internally and externally for one or more persons. Shares in the GmbH can be bought and sold by both individuals and legal entities. This makes the change of shareholders much easier.

• Respected legal form
• High credit rating
• More security for banks, business partners & customers
• Contributions in kind are permissible
• Low financial risk due to limitation of liability
• More favourable taxation with corporation tax
• High flexibility in structure & management
• Legal entities are accepted as shareholders
• Simple change of shareholders

Disadvantages: Trade tax liability, 25.000 Euro share capital & liability

The disadvantages, which the establishment of a GmbH can bring with itself, are likewise fast localized: On the one hand, the high share capital of at least 25,000 euros is an obvious problem for many start-ups. Also the social adhesion measures itself accordingly to at least 25,000 euro. The foundation may not take place informally, but is subject to extensive formalities and specifications. In case of doubt, the managing director is also liable with his private assets. Banks can easily leverage the exemption from liability if, despite high creditworthiness, they aim for a directly enforceable guarantee from the shareholders. Last but not least, the GmbH is subject to trade tax and, depending on the purpose of the company and how it is handled, has to pay further taxes.

• High share capital required
• Liability based on share capital
• No informal incorporation
• Possible private liability for managing directors
• Banks may require directly enforceable guarantees
• High trade tax levies

Evaluation: Invest, Risk & Hedge

After comparing the advantages and disadvantages, it becomes clear: At first glance, the formation process seems complex and much more extensive than, for example, with a civil law partnership (GbR)… Basically, however, the process is not overly difficult, especially if it is a one-person company. A limited liability company makes particular sense if business projects are planned that are exposed to a high level of risk, or if the managing director and shareholder are one and the same person. Business founders with monetary reserves and real estate investors are given many options for structuring and managing their dreams and entrepreneurial goals through a GmbH.

Especially for families, the GmbH is often a suitable legal form, since each family member can contribute to the company according to his or her qualifications, possibilities and reliability, and changes can easily be made across generations.

GmbH models with and without shareholders

As a sole shareholder, you are your own boss: you are founder, shareholder and managing director at the same time and can set up your GmbH entirely according to your wishes. If the entrepreneurial responsibility is too high for you or if you have plans for whose implementation you are dependent on several people, you can bring in as many co-founders as you wish or add them to the GmbH later. You can also divide the management authority among one or more persons. The multi-person GmbH is therefore the most common GmbH model.

By appointing new shareholders or leaving existing shareholders, the limited company model you choose can easily change. Whether it’s a one-person company, a two-person limited liability company or even a company that operates without any shareholders at all…. In each case, there are specifics you should be aware of as they deviate from the norm of the traditional limited liability company. In the following, you will learn the most important aspects for solo founders, founding duos and team founders in order to be able to make an informed decision regarding the form of company that is best suited to you and your plans before you start your own business.

• Two-person limited liability company
• One-person limited liability company
• No-Person-GmbH

Tip: For GmbH formations with a maximum of three shareholders, a sample protocol is available that can significantly simplify the formation process for you.

Immobilien GmbH: Management, Leasing, Marketing & Co.

You think the idea of a limited liability company is not bad at all and are now wondering how you can combine your capital company with the real estate business? A real estate company is a company that serves the financing, development, realization, leasing or marketing of real estate – starting with a single property up to a real estate portfolio in the three- or multi-digit range. The management of real estate property or third-party real estate on behalf of third parties can also be handled by a real estate company.

Small tip: When acquiring and/or managing real estate, make sure that all details are clearly stated in the partnership agreement.

Vermögensverwaltende GmbH – Variant 1: Advantages of the Immobilien GmbH

This variant of the asset-managing GmbH is often referred to as a leasing company due to the advantages associated with it. It impresses with several advantages, first and foremost impressive tax advantages: Instead of having to pay tax on the rental property privately at high rates (income tax, solidarity surcharge, church tax), a corporation placed in front of the property can save taxes to a considerable extent. The rental income is counted as business income and is therefore taxed at the corporate tax rate, which significantly reduces the overall tax burden.

Furthermore, the renting and leasing of private real estate property is generally not considered a commercial activity, which would have to be regarded as taxable. The pure asset management takes place outside the general economic traffic, which is why the trade tax is completely omitted upon application to the competent tax office. In order not to risk a later taxation with the full trade tax rate, you should outsource all commercial administrative as well as manual tasks as a precaution.

Attention: In the case of a real estate GmbH, the usual distribution of profits is not provided for, as the shareholders must charge the final withholding tax on their earnings in the event of a distribution of profits. Instead, any savings resulting from the tax benefits will be used to repay debts or as an asset investment.

Asset-managing GmbH – Variant 2: Advantages of the holding company

This variant of the asset-managing GmbH is – in contrast to the Immobilien GmbH presented above – a commercial real estate company. Here, direct participations are combined in a hierarchically superior parent company – called a holding company. In addition to holdings in corporations such as the GmbH and the AG, other corporate legal forms can also be incorporated. One of the purposes of a holding company is to save taxes: By combining the various company holdings, no capital gains tax is levied in the event of a profit distribution.

Taxes for GmbH shareholders: KSt, GewSt, USt & Co.

As a GmbH shareholder, you need to know about some types of tax, because with the establishment of your company you receive income from your business and must of course also pay tax on this. In accordance with tax law, sales tax must therefore naturally be paid, insofar as the GmbH does not only carry out tax-free sales. The following applies to all corporations: They are subject to corporate income tax. An exemption from taxation is possible under certain circumstances, for example if the GmbH meets the criteria for non-profit status. The payment of trade tax is also obligatory for a GmbH, even if all founding members were freelancers, because by virtue of its legal form it is always regarded as a commercial enterprise.

• Corporate income tax (KSt)
• Trade tax (GewSt)
• Value added tax (VAT)
• Income tax (ESt)
• Capital gains tax (KapESt)

Other taxes: LSt for employees, GrESt & GrSt

As an employer, the GmbH is of course also responsible for the payment of income tax for all persons in an employment relationship with it. Under tax law, the managing director is considered a dependent employee. When a property is purchased, a one-time land transfer tax is due. It is always demanded if the company not only rents real estate, but acquires it by purchase. For all real estate owned by the GmbH, the real estate tax is then also applied.

• Wage tax (LSt)
• Real estate transfer tax (GrESt)
• Property tax (GrSt)

You can find out what taxes you can expect with a real estate corporation here:

• Save taxes on real estate

Conclusion: Limited liability company – For whom is it worthwhile?

With versatile GmbH models you can start your dream of your own company in any constellation and have the possibility to react flexibly to changes in the number of shareholders. Whether you prefer to work alone or in a team – a GmbH offers solo founders, team founders and entrepreneurial partnerships a suitable legal form to handle even risky transactions skillfully and without private liability. The easy introduction of new shareholders and changeable management allow for a cross-generational management of the corporation and can also organize a secure succession.

In real estate terms, asset-managing real estate companies are particularly worthwhile for start-ups and investors with high private assets who wish to manage, rent out and, if necessary, sell their own and/or third-party real estate portfolios on a non-commercial (Immobilien GmbH) or commercial (Holding) basis. The GmbH is also a good choice for long-term transfers of real estate property to children and grandchildren. Furthermore, the capital contributed to the GmbH is protected even if private financial bottlenecks arise.

Comparison: Sole proprietorship, one-man GmbH, small AG or entrepreneurial company?

If you plan to set up your business on your own, you can choose between different legal forms of business: On the one hand, there is the classic sole proprietorship, in which you act as a freelancer or registered trader, or set up a small business. Alternatively, you can choose between the one-man limited liability company and the entrepreneurial company – often referred to as a “mini-GmbH” – or set up a small public limited company.

Sole proprietorship & one-person GmbH

Basically, there is not much difference between the two legal forms of a sole proprietorship and a single-member company, because in both cases you are the sole shareholder with sole power of management and sole power of representation. However, the decisive difference arises in the form of the liability issue: As a registered businessman (e. Kfm.) or registered businesswoman (e. Kff.) you are liable without limitation, directly and jointly and severally – as the sole shareholder of a one-person GmbH, on the other hand, you are liable exclusively for the business up to the amount of the capital contribution you have made.

Are you a sole proprietor yourself and no longer want to bear the enormous liability risk? Then you should think about converting your sole proprietorship into a one-person limited liability company. The change of form is easily accomplished, but can make a huge difference in case of losses! In order to avoid personal liability, as part of the registered traders (e. K.) you only need a notarial certificate confirming a value of at least 25,000 euros for your business and submit this to the commercial register together with the opening balance sheet. The sole proprietorship is practically brought into the GmbH as a contribution in kind.

Entrepreneurial company & small public limited company

Alternatively, you can consider setting up an entrepreneurial company (UG). Often referred to as a “small GmbH” or “mini-GmbH”, this legal form of company is a sub-form of the conventional limited liability company, but unlike the “normal” GmbH, it only requires a single euro as share capital. It is therefore particularly attractive for solo founders who do not have 25,500 euros in their bank account. Without the share capital of a GmbH, however, your image with the banks could be lower and your chances of getting a good loan could decrease.

The so-called “small AG” is primarily intended for individual shareholders who wish to keep their public limited company within a small group of people. Apart from the individual shareholder, who also equally assumes the role of the management board, only three other persons are required to be appointed as supervisory board members. However, the formation of a public limited company, regardless of its size, is very complex and more cost-intensive than the other common forms of corporate law. Therefore, a one-person limited liability company or an entrepreneurial company may be more suitable if you intend to found your company on your own. Alternatively, you may also consider setting up a sole proprietorship.

You can find out more about the different legal forms for solo founders here:

• Sole proprietorship (EU)
• Entrepreneurial company / UG (limited liability)
• Small public limited company – see AG

Reading tip: Legal forms & real estate GmbH

1. Legal forms: List
2. Real estate GmbH / Asset management GmbH

Legal forms: List

Legal forms – What types of company are there? If you want to start your first company, then choosing the ideal legal form is one of the first steps in the process of setting up a company. Whether it’s a special real estate company or a start-up, I’ve summarized all the types of companies in Germany for you here.

• Legal forms: List

Company types in detail:

• Sole proprietorship
• Registered businessman / registered businesswoman (e. K.)
• Civil law partnership (GbR)
• General partnership (OHG)
• Limited partnership (KG)
• Entrepreneurial company (UG)
• Real estate GmbH / Asset management GmbH
• Stock corporation (AG)
• Real estate stock corporation (REIT-AG)
• Societas Europaea (SE)
• Foundation / Family Foundation

Real estate GmbH / Asset management GmbH

In this article you will learn the basics about real estate companies. Briefly explained: A real estate company is a company that pursues the purpose of renting, developing, financing, realizing and/or marketing. It doesn’t matter if it’s one property or multiple properties. The management of residential and commercial real estate – in its own interest or as a service offered to third parties – is also a popular focus for real estate companies and asset management GmbHs. Find out more about the main advantages and disadvantages of buying real estate and the expected costs.

• Real estate company

Holiday home and apartment: additional costs, location & taxes

Modern property in the countryside or in holiday areas are often on offer. The perfect properties for those who want a quiet retreat. However, such an investment is by no means cheap and finding the right property is not easy. In addition, you should consider a few things before you decide to buy.

Prices of €200,000 to €300,000 are quite common for smaller properties of 40 to 50 square metres of living space.

If you want a luxury property, you have to pay a lot more. Depending on the area, prices naturally differ and properties vary. Whether abroad or at home, before you acquire a second residence, you should clarify important points.

Investing in real estate: France

Living and working abroad is a very memorable experience, professionally, personally, culturally and of course financially. In this free guide, you’ll get investment tips for all the major cities in Europe, America and Asia, from New York to London to Paris.

• Investing abroad: Real estate (external)

Incidental purchase costs: What do you have to pay?

When buying a holiday home, you have to expect similar ancillary costs as with a normal house purchase. Depending on the property, renovation costs may be added to the purchase price first and foremost, as most properties need a little new paint, possibly a new kitchen or bathroom.

Looking for inspiration? In the FIV Magazine you will find tips for living room, kitchen, bathroom & Co (external): Furnishing.

The furnishing of the house is also added to the new construction. Your holiday home also needs to be furnished, because you want to feel comfortable in your place to relax. Apart from these additional costs, there are also costs for the interest.

Financing a holiday home with a real estate loan

If you take out a loan to finance your holiday home, you will usually only get one with high interest rates for such a project. So compare different lenders and check where you are offered the best interest rates. Of course, you will also have to pay, for example, the land transfer tax or the notary.

Buying property abroad in Europe

• New York, LA, London & Co: Luxury Real Estate
• Foreign property France
• Foreign property Spain
• Foreign property Mallorca

Location and property prices

Depending on the location in which you are looking for a house, the real estate prices are cheaper or more expensive. So think carefully in advance about how much space you need in a holiday home and look explicitly only for houses that really meet your size requirements.

Houses that are too big will only make more work for you and drive up the price unnecessarily. Also consider where your holiday home should be located, because the location can also make a lot of difference to the price.

Example: Romantic holiday home by the sea, near Hamburg.

Winter garden and idyllic summer nights:

Taxes: Tourist tax holiday residence (second home tax)

Depending on the municipality in which your holiday home is located, the municipality may charge a so-called second home tax, which is usually around 10 percent of the annual rent.

Secondary residence tax approx. 10 % of the annual cold rent

Allotments with gazebo?

However, owners of allotment gardens with a gazebo are not affected by this regulation as long as the gazebo does not exceed a size of 24 square metres and the premises are not used for permanent living.

Real estate in holiday areas

For real estate in holiday areas, resort taxes are also due. Again, there is an exception for allotment gardens, these spa taxes are only required if a water and electricity connection is available and thus makes the gazebo a property.

Lease, right of termination and technical equipment

Who shies away from these costs, however, there are still other possibilities to get a holiday home. A property could be leased, but there is the risk that the homeowner insists on his right of termination and you can be terminated. The dream of a holiday home is then quickly over.

Of course, you can also build a holiday home yourself. Here, the costs for the land and a building permit are added. In addition, there is a building ban in some holiday areas, for example in flood protection areas. In addition, it must be noted that possible costs for water and electricity connections are added, which must be laid to the construction site.

Real estate transfer tax on the purchase of real estate

When you buy a holiday home, or more precisely a plot of land or part of a plot of land, you pay land transfer tax. The amount of the tax is determined by the individual federal states. As a rule, the real estate transfer tax ranges between 3.5 percent and 6.5 percent. You can find the current real estate transfer tax rate here, with example purchase prices of 1 – 5 million euros:

• Real estate transfer tax table

Holiday home abroad: special regulations & legal situation

Buying a holiday home abroad can quickly turn out to be more difficult than you think and you should be clear about the legal situation of the country before you make a decision. Abroad, some completely different rules than in Germany and blanket guidelines are not possible, because it varies from country to country. Depending on the situation of the country, there are different regulations that you must observe.

Mallorca: #1 for holiday homes in Germany

Exclusive luxury property for sale in Mallorca:

Small, green oasis with fireplace in the backyard.

Purchase contract: Written form & notary are obligatory

Probably the most important thing is that you never buy a property without a written and notarized purchase contract. With a purchase contract you are always on the right side and protected. In Spain, a verbal commitment is usually sufficient to achieve legally binding effects. In Turkey the transfer of ownership on a piece of paper is sufficient. And although other regulations are often customary abroad, you should still insist on the written contract.

Dedication: What does that mean?

In some countries, the use of the property as a holiday home requires a specific dedication. Check before you buy whether such a regulation has been included in the contract, so that you can use the property properly later. You should also check whether you, as a foreigner, can expect to own real estate in the desired country / area at all or whether you are not entitled to do so. Here, too, there are different regulations depending on the country.

Regulations on coastal protection, inheritance law and planning permission

When buying abroad, you should also pay attention to existing regulations on coastal protection, inheritance law or rights of way.

Many houses or apartment complexes have been built without planning permission or in coastal protection zones and can therefore be demolished at any time by a government order. Properties are also often of dubious construction quality or built illegally, which puts your protection at risk.

So when buying a property, ask to see all the necessary documents and insist on planning permission. A cadastre is also important to delineate what the property includes. In some countries, only rough indications have been made here and there is no legal certainty for you.

Europe: France, Italy, Turkey & Co.

Holiday home in Istanbul:

Exclusive furnishings in Kartepe.

Relaxing above the rooftops of the city.

Rent out a second home as a holiday home: Tips & Tricks

Many people buy a holiday home under the assumption that they will also rent it out if the property is not being used themselves. Not a bad idea, because a little extra income is actually always quite good. However, if you want to rent out your property, there are a few things you need to consider.

Good location generates interest

For example, location is very important.

Holidaymakers want central holiday apartments.

For example, close to the beach or just downtown. They usually want to see the place and not just stay in the apartment all day. An attractive location is therefore the key to successfuly rent out your property and also to be able to charge a good price for it. The better the location, the higher the price you can charge.

Attractive equipment

In addition, your property must have some equipment to be attractive for guests. Sufficient bedrooms, possibly a sofa bed to create more sleeping possibilities, a good kitchen with modern appliances and entertainment program, such as TV or Wi-Fi.

Your property should leave nothing to be desired and offer your guests everything they need on holiday. Bed linen, towels and a well-equipped kitchen are just as important as tips for great excursions and restaurants nearby and cleanliness on arrival. Special features such as a rooftop terrace or a pool will add tremendous value to your property.

Buy and rent

The real estate market is booming, everyone wants to get a piece of the pie. They also know that if you’re smart about it, you can get really rich with real estate investing. But how do you get started? How do you get there, buy your first apartment and rent it out? You can find out here, from real estate investor Alex Fischer:

• Buy and rent (external)

Viewing appointment: convince seller / broker

You have been looking for a new property for a long time. Berlin, Hamburg, Cologne or Munich, a house for the family because the apartment is simply too small for everyone, a new apartment because you want to move in with your partner or simply a move to a new city. When looking for an apartment, you always come to one point – the viewing appointment. For many an exciting appointment, because you can now see the property in real life, which you have only seen on pictures until then, but for others also a stressful appointment, where you meet other co-interested parties, the landlord or the agent.

• Do you need to bring documentation?
• What is your best course of action?
• How do you make the perfect first impression to actually get the property of your dreams?

In order to avoid making mistakes that in retrospect will be your undoing, there are a few things to keep in mind. From the important first impression at the viewing appointment, to the good organization of all documents. So that you don’t forget anything and can soon move into your dream property, here are the 11 most important tips.

• Viewing appointment

Buying a weekend home: Get out of the daily grind

Buying a weekend house – A weekend house can be used in a very diverse way. You can spend your free time and holidays there. In addition, it is possible to rent out the weekend house and thus generate additional income. Weekend houses are quite often on offer in Hesse and Rhineland-Palatinate. There are many beautiful regions in the federal states that are very popular with the people who live there.

Some weekend homes are located in popular holiday regions. Others are considered more of an insider tip and are hidden away on the edge of the mountains, near the Main River or in the middle of nature. If you want to buy a weekend house, you can choose whether you prefer nature, water or mountains. Decide on a location that you individually prefer. Weekend homes are not designed for residential purposes. They are for recreational purposes. For this reason, it is important that you feel comfortable in the area. If you are planning a rental, you should find out which locations are particularly popular. We will be happy to assist you in this and offer you weekend houses that exactly meet your individual requirements.

• Buy weekend house

Buy a farm: Country house in the green

Buying a farm – The decision to buy a farm is made by families as well as couples or singles in middle or older age, who want to change and appreciate the individual form of living in the midst of nature. We offer you farms in attractive rural locations.

Buying your own farm as a permanent residence or as a weekend home. You need to decide if you want to buy a property in need of renovation. These farms can often be purchased at a very reasonable price. Alternatively, there are properties that have already been refurbished by their previous owner and are in a modern and very good condition. These farms are usually ready for immediate occupation. However, you will have to expect a higher purchase price. This is especially true if the farm is in a very central location with a good infrastructure.

• Buy farm

Buying property abroad: Tips

• New York, LA, London & Co: Luxury Real Estate
• Real estate agent
• Foreign property France
• Foreign property Italy
• Foreign property Spain
• Foreign property Mallorca
• Luxury Real Estate Mallorca
• Off market – especially in hot real estate markets

Buying real estate: Tips from the investor (external)

Buying real estate but also investing in real estate requires a lot of knowledge and expertise. The best way to learn is to draw from the experience of professionals. Therefore, in conclusion, a recommendation for real estate beginners.

Newcomer Tips + Germany Comparison: Buying Real Estate

External guide (link opens in new tab):

• First property purchase
• Buying real estate: What to look out for?
• Buying mistakes
• Save taxes with real estate

Comparison of cities: Purchase prices in Germany (external)

In these individual guides to the major German cities are the important districts for real estate buyers, information on the infrastructure, as well as prerequisites for the purchase such as income, creditworthiness (credit rating), banks and equity. But much more important: mistakes, risks, rental yields and more. What is decisive for the purchase price and the valuation? Everything about location, building fabric, renovations, equipment and all that, free of charge.

External guides (link opens in new tab)

City / Purchase Price Current:

• Munich ~ 8,993 Euro / m²
• Frankfurt ~ 6,701 Euro / m²
• Stuttgart ~ 6,324 Euro / m²
• Berlin ~ 5,578 Euro / m²
• Hamburg ~ 5,507 Euro / m²
• Düsseldorf / Cologne ~ 5,470 Euro / m²