How to Buy a House in Germany as a Foreigner!

Discover how to invest in German real estate with our guide, covering essential steps and insights for maximizing your investment returns 🤑.

Key Takeaways

  • separate decisions: emotional decisions for personal homes and financial decisions for investment properties to avoid mistakes
  • Define your property goals: choose between renovation projects with tax benefits or new constructions with fewer immediate costs.
  • Prioritize financial planning by clearing debts and saving money to achieve your homeownership or real estate investment goals.
  • Seek off-market properties for better deals and set realistic expectations, aiming for 80% satisfaction in your property search.
  • Choose a flexible mortgage that adapts to life’s changes, ensuring long-term stability and peace of mind.
  • Use advanced tools to accurately calculate real estate profitability, considering factors like mortgage, taxes, and maintenance costs.
  • Understand all documents and costs before finalizing your real estate purchase to ensure it aligns with long-term goals.
  • After buying, pay all fees, maintain cash reserves for unexpected costs, and consider scaling to more properties.


Germany’s real estate market has become a hotspot for both domestic and international buyers, thanks to its stable economy, low interest rates, and high quality of life. Over the past decade, the market has experienced significant growth, with rising property values and increasing demand for urban housing driven by population growth, low unemployment, and interest from foreign investors.

The German real estate sector is known for its secure investment environment, supported by a strong legal system and clear property laws. Government initiatives, such as tax breaks for eco-friendly buildings and subsidies for first-time homebuyers, further enhance its appeal.

This comprehensive guide will walk you through the process of investing in German real estate, from initial considerations to closing the deal. By understanding these insights, you’ll be well-prepared to navigate the German property market and make informed investment decisions.

Step 1: Home for Yourself or Investment Property

The first and most fundamental decision in the property buying process is determining whether you want to buy a home for yourself or an investment property to rent out. Many people try to keep both options open with the same property, which can be a significant mistake.

Buying a home for yourself is an emotional decision, often driven by the belief that renting is a waste of money. This notion is misleading, as explained in our rent versus buy article. Homebuyers may choose properties that a real estate investor would never consider because the decision is not based on financial logic. Conversely, purchasing an investment property should be purely a financial decision, free of emotional influence.

Mixing these two can lead to poor investment choices. Therefore, it’s crucial to keep these objectives separate: make an emotional decision for your home or a financial decision for your investment property. This clarity will guide your search and ensure you make sound, objective decisions.

Step 2: Define Exactly What You Are Looking For

Now that we understand your fundamental goals, it’s time to get specific. Are you looking for a relatively cheap house that needs significant renovations and has e.g. Erbbaurecht? These properties often require a substantial investment, such as €100,000 to update an old bathroom and other areas. Alternatively, a new construction might cost more upfront but requires fewer immediate upgrades.

For real estate investors, the decision is similar: opt for new construction with potential KFW subsidies and increased depreciation benefits, or choose a renovation property. High-income earners, especially those in the 42% tax bracket (earning above approx. €65,000 annually), often prefer renovation properties. When done correctly, buying an existing property with a renovation package allows you to deduct all renovation costs immediately from your taxes. This is the most tax-efficient real estate investment strategy available. If you want to explore this further, you can book a free meeting with us for personalized advice.

Step 3: Start Working on Your Finances

Now that we’ve mapped out your dream of becoming a future homeowner or real estate investor, it’s crucial to address your financial situation before continuing with our step-by-step guide. Ideally, this should be the first step, but people often delay financial planning until they find their “why.”

As discussed in our FIRE article, everyone knows the steps needed to achieve a goal in sports, business, or finance. However, few are willing to undertake challenging tasks in advance. It’s easy to get distracted by scrolling through TikTok for instant gratification, despite the long-term benefits of financial discipline.

With your goal clearly in mind, you can start by clearing loans and saving money. This proactive approach, though difficult initially, will set you on a solid path to achieving your real estate dreams. Our article provides detailed guidance on how much you need to save, helping you to take the first steps toward financial readiness.

If you wanna avoid taxes when investing in Germany, feel free to schedule a free meeting with us. We will help you finding the best solution for you.

Step 4: Choose the Right Property for You

Now that you know how much real estate you can afford, you can finally choose your property. The number one destination to find a property in Germany is Immoscout. While Immoscout is a valuable resource, we’ve developed a love-hate relationship with it over the years. we’ve used Immoscout ourselves to find a rental apartment, but would we use it to buy property? Probably not. To find a really good deal in the German real estate market, you need to understand that it often operates under the radar. The best deals come from a strong network of real estate experts, local newspapers, grocery store blackboards, and lawyers handling inheritance cases. None of this typically happens online.

At Perfinex, we offer access to such off-market properties on, providing you with opportunities for an after-tax return of over 20%. Try finding that on Immoscout or other public websites—good luck! One tip from us from years of working with first-time real estate buyers: free yourself from the expectation of finding a property that is 100% what you’re looking for. This is much harder for homeowners due to the emotional aspect, but it’s crucial to understand that a 100% perfect property doesn’t exist. Even if it did, it would likely be prohibitively expensive. Aim to meet at least 80% of your expectations to make the property search much easier.

Step 5: Secure the Right Mortgage for You

Now that you have a property in mind, it’s time to secure your mortgage. It’s essential to always prioritize property before mortgage, as banks need to know the specific property you intend to purchase. Pre-approval statements from banks promising a general mortgage amount are often worthless without a property in hand. To begin, read our article to understand how much real estate you can afford. Once you’ve identified your property, we can help you navigate the mortgage process with over 700 different banks in Germany.

A low interest rate is generally better than a high one but consider the long-term implications. Mortgages typically last 20 to 30 years. Many clients prefer an interest rate that might be slightly higher, by 0.1%, but offers flexibility to adjust as life changes. Think about how much your life has changed over the past 20 to 30 years. A flexible mortgage can adapt to these inevitable changes, providing stability and peace of mind over the long term. Making the right choice now will ensure that your mortgage fits your needs both today and in the future. If you need help getting the best mortgage feel free to book a meeting with us.

Step 6: Calculate the Profitability or "Savings"

Now that you know your mortgage costs and potential rental income—or the savings from not paying rent anymore—you can calculate the profitability of your real estate venture. This step is crucial for real estate investors, as their primary focus is financial return. For homeowners, the decision to buy is often emotional rather than financial, making this calculation less relevant.

Calculating profitability involves more than simple arithmetic. It requires a comprehensive analysis to account for all variables, including mortgage payments, rental income, property taxes, maintenance costs, and potential appreciation. Using a basic Excel sheet or an online calculator with limited input fields won’t provide an accurate picture.

Instead, we recommend using more sophisticated tools designed for this purpose. There are excellent, detailed calculators available, and we’ve also developed our own proprietary tool, which we explain in detail in our article. These tools consider all relevant factors and provide a more precise estimate of your investment’s profitability. By using these advanced calculators, you can make an informed decision and maximize your financial returns, ensuring that your real estate investment is both sound and profitable.

Step 7: Make the Actual Purchase

Step seven is the easiest part of the entire process: making the actual purchase. At this stage, you’ll sit down with a notary who will read all the purchasing documents to you. This can take an hour or two. Once you’ve understood everything, you will sign the documents—this momentous signature marks the completion of your property purchase journey.

However, it’s essential to know what you’re getting into. Buying real estate is a significant commitment that often spans decades. It’s crucial to ensure that this decision aligns with your long-term goals and financial situation. Double-check all details, understand the terms of your mortgage, and be aware of any additional costs, such as notary fees, property transfer taxes, and possible renovation expenses.

Moreover, be prepared for the responsibilities that come with property ownership. Whether it’s regular maintenance, property management, or dealing with tenants, owning real estate requires ongoing effort. By being fully informed and prepared, you can confidently take this step, knowing you’ve made a sound decision that will benefit you in the long run.

Remember, this process marks the beginning of your journey as a property owner, not the end. Be diligent, stay informed, and enjoy the benefits of your investment.

Step 8: After Sales & Scale to Next Property

In step eight, the journey isn’t quite over after you sign the purchase documents. First, you need to pay all associated bills. This includes notary fees, property transfer taxes, possibly real estate agent fees, and any remaining balance to the seller, depending on your down payment arrangement. It’s essential to ensure you have a solid cash reserve because unexpected costs can arise suddenly in real estate. Maintenance issues or necessary renovations might come up, and having funds readily available will save you from financial stress.

Once all bills are settled, it’s wise to keep monitoring your property’s financial health. Maintain your cash reserves and stay prepared for any unforeseen expenses. Real estate ownership is a long-term commitment, and being financially vigilant ensures you won’t face any unpleasant surprises.

If you find the entire process rewarding and are considering scaling to the next property, remember that the second time around is often smoother. The learning curve flattens, and with experience, you’ll find it easier to navigate the market, secure financing, and manage new properties. The initial purchase is the most challenging; subsequent investments benefit from the knowledge and expertise you’ve gained, making each new acquisition more straightforward and efficient.


In conclusion, investing in German real estate as a foreigner presents a lucrative opportunity with significant potential for financial growth and stability. Germany’s stable economy, favorable interest rates, and high quality of life make it an attractive destination for both residential buyers and rental investors. The recent growth in the German real estate market, driven by factors such as population expansion and low unemployment rates, further enhances its appeal to investors.

Moreover, Germany’s meticulously regulated real estate sector offers a secure environment for investment, backed by a robust legal system and transparent property laws. Government initiatives, such as tax incentives and subsidies, underscore the country’s commitment to fostering a vibrant real estate market.

Whether you’re a first-time buyer or an experienced investor, navigating the German real estate market can be daunting. However, with the right knowledge and guidance from experts such as PerFinEx, you can confidently navigate the complexities of property ownership and make informed decisions that will benefit you for years to come. So, take advantage of the opportunities available in the German real estate market and embark on your journey to financial prosperity.

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