Ownings Vs Renting

I keep continuing to build my database of finds just in case I do happen to open a design shop in Hannover. I'm still thinking about it. I've saved money for shop ownership. Thing is, I don't have enough money to buy a flat AND invest in a shop. So I'm thinking of either one or the other.

dreamy

Things I'd stock if I did decide on opening one... Bailey Doesn't Bark and Studio Violet.
And frankly, I'm terrified to purchase a flat -- I've never owned anything expensive really outside of my current car and my husband is super practical and doesn't see such a benefit in owning a home because so many of his friends rent. In the city, at least where he is from (Hannover), it's very normal to rent apartments and homes vs. buying them. Although his family once owned several Jugenstil villas in the List, they were located right on Lister Platz and I still visit them and drop by the courtyard to see his grandmother's former shop, now vacant and overgrown with weeds. I wish these homes were still in the family today, I would no doubt occupy one of them and revitalize her shop into my own. But dreams don't always come true now, do they? So I'm thinking... should I rent an apartment and start a small shop and invest my money in that way, or should I buy an apartment and put the shop plans on hold? Anyone in Hannover or Germany in general know much about property taxes and owning a condo there? Advice? :)

Comments

susan said…
It may sound trite, but it's true. The answer will reveal itself to you in the right time. It has to do with roots...do you want them...long term, or not? Only you know the answer. Maybe not at this particular moment, but you will! As far as the shop, maybe if all expenses are added up for a year, it will show how much income is needed to meet those expenses and then go beyond.

These are not easy questions to answer. Maybe renting to start might be best, on a month by month basis to ease into these decisions.
Juliette said…
property taxes are no small beans if they mirror car taxes, which I'm sure they do in the land of 19% sales tax. My car tax in the US was $24/yr for a 10yr VW, here for a similar VW (when we first arrived) it was $230. I was pissed. Again, property could be different, but in a land where 60% of the population rents, I have to guess tax is one good reason not to buy.

Also - renting is a German thing. When looking at apts some landlords were like, "our last tennant was only here for 12 years, can you believe it?! Then he died." geez. Our current landlord had a hissy fit when we told him we were leaving after 2 years. cry me a river.

I would think it's a buyer's market now with the economy such as it is. BUT who knows? Could you buy/rent anything that includes a large empty room seperately accessible that could double as a shop/workshop? I see some of that in our little university town, even in some of the surrounding dorfs. I'm sure something like that must be available in a city like Hannover. (I think anything is possible in a city with property, notice? =) Maybe that's my wishful thinking since it took over a year of hunting to find even what we're moving into now, and it's not our 'forever home' by any means!)
Salon de Sucre said…
both will need you to commit to the place for a very long time.. You can rent and it will be okay.. but having a shop , which is a long time dream for you.. is the way to go in my opinion..

Plus you do have a huge clientele basis .. starting with a website too would help..

Good Luck in all you choose!
Can you rent a flat AND store front? Not sure the logistics but that could be a win-win situation. But if you had to purchase a store front, I foresee you being extremely successful with that and would advise investing your money that way.
Isa said…
I'm German, although I don't live in Germany at the moment. Anyway, here are my five cents on the topic:

Renting is indeed very common in Germany: about 50 % of Germans rent. It's because renting is relatively cheap. The highest rates of ownership are in big cities, such as Munich, Frankfurt, etc., where there might be apartment shortages and high rents.

Here is some info on buying in Germany:

Fees: around 6-7% of the buying price, which comprises the transfer tax of about 3.5% and a notary fee of 1.5%. (You have to go through a lawyer).

The Real Estate Agent's fees is up to 5-6% (split between the buyer and seller.)

Property Tax

Around 1% of the rateable value. Non-residents are subject to wealth tax on property owned in Germany of around 0.5%.

Just some basic info. I hope it helped!

In general I think it's a better investment to own a place, but in Germany, things are a bit different. Why not invest in your shop first, and if it goes well, buy a place of your own later?

Good luck with making that decision, it's a tough one!
Yvonne said…
I'm most definitely for buying. Renting is flushing money down the drain and owning your bricks instead is a lifetime investment. I've been buying and selling ever since I moved out my parents house. I started small and eventually I could buy something bigger as the profit of the houses I sold go up. Now I own a house that's supposed to earn my pension for me.

The second good thing is that you can do whatever you like with a house that's yours. Something you can't do with a house that's not yours. There are laws these days that you can change things as they improve the property but you'll not get anything back for it and you'll benefit your landlord instead.

You can always take out a mortgage and don't really need money of your own to get one, you just need a steady income. It's scary to start with but in the end it will do you right.

I think buying or renting are quite personal choices so I can only give you my choice. Hoped it helped :o)
Naomi F. said…
Renting is indeed very common in Germany (I guess because it's fairly cheap).
Also, the property tax falls on the buyer (which is different to most countries) so that's another thing to consider.

You are probably better off renting and investing your savings in a business.

From what I can tell, you would probably make a big success of it and then you could buy whatever property you like :)
mymaki said…
in germany it's quite common to rent a flat. we (germans in the city) love to be flexible... ;o) owning a flat is often kind of retirement provisions by renting the flat. I would suggest to rent a flat until you're settled in hannover.

greetings from munich from maki
Unknown said…
You also need to consider the tax implications for here since I'm assuming you are a U.S. Also how will Germany classify you and would it matter if property is in your name or your husbands(thinking that he is still a German citizen) name?

Owning here in the U.S. lets you deduct your mortgage interest, and your property taxes, so you could be paying more in a monthly mortgage, but receive the tax deduction which can make the cost lower overall.

What does Germany do? Does Germany have something like Small Business Loans? Even if you don't need or get one, some of their information may help you.

Good luck with whatever you decide to do.
Bri said…
All of the weird legal implications aside, my vote is for buying the shop. Shops really succeed when they set down roots in an area and you know they are always there, and you get lots of word-of-mouth business. What happened if you rented and had a really successful place, and then they pulled the plug on your lease? I know that everyone has their dream house but I imagine that it's much easier to move houses than move shops and still continue to be successful.
Frau Haselmayer said…
buh, seems like blogger did eat up my comment :(
Lisa Parks said…
I would invest in a shop and then eventually purchase a flat when you start to make more income from your wonderful new shop!
haus maus said…
I really really REALLY appreciate all of this valuable insight. I need it, trust me, this is all so new!
alix said…
I'm in the camp of renting and opening a shop! For starters, renting will allow you some flexibility—you might want to explore neighborhoods before settling permanently somewhere. But mostly I think that opening up a shop of your own would a terrific thing. In the short time I've known you it seems like it is a bit of a dream come true to have a shop—i can totally imagine you flitting about Europe sourcing yummy items to stock on your pretty shelves. You are also so social, I can imagine you meeting lots of wonderful people through the store. I'm sure you have lots of friends in Hannover already, but having a shop seems like it would really ease the transition. Not only will it give you something new and fun to focus on, but it will make you feel a part of the community in a concrete way!
Whatever you do I know you'll do with gusto and in an amazing way. I'm SO excited for you guys!
And so impressed.
What a wonderful new chapter for your lives!
xo
alex
Juliette said…
One other thing to keep in mind about renting: you have to give at least 3 months notice when you move out. The longer you live somewhere, the more notice you'll have to give. Of course you can always hope a Nachmieter will fill in your 'notice time' if you need to hurry on to the next place, but you could be stuck paying rent in 2 places at the same time.

I only say this as an FYI to file away. This affects private rentals, but also likely commercial. Are you two part of a Mietverein (Renter's Assoc)? If you, or somebody you know is, you could get a lot of rental legal-schmegal questions answered there, which is a good head's up if you're looking for long-term rentals and what you're rights are. We're not since my brother-in-law's kinda in the business down in Munich, so we get our info all unofficial as needed =)Actually, I'd highly recommend contacting one just so you're on the same page with how different standard issues are in Germany. I wish I had some kind of member's manual or something - it IS different over here!
Laura said…
I would say rent an apartment and invest in the shop. I live in germany and one can find relitavely cheap rates, even nice places, I think that's why so many people rent. Then you can still save some money away for eventually buying an apartment. Plus you could be more flexible in moving your apartment to a new neighborhood/larger space if needed, later.
G in Berlin said…
No one seems to have pointed out that owning is not tax advantaged in Germany. That's why people rent flats to live in, then rent out the flats they own. Not being able to deduct mortgage interest on one's own home is a huge negative, as you will find when you are filling out tax returns for both the US and Germany. Don't buy unless you fall in love with an apt and know that you want o have just that apartment for the rest of your life and can afford the huge cost of no mortgage deduction.
No matter how long you live in your German apt, you still need give only 3 months notice (as you will on your phone, your utilities, your gym...)even if you had signed a 20 year lease. that happened to a friend who rented her house in Duesseldorf and 2 months later (as she settled for 2 years in the US) the tenants gave three months notice. It's even faster if you are transferred or get pregnant and don't have enough "legal" room, but I wouldn't depend on that:).
I'll be in Hannover in July to meet up with some other expats, if you are interested, drop me a line (or if you have tax questions you don't already know- we have had to deal with a lot of it already).
Samantha said…
Remembering back to German class, I recall the teacher saying that it is very common to rent in Germany as opposed to owning.

From a non-experienced standpoint, I'd say rent an apartment and invest in a shop. Hopefully the shop will go well and then maybe down the road you can invest in a home that you own.
Traveling Mama said…
Well, I don't know about taxes or those kinds of things but the thought of you NOT opening a shop is crazy! Open your shop, girl! I wouldn't be afraid to rent your personal flat at first (or maybe forever!) There is a lot of freedom when renting, including upkeep and repairs. I'm sure you have a good idea of where you might want to settle, but once you are there permanently you may change your mind, so renting at first will buy you time too. I have a feeling that your shop is going to be ridiculously successful so it's likely that after a couple years you will have the means to purchase a flat (and probably one even better than you could afford now!)

My only question regarding your shop is your hope to add to your family next year. Little ones are SO much more work than I ever imagined! Do you want to spend your time tied to a physical shop or would running everything out of your home be a better option? (I liked one of the other comments about buying a flat/business in one.)
Anyways! I am super excited to see what you guys decide. It would be so cool if you could do a mini "house hunters" and show us the flats/business spaces you are looking at!
I have been browsing your archives and I really think you should write a book. You have so many innovative ideas and I think the world has so much to learn from you!
Hugs from Morocco!
moline/yvonne said…
To be honest: We would never have bought if there would have been an appropriate thing to rent here in our smalltown. We love our house but it also makes you stay and not moving elsewhere easily. The good thing is you don't have to live with ugly tiles and awful kitchen. We would definittely rent the next time. There was not much choice here but all the places we lived we moved within the city because after some time staying there you may opt for another part of town because everything looks different once you finally really live your everyday life there.
As for buying there is the benefit of having something to sell or live in when you retire and that is not a small thing. if you have invested into the future and can live from that you can easily rent high scale apartments forever but if you don't...
And when it comes to the shop: follow your heart, follow your gut feeling. I would have done it if I hadn't three children. And in the future I will somewhere here on this planet - I still have dreams...
hugs,
yvonne/moline
Unknown said…
I think you should follow your heart. There is a lot to say for either sides, but in the end it is a gutt decision anyway.
Sidsel_._ said…
We rent here in DK - and I love it for many reasons - first we could never find a flat like ours for sale or afford to buy it! second because we have "people" doing all the repairs etc. Bying a home as an investment doesn´t appeal to me - but bying a home because it feels like a home does - if you know what I mean. I think the answer will come when once you see the right place. And who knows - maybe you can buy both a shop and a home!

I´m sure there are some amazing apartments for rent in Germany, since so many rent there.

If I was to open a shop I would find the area/location first - and then let people know I was interested in taking over the shop and take it from there - I totally believe in being at the right placa at the right time, serenedipity and laws of attraction! Good luck!
jja said…
"m most definitely for buying. Renting is flushing money down the drain and owning your bricks instead is a lifetime investment. I'"

Yes, but not in Germany. Bank taxes for mortage are so high that you actually pax for TWO apartments at the end.
I would buy a shop, and with money made there starting to save for an apartment - it is expensive to use bank services here.
And even if you live for 10 years in one apartment, you can always leave due to the 3 month notice, it is gesetzlich vorgeschrieben.
Good luck!
I hope you we can order (we in germany) also online from your future shop, I would love that!

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