That time we almost got scammed

building

Germany is full of honest, hard working, straight forward people who would never scam you, right?

Mmmhmmm!

We ‘almost’ got scammed here big-time. Like a few hundred thousand euros worth. I say almost because we weren’t actually convinced, and pulled out at the pre-pre-pre stages of anything happening.

Before I begin with my story, this post was inspired by Insider Accountant’s experience with his sister-in-law’s boyfriend getting scammed $3K.

And so it begins…

Preying on our vulnerabilities

A few years ago, my sweet husband (then boyfriend) was going through chemotherapy. If you don’t know what it’s like to go through chemo, it’s truly awful. You have poison running through your veins and are so sick you can die. More people die from chemotherapy and other conventional cancer treatments than from cancer itself.

Needless to say, Martin was very weak and we were both emotionally distraught. We were not thinking at all about finances but Martin was on sick leave and my income dropped 80%. We also had 2 households to support as we each had our own apartments that were 70km apart. So money was tight, but not desperately so.

Suggestion from a doctor

A few months after chemo, Martin is recovering well. His doctor approaches him about switching his insurance from DAK to Knappschaft. Both are public health insurance providers, but the latter has an extra top-up scheme that covers tests that only private insurance covers. Which means the doctor is able to monitor Martin better under the new insurance. He gives us the name of an insurance broker.

I didn’t like that the doctor was pushing for a new insurance. Knowing that the insurance biz is big money, I was certain he’d receive kick backs and therefore his recommendation would be heavily biased. But as I mentioned, we were emotionally distraught and if this doctor thinks it’s important to run extra tests, let’s just do it.

Knappschaft is still a public insurance provider which means it is regulated by the government, so the risk was low. This extra top up would cost a bit more than DAK, but it was reasonable and more importantly, Martin would be getting more coverage.

Meeting the insurance broker

Martin called the insurance broker recommended by the doctor, and he helped him switch over to Knappschaft easily. While we’re not thrilled with Knappshaft’s services, overall it’s fine. The part that wasn’t fine was this shady broker.

Him and Martin got along well. After he sold Martin the insurance policy, he was suddenly like ‘hey, I don’t just do insurance, I also do real estate investing! Why don’t I come over and teach you some good ways to save for retirement using real estate?’.

He said some more convincing things and Martin decided that sure, let’s hear what he has to say. I was also excited because I didn’t know so much about how things worked here in Germany, and had been wanting us to start planning for retirement. I figured that since Martin had such a positive experience with him already, that it couldn’t hurt to learn more from him.

Trying to gain our trust and playing on our (perceived) weaknesses

When he got to my place, he was friendly enough but I got the sense that he felt uncomfortable around me.

He was trying to sell us 2 things:

  1. Units in an empty apartment building in the middle of nowhere
  2. A 0% downpayment mortgage (Fremdkapital)

The building is owned by a real estate company who is selective about who they do business with. They only want investors who have stable, steady incomes – people they can work with long term. They will reject anyone otherwise.

The shady broker also said he himself is picky about who he works with, because it was a long term project and that he isn’t only interested in selling us something and then disappearing. He also kept name dropping the doctors who had referred him – how they’ve invested in his projects too and have made a lot of money as a result. Proof of how well they’re doing financially is their beautiful office (because of course practising medicine couldn’t possibly earn much since oncology is such a poor field!).  He kept stressing how WE could be sitting at the same table with DOCTORS, making business decisions together.

Wow! Is that really a bonus?!?!! My b.s. detector started going off big time at around this point. But I also found it hilarious because both Martin and I work in professional fields and hold advance degrees ourselves, so it’s is not uncommon or thrilling for us to sit with doctors. Plus, we’re talking about investments here, not healthcare!

What I did find helpful was learning about Fremdkapital, which is a 0% down mortgage but only for investment properties. I don’t know much else about it, but while this guy was rambling on, I had already decided that we could approach banks or other brokers directly about Fremdkapital if we were interested. Mr. and Mrs. W have used Fremdkapital to purchase an investment flat in Stuttgart, and are early retirees in Germany! So maybe the shady broker wasn’t that off conceptually – but just not with his product or services.

Buy it while it’s HOT!

The guy wanted our financial information right away, so he could start processing us for a mortgage pre-approval. He also wanted us to buy not one but TWO flats. We said thanks but that we still had to think about it, and he made an appointment for Martin to meet him at his office at 4pm on that Monday (we met him on a Saturday).

The next day we drove 50km to the address of the building to check it out ourselves. It was completely empty with no signs of any renos going on. The guy said it’s about to be renovated and the previous tenants were moved out to a temporary apartment, but would be moved back in after the renovations are completed. He said all the previous tenants want to move back in because it’s such a great deal for them to have a newly renovated space.

Having a look around the town, we weren’t really impressed. The neighbourhood was fine but there was hardly any infrastructure and for the price he was quoting (200+K for 2 units), it definitely wasn’t worth it. (Later our RE-investor friend said he would buy at least 20 flats for 200K, not only 2 flats)

Something doesn’t sit right – a sore loser

Martin emailed him on Monday morning to cancel the mortgage pre-approval appointment, but that if he had any future projects in big cities like Düsseldorf or Cologne, to let us know. He wrote back hours later and was a complete @sshole about it. He berated Martin and asked why the sudden change of mind, but then also said he would never deal with us again. He was MAD and pretty nasty about i too.

We found the whole situation to be distressing and upsetting. Because Martin was still recovering from chemo and this guy was connected to Martin’s doctor (we think they are related), it made Martin really uncomfortable to continue with his doctor. There were other reasons too, but Martin eventually switched to another doctor, only to stop seeing doctors completely.

A year later

Out of curiousity, we decided to drive by the building to see how the renovation was progressing. It had been a year and nothing had happened. It still sat vacant. Which means had we bought in, we would have been paying mortgage on a derelict building while collecting no rent, not able to sell, and possibly dealing with a bankruptcy from the RE company that owned the rest (or maybe our own).

In conclusion

We feel like we’ve dodged a huge bullet, even though we weren’t close to buying anything anyway. And we’ve reflected on the situation enough to walk away having learnt some valuable lessons. Some people just suck, and we’re lucky we didn’t fall for it. Real estate investing is probably not for us either, as we find it too finicky for our tastes. But maybe we will look into in the future – or maybe not!

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Paperwork journey as a wannabe-freelancer in Germany

I’ve been officially Arbeitslos (unemployed) since November 1st.

And I can’t say I miss my old job. 😀

I actually did go to one big year-end meeting in early November, where I reconnected with my colleagues.  Since I wasn’t planning to bill them for it, I decided to only show up for the fun parts. Meaning no day-long strategy/goals/blah blah meetings for me, but I did attend the laid back social bits. I had a blast!

If this is what freelancing is like, I’m game. Except for the not getting paid part. 😕

It looks like my original plan to start freelancing in early December was too ambitious. Because I have barely made a dent in the paperwork. It’s been a lot of running from office to office to ask questions, and trying to organize that info to make it actionable. Plus we moved, so needed to hold back on/transfer paperwork flow to our new city’s office (even though everything is Federal!). So now I’m hoping for a February 2016 start date.

I had a small idea of what the paperwork would be like, but didn’t know it would be this confusing. So I’ve been slowly trudging through it with Martin’s help, and hopefully everything will work out soon.

The first place I went to was the Arbeitsamt (unemployment office), and that was the most confusing place I’ve ever been to! I was trying to get help with freelancing advice, but they were focussed on trying to find me a job and updating my resume. They really didn’t know what to do with me because I wasn’t applying for Arbeitslosengeld 1 (unemployment subsidy). It’s funny because were I to apply for ALG1, it would be so easy. Everyone at the Arbeitsamt was focussed on ALG1 but only 1 person (who was on vacation) knew a smidge about the freelancing process. And when I finally spoke with that person after 2 weeks, she recommended that I apply for ALG1, and to find an accountant and talk to the Finanzamt. GAHHH!!!!

I’ve decided not to apply for ALG1. Actually I’ve applied already, but won’t follow through with the application. It’s too much effort that I could pour into setting up my Umsatzsteuernummer (freelancing tax number & registry) instead. Plus I feel really uncomfortable receiving handouts when I don’t need it.

What would be helpful is if there were a German office like the Arbeitsamt, but to help with setting up freelancing in a centralized way!

Through all of this, I was really tempted to register as a freelancer in Canada and approach my client that way. At least I could do all my paperwork in English! But I think this doesn’t solve much. It just brings Canadian rules and tax issues into the mix, which I don’t need right now.

At the same time, I’m grateful to have this down time. Martin’s job is stable, and we are not stressed with money (only good stress). We’re able to focus on healing and health, which was the point to all of this. So the freelancing is really secondary, even though it takes up a lot of my energy. I just have to keep reminding myself this!