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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Renting is great!

A few steps from our new home.

A few steps from our new home.

We found our soon-to-be new place in Niederrhein. 🙂

Our move-in date is in mid-November, and we can’t wait!!

I said we were considering buying a house or a flat, but we didn’t find anything compelling enough. Plus I ran the numbers and also started investing again, which makes me want to not spend too much on anything.

Our new place is smaller and cheaper than what we have now, which we didn’t plan on, it just worked out that way. More importantly, the new place is in line with our FIRE and health goals.

Martin will be able to bike to work in 30 min, or take the train 8 minutes. I will either work from home, or will rent a coworking space 15 min away (walking). Long commuting will soon be a thing of the past. Excitedddd!!!

We’re dropping off our signed contracts this weekend, and are thrilled the hunt is over. :mrgreen:

Working and living in the same city together is a dream come true. We had been hoping for it for years, without wanting to change anything. Now that we’re putting in the effort to make it happen, we see that it was only hard because we made it hard.

House hunting in Niederrhein

Niederrhein

Martin and I are looking for an apartment/house to move into in the Niederrhein area.

We live in Nordrhine-Westfalen (NRW), which is the north-west state on the border of Netherlands and Belgium. Martin works deep in the Niederrhein, which is more north, and I work in the Rhineland area which is south (in the Cologne and Düsseldorf region).

Everyday we commute 35-40km in opposite directions, but soon that will be a thing of the past as we commit to changing our lifestyles for the better.

Normally, I have to stay working in the Rhineland area of NRW because that’s where all the international jobs are. But, since I will be freelancing soon, I’ll be able to work from home!!

We’re so excited to move and to get rid of our commutes. We just have to find a place to live now, which is a big pain in the @ss.

Ideally we would like to be within walking or biking distance from Martin’s workplace. In immobilienscout, we type in his work address and search within a 5km range.

At first we were only considering renting, but since it’s hard to find something suitable, we are also thinking of buying a flat. Then over the weekend, we visited my friend in the Netherlands and fell in love with her house and house-living. So now we are also opening our search up to buying a house! (renting a house is pretty expensive and difficult to find in the area we want, we’ve found)

Typically we have been very confused folk about [a lot of things!] but especially when it comes to where to live and what to live in; from dauercamping to renovating an Altbau. We are all over the map, the reason being that we are so so so different personality-wise and background wise. I hail from Toronto, and Martin is from the most rural area of east Germany where you can see wild pigs running through the fields (true story!). So what we tend to look for/how we feel comfortable in a place differs by a lot.

Since moving to Germany though, I’ve shed my big city identity and now have a much stronger appreciation for nature and small town (maybe even rural!) living. It’s pretty nice not being directly in a big city. Less rush, less spending, closer to nature, and more space. We want peace and simplicity. What a big city has to offer is less important to me now.

The more time I spend in Niederrhein, the more I like it. It’s really fantastic for biking, with flat lands and extensive bike trails. We love biking, so this area matches how we want our new lifestyles to be.

We’re planning to move in mid-November, and hopefully I’ll have some good pics to post about our house hunt soon.

Something fun to note: a big difference between house hunting in Toronto and Niederrhein (maybe Germany in general) is that it seems to be a plus in Germany that a space was renovated in the 80’s or 90’s. Like look! you don’t need to do anything since it was renovated a mere 20-30 years ago! Whereas in Toronto and the GTA, this would be something that the potential buyer should overlook, because clearly it’s a gut job. :mrgreen:

Dauercamping in Germany

When Mr. German and I were investigating the tiny house movement in Germany, we stumbled across an actual tiny house community about 5km (3 miles) from where we currently live!

It’s not called ‘tiny house’ though. The verb is dauercamping, which means long term camping, and is akin to living in a trailer park called a Campingplatz.

People live in these parks in what I consider to be very nice trailers. Average ones look like this:

And the sky’s the limit on fancy, but we’ve seen nicer ones like this:

woodcabin

They’re not always wood-cabin like. I just happened to lift these from the internet.

The Campingplatz near us has lots of amenities. Like a playground, tennis courts, communal showers, toilets, etc… It’s shared between people who live there long term, people who only visit during weekends, and transient tourist campers who drove their RVs there or who camp in tents (only in the summers).

Mr. German and I originally wanted to buy a ‘real’ trailer (ein Wohnwagen), as in one that looks like this:

wohnwagen

We wanted to park it there and live in it for at least the summer to try it out. But this Campingplatz doesn’t allow long term camping in these trailers, because the pipes freeze over winter. They also prefer to form a community of Mobilheime, not Wohnwagen (is this trailerpark snobbery I’m hearing?!!!). If we want to live at the Campingplatz full-time, we’d have to buy a proper Mobilheim like the first 2 I posted.

There are a few on sale at the park. The cheapest one is 8K EUR and similar to the first pic above. It’s on a nice plot of 150 m2 (1500 sq ft) with a yearly rent of 2K plus utilities.

Basically after buying the Mobilheim, we’d halve our housing costs to 300 EUR per month for rent and utilities. Since it’s not far from where we currently live, our daily lives wouldn’t change too much either, unlike the gorgeous Altbau option which would increase my commute to 1hr45 min.

The downside is that the Pacht (plot rent) of 2K/year is quite high for a Campingplatz. If we owned the Mobilheim, we’d have to sell it along with the Pachtland agreement since it’s not movable. This will be hard to re-sell and we don’t want to get stuck with something that has 2K running costs per year, especially when we retire. 8K is also quite steep for an older Mobilheim that needs work.

Is living there legal?

Like with tiny houses, dauercamping exists in a legal grey zone. In Germany, you have to register your address with the authorities so it’s highly dependent on whether the Amt lets you register a Campingplatz as your main address or not. This doesn’t affect people who have another primary address to register, but for us, we’d only do dauercamping to reduce costs, not to have a second address for a weekend retreat.

There were so many nice people at the Campingplatz, mostly older retired people who have been living there for 30 years.

So it appears doable to register as a primary address, but it’s still not 100% legal and there is an ongoing discussion about whether people should be allowed to live full time in Campingplätze. It depends entirely on the city and whether the immediate community complains or not.

We would totally try it out with the towable trailer if it were an option. If it didn’t work out, we could easily sell the towable trailer, or even if we couldn’t, just move it to a much cheaper parking spot to store until we sell it (or use it to tour Scandinavia!).

It’s too bad because it’s a very nice park. Though it has opened our eyes to other options.

We are casually looking for a similar set-up that’s not on a park and on our own land (Grundstück). Then we wouldn’t have to pay the yearly Pacht fee and can own some land while we are at it! This is not so common in our state, but there’s no harm in looking.

Altbaus knock me off-course

altbau

Over the week, we had our first viewing of the above house with the listing agent.

Before we visited, we had decided it wasn’t for us. But that still didn’t stop the pangs from us wanting it. 😦

It’s a beautiful house, but it’s far too big a project for us, and doesn’t fit with our overall FIRE and low stress goals.

Some interior shots:

photo 5(1) photo 4(1) photo 3(1) photo 1(2)

There’s lots of potential there, but everything needs work. Even if the pictures don’t show it, it’s really quite nice inside. The high ceilings, old staircase, original floors & features, and the garden at the back.

I love old houses.

I’ve realized that mostly I can stick with our real estate criteria, but when it comes to old houses, I’ll throw it all out the window and start getting really excited. Especially being here in Europe, there are so many of them!

This confuses Mr. German since he’s very focussed and his personality skews toward staying on course. (hint: mine doesn’t!)

I can see how it appears inconsistent when I swing from wanting a small, centrally located flat, to a tiny house in the woods, and then suddenly out of nowhere, a suburban Altbau that needs renovation!

After all of that, I also think renting is preferable for our situation because it’s low cost and gives us lots of location flexibility. :/

So, I’m going to go back to focussing on stocks and let Mr. German continue with his real estate search in peace. 😛 We’ve agreed that I’ll go in 100% with stocks and he’ll keep his stash liquid because he’d like to buy real estate that will:

  • lower our expenses and
  • be alright for my long commute

He is very strict about it and that’s a good thing. :mrgreen:

Lifestyle inflation?

lifstyle inflation

Mostly, Mr. German and I have avoided lifestyle inflation.

We have splurged on a BMW and travelling, but for the most part, we still live like students.

Lately I’ve been visiting my coworkers and friends in their homes, and have been blown away by how stunningly beautiful their spaces are.

Easily, their homes could be featured in design magazines, and the value of their properties are in the 500K-1M EUR range.

Like what?! Mr. German and I are living in a 600 EUR/month rental, while my friends live in fancy mansions?

Of course I’m being figurative, but it makes me wonder whether we’re doing something ‘wrong’.

I know we’re not literally doing something wrong, and it’s based on priorities, etc, etc… But still. It’s making me feel like maybe we should step it up a little bit. Not a lot, but a teeny weeny bit.

Since Mr. German and I are in the market to buy property, maybe we should relax our budget and buy something more WOW?

We’ve been so back and forth about it, but finally decided that we should buy a small, centrally located flat that we can afford in cash.

Then, we fell in love with an old Altbau (historical building) that we can’t afford in cash, is not centrally located, and is 150m2 (1500 sq ft = too big for us). It’s basically way outside of what we were looking for, but yet it still draws us because it’s so *nice*.

altbau

This is the Altbau

Isn’t it a beauty?

We could comfortably put down 50% as a downpayment, and our mortgage payments would be about what we pay for rent now, excluding utilities. We expect that living in a house versus a rental apartment will increase utilities, since we’d be on the hook for taxes and will have more space. We could ‘easily’ pay this property off in 3-5 years.

Basically, the house is affordable for us, but will increase our costs which is not what we initially planned.

Does it make sense to do this? Does it support our FIRE goals?

I’m not sure. I think it’s a yes or no depending on how I describe it.

Pro Altbau

I could say it’s a good investment since houses are usually not this cheap, so we could be buying into an opportunity, plus we could have more space and live in a pretty setting (like my friends do!). We could even turn it into a triplex, and rent out 2 of the units, or keep one or both open for Airbnb. Likely we would keep the first 2 floors for ourselves and the 3rd floor we would list on Airbnb, or maybe rent to a student roommate. With space comes potential. By that I mean income potential.

Con Altbau

I also could say it’s an old building that is potentially a money-pit, and that we should steer clear of it since we wanted to reduce costs and stress, not increase them. Since this Altbau is not centrally located, my train commute will rise from 1 hr to 1hr45 min (!!!), which may force me to buy a car. Owning property in general is not a good investment, as it will tie up a significant portion of our networth without generating passive income. Plus, real estate in our area of Germany is not so easy to sell.

We’re torn. Maybe on paper it’s not the best choice, but we still feel like we want it. *sigh*

Just for fun, here is the floor plan:

altbau1

Ground floor

2nd floor

3rd floor

3rd floor

Alternative to renting or buying in the city

I am so cute and functional!

I am so cute and functional!

Since Mr. German and I have not been successful at finding a flat in our city, we have been exploring the option of buying land and building a tiny house on the land.

This is actually my dream! I love the tiny house movement and am hippie enough to try it. :mrgreen:

I think Germany is a great place to do this since any land we buy would still be fairly connected to the city. Which in my mind means that the land will hold its value.

Welcome to my modern home on wheels.

I’m ultra modern and close to the city.

Sounds great, right?

Except it’s illegal. 😦 I know tiny house living is generally semi-illegal in developed countries, but in Germany it’s illegal-illegal. At least that’s how I understand it. There are some people here pushing the envelope on tiny houses, but as I don’t have permanent residency yet, I don’t feel comfortable being one of those people. Plus there’s a lot of red tape and expense connected to it, and for us, tiny house living was meant to cut down our costs not increase them.

Not all is lost though. We accidentally stumbled upon a different but similar movement in Germany that I’ll write about in another entry. It’s getting late here!