Are dividend income/interest income fully taken into account by your bank regarding the current monthly income (i.e., annual income/12)? Is the value of the past year simply used, or an average value of recent years?
At least partially.
What about unrealized price gains of securities (e.g., accumulating bond funds that do not generate current income), but also just normal stock price gains concerning the recognition for current income?
The same as with unrealized losses. Do you have money in your wallet from unrealized price gains? No, so you also have no income. Quite simple.
Are payments not notarized in the context of an inheritance settlement taken into account for current income?
No.
What amount is set as the minimum needed for living expenses aside from the loan?
Depends on your income. From €700 for a single person – more income also means a higher lifestyle and thus higher flat rates. So it can also be €2,000 per month.
How does it look if I make a sort of (interest-free) private loan with an acquaintance? So, let’s say I give him €12,000. And he pays me back €100 per month for 10 years. Are these €100 then fully considered as current income?
No.
Or if you don’t want to calculate: How many basis points more do I roughly pay compared to someone in the same situation but with a net monthly income of €10,000?
No difference, since it’s the same risk position from the property for the bank.
I am very interested in the SPV topic: How do they get to a 6% annuity, please? Ok, if they put in 50% equity that’s clear. But many operate with at least 90% debt. For that, they would need at least a target rent of 8%, so that after operating costs (they also have administrative costs for accounting etc. compared to a private investor) 6% remain for the annuity. But where do you still get 8% today??? That is even difficult commercially in Smalltown (Kleinbubishausen) on a field (and there the vacancy rate is higher than if you calculate only 20% operating costs).
All properties where between 15 and 35% equity is contributed. These framework data exist with nearly all commercial real estate financiers. The limit is usually also at 80% market value and thus 20% equity on the purchase price as well as incidental costs from equity. Why should the bank also bear all the risk in an SPV? The customer just has to accept one death – and here it is the equity death. By the way, operating costs in the calculation for reasonable properties are between 9-15%.
But I don’t understand how a newly launched SPV now stands a chance to get a loan? It would need at least 30% equity for financing, and even that is very tight. And if you put in more than 30% equity, the equity return is no longer really attractive. (You also need equity reserves for management, fund administration, etc.)
Almost 90-95% of all commercial real estate financing runs through an SPV – no matter if with us, a HSH Nordbank, Deutsche Hypo, Bayern LB, Helaba or whatever they’re called.
You will laugh: I have already considered setting up something like that; there are many interested investors; what is the minimum volume for such an SPV with you? I was once told €10-20 million was the minimum. According to my calculations, it can also be operated economically from about €3-5 million. For example, accounting can be done by oneself.
So you want to set up a small private fund? We start commercially at around €10 million, however, we would not want to support such a construct with an inexperienced initiator and then still privately with several private investors. That is too unprofessional and too complex for us.
P.S. There are enough properties that are bought for 30-40 times the annual rent. That still leaves much more ongoing yield than low-risk alternative investments. In residential, even higher prices are not a problem. But the clients then tend to be institutional.