Purchase Price (Kaufpreis)
The total cost to acquire a property
The purchase price (Kaufpreis) is the agreed-upon amount you pay the seller for the property. It's the starting point for all investment calculations and determines your financing needs.
What Determines Purchase Price?
- Location: City center vs. suburbs vs. rural (biggest factor)
- Property type: New construction, existing, renovated, or needs work
- Size: Square meters and number of rooms
- Condition: Move-in ready vs. renovation required
- Market dynamics: Supply/demand, interest rates, economic conditions
German Real Estate Prices (2024)
Average Price per m² for Condos:
- Munich:€8,000-12,000/m²
- Hamburg, Frankfurt:€6,000-8,000/m²
- Berlin:€5,000-7,000/m²
- Leipzig, Dresden:€3,000-4,500/m²
- Smaller cities:€2,000-3,500/m²
Purchase Price vs. Total Investment
Don't forget the extras!
The purchase price is just the beginning. Add:
• 10-15% for closing costs
• 10-30% for down payment
• Renovation costs if needed
A €450k property typically requires €92k-115k cash upfront.
Real Example: Breaking Down the Numbers
€450,000 Purchase Price:
- Purchase price:€450,000
- Down payment (20%):€90,000
- Closing costs (10.6%):€47,700
- Total cash needed:€137,700
- Mortgage (80%):€360,000
How Purchase Price Affects Returns
Lower purchase price (relative to rent) means:
- Higher rental yield
- Faster payback period
- Better cashflow
- But often lower appreciation potential
Negotiation Tips
- Use comparables: Research recent sales of similar properties (Vergleichswerte)
- Point out issues: Deferred maintenance, needed renovations
- Act quickly in hot markets: But don't overpay due to FOMO
- Get a valuation: Banks will order one anyway (Wertgutachten)
Related Terms
Building Value(Gebäudewert)
Building value (Gebäudewert) is the portion of the property purchase price allocated to the structure itself, excluding land. Only the building value can be depreciated with AfA.
Land Value(Bodenwert)
Land value (Bodenwert) is the portion of your purchase price allocated to the land itself. Unlike buildings, land cannot be depreciated with AfA since it doesn't "wear out."
Closing Costs(Nebenkosten / Kaufnebenkosten)
Closing costs (Kaufnebenkosten) include property transfer tax, notary fees, and land registry fees. In Germany, expect 10-15% of purchase price in total closing costs.