Both politically and personally, 1996 proved a difficult year for me. I found consolation in my Christian belief, and converted to the Russian-Orthodox faith. I continue to worship every Sunday. As son of a protestant minister, my relationship to the Christian faith and to God had always been a mixed bag – now I had finally found a solution. Growing up in a Protestant parish had also soured my attitude toward money. My father had always likened money to toilet paper, saying: “You need it, and yet it’s revolting.” It was Peter Gauweiler, a non-conformist CSU politician, who during a conversation opened my eyes for an alternative view of the subject. Financial freedom, he argued, makes it easier for non-conformists like him and me to “go against the grain” and to speak their minds.
With the purchase of a refurbished apartments in Potsdam in 1996, I entered the world of real estate. The purchase took advantage of a tax saving scheme that had been enacted within the framework of the German reunification. It subsidised, for instance, the refurbishment of historic buildings in East Germany that had deteriorated during decades of Communist mismanagement. At the time, my understanding of real estate and taxes was limited, but I studied both in depth and with a critical eye before signing the deed. For me, unlike many other private investors, the acquisition of the condominium (which has been let on sound terms ever since, and without any vacant periods), was a positive experience. So I acquired a second and third apartment – and eventually many more, especially in Berlin.
However, soon after the tax allowance was rescinded, the property market in Berlin collapsed. Construction had gotten out of hand – like elsewhere in East Germany – causing rents to stagnate or indeed to decline. Berlin lost its reputation as a good place to invest. Property developers that had thrived on the tax saving schemes were folding left and right. Sensing an opportunity, I started buying up apartments in Berlin-Mitte – either from a developer that faced bankruptcy, and did end up going bankrupt, or from the bank.
My rebellious character trait of “going against the grain” and to steer clear of prevailing fads and trends was finally turning into a paying proposition! I suddenly realised that it is a rather useful approach in financial investing to form your own opinion and to make anti-cyclic investments at time, that is, to ignore the general opinion.
The property at purchase (click to enlarge!)
The property after renovation: